CFTC Extends No-Action Relief from DCO Registration Requirements for Chinese Clearing House
The CFTC Division of Clearing and Risk extended no-action relief from DCO registration to Shanghai Clearing House ("SHCH"), for purposes of clearing swaps of proprietary accounts of SHCH clearing members and their affiliates.
The relief was initially granted under CFTC Letter 16-56 (see previous coverage), which would have expired on the earlier of (i) July 31, 2023 or (ii) when the CFTC permanently exempts SHCH from registration as a DCO under CEA Section 5b(h) ("Derivatives clearing organizations - Exemptions").
The CFTC stated that it will not recommend enforcement action provided that SHCH:
- complies with the conditions specified in CFTC Letter 20-46 (see previous coverage); and
- demonstrates continued compliance with CFTC Letter 18-18 daily reporting conditions (see previous coverage).
CFTC Commissioner Summer K. Mersinger expressed "dissapoint[ment]" that the no-action relief was extended and said she is "troubled by SHCH's lack of engagement with [CFTC] staff." Ms. Mersinger noted that the CFTC still does not have a memorandum of understanding with the People's Bank of China and said that "[s]ix years' worth of relief is beyond what should be considered a reasonable amount of flexibility and international diplomacy."