The CFTC has enacted a substantial number of new regulations designed to implement the core principles for derivatives clearing organizations (“DCOs”) in the Commodity Exchange Act, as amended by the Dodd-Frank Act. It is important to note that the two new regulations detailed below impose, in part, obligations on clearing members that are not FCMs to report certain information to the CFTC, upon the CFTC’s request.
CFTC Regulation 39.12(a)(5)(B) becomes effective on May 7, 2012 and requires financial reports of non-FCM clearing members to be made available to the CFTC upon request. In order to comply with this Regulation, we will be amending CME, CBOT and NYMEX Rule 970.B. to require such reporting.
In addition CFTC Regulation 39.13(h)(5) becomes effective on May 7, 2012 and requires DCOs to adopt rules regarding their ability to request and obtain information and documentation from clearing members concerning risk management policies, procedures, and practices. Further all clearing members, including non-FCMs, must be required to provide such information, upon request, to the CFTC. To comply with this Regulation, we are amending CME, CBOT and NYMEX Rule 982. and CME Rule 8F010. regarding risk management.
In the attached formal rule changes, additions are underlined. The rule amendments will become effective May 7, 2012, pending regulatory approval.
If you have any questions, please call the Audit Department at (312) 930‑3230.
CME, CBOT and NYMEX Rulebooks
Chapter 9. CLEARING MEMBERS
Rule 970. FINANCIAL REQUIREMENTS
B. For non-FCMs, all filing, notification, and approval requirements set forth in CFTC Regulations 1.10, 1.12, 1.17 and 1.18 and in the rules of the Exchange must be submitted to or obtained from the Audit Department, if necessary, rather than the Commission. Non-FCM clearing members shall make available to the CFTC, upon the CFTC’s request, copies of financial reports required to be submitted to the Audit Department under this Rule.
Rule 982. RISK MANAGEMENT
C. Each clearing member shall promptly provide to Clearing House staff, upon request, information and documents regarding its risk management policies, procedures and practices, including, without limitation, information and documents relating to the liquidity of its financial resources, settlement procedures and operational issues.
D. Each clearing member shall make information and documents regarding its risk management policies, procedures and practices available to the CFTC upon the CFTC’s request.
Chapter 8F. Over-the-Counter Derivative Clearing
Rule 8F010. RISK MANAGEMENT
OTC Clearing Members will be subject to risk management and monitoring practices by CME relating to transactions submitted to the Clearing House. OTC Clearing Members shall promptly provide all information requested by Clearing House staff, including, without limitation, information respecting risk, settlement, liquidity, and operational issues. OTC Clearing Members shall make information and documents regarding their risk management policies, procedures and practices available to the CFTC upon the CFTC’s request.