August 11, 2022

CFTC Sets October Comment Deadline for DCO Governance Proposal

Comments on a proposal to amend CFTC Rule 39.24 ("Governance") to impose additional governance requirements on derivatives clearing organizations ("DCOs") are due by October 11, 2022. The notice was published in the Federal Register.

As previously covered, the proposal would require DCOs to:

  • establish one or multiple risk management committees ("RMCs") to review matters relevant to the DCO's risk profile;

  • consult with the RMC for material changes to the DCO margin model, default procedures, participation requirements, risk monitoring practices and new products;

  • appoint clearing members and their customers to the RMCs, and require that RMC membership be rotated on a consistent basis;

  • create one or more market participant risk advisory working groups and require those groups to meet at least once each quarter;

  • adopt written policies regarding the RMC consultation process and the formation and role of the working groups;

  • screen RMC members to determine their ability to adequately advise on risk; and

  • maintain policies that enable RMC members to provide independent opinions on all matters presented.

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