CFTC Issues Final Rules Implementing Enhanced Risk Management for Systemically Important Derivatives Clearing Organizations

The CFTC has approved final rules to impose enhanced risk-management standards for systemically important derivatives clearing organizations ("SIDCO"). The rules were adopted in part pursuant to Section 807 of Dodd-Frank.The CFTC said that the adoption of these rules is intended to provide that SIDCOs are consistent with the Principles for Financial Market Infrastructures, thereby enabling them to continue to be Qualifying Central Counterparties for purposes of international bank capital standards.

The final rules:

• Increase financial resources requirements for SIDCOs that are involved in activities with a more complex risk profile, or that are systemically important in multiple jurisdictions;
• Do not allow SIDCOs to include assessments in calculating their available default resources; and
• Enhance system safeguards for SIDCOs in the areas of business continuity and disaster recovery.

See: CFTC Release.