• Revisions to CME Rule 8F004 ("OTC Clearing Member Obligations and Qualifications")

      • To
      • Members, Member Firms and Market Users
      • From
      • Market Regulation Department
      • #
      • SER-6233
      • Notice Date
      • 04 May 2012
      • Effective Date
      • 07 May 2012
    • Effective May 7, 2012, CME will adopt revisions to CME Rule 8F004 (“OTC Clearing Member Obligations and Qualifications”) concerning minimum capital requirements for OTC Clearing Members. The revisions clarify that OTC Clearing Members must maintain minimum capital of $50 million. The revisions are being adopted to comply with CFTC Regulation 30.12(a)(2)(iii) which becomes effective on May 7, 2012, and provides that Designated Clearing Organizations “shall not set minimum capital requirements of more than $50 million for any person that seeks to become a clearing member in order to clear swaps.”
      The revisions to CME Rule 8F004 appear below, with additions underscored and deletions overstruck. 
      Questions regarding the revisions may be directed to Lisa Dunsky, Executive Director & Associate General Counsel, Legal Department, at 312.338.2483 or via email at Lisa.Dunsky@cmegroup.com.
      OTC Clearing Members are subject to all relevant CME, CBOT and NYMEX Rules and the Clearing House Manual unless an exemption has been granted by staff or the Clearing House Risk Committee. OTC Clearing Members must execute all agreements and documents required by the Clearing House. The qualifications and requirements to become an OTC Clearing Member are set forth below.
      A CME, CBOT, NYMEX and COMEX Clearing Member clearing OTC Derivatives must satisfy the requirements set forth below.
      1. An OTC Clearing Member must be in “good standing” under each applicable regulatory regime to which it is subject at the time it applies for OTC clearing membership and it must maintain its good standing status while it is an OTC Clearing Member.
      2. An OTC Clearing Member must be in compliance with all applicable regulatory capital requirements and an OTC Clearing Member must maintain minimum capital of $50 million.:
      i. $50 million if it clears only commodity (i.e., agricultural, metals and energy) and/or foreign exchange OTC Derivatives products; and
      ii. $300 million if it clears only the OTC Derivatives products listed above in section 2.i. and other OTC Derivatives products not specifically listed in this rule, excluding credit default swaps and rate swaps; and
      [The remainder of the Rule is unchanged.]
      For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at 312.930.3434 or news@cmegroup.com.