LCH obtains CFTC authorization to hold cleared CDS products

Rick Steves

The CFTC issued the same relief to ICE Clear Credit and ICE Clear Europe in 2013. 

LCH has been granted authorization from the CFTC to hold credit default swaps (CDS) and security-based CDS in a cleared swaps customer account with portfolio margin.

The Commodity Futures Trading Commission has allowed LCH SA and its clearing members that are dually registered as futures commission merchants and broker-dealers to:

– hold credit default swaps (CDS) and security-based CDS in a cleared swaps customer account subject to Section 4d(f) of the CEA;
– portfolio margin such as CDS and security-based CDS held in the cleared swaps customer account.

LCH made the request to CFTC under the entity Banque Centrale de Compensation, a CFTC-registered derivatives clearing organization (DCO), under Section 4d(f) of the Commodity Exchange Act (CEA).

“IT IS ORDERED, pursuant to Section 4d(f) of the Act, 7 U.S.C. § 6d(f), that, subject to the terms and conditions below, LCH SA and its FCM/BD Clearing Members that are acting pursuant to this Order may hold customer property used to margin, guarantee, or secure trades or positions in cleared security-based swaps with other customer property used to margin, guarantee, or secure trades or positions in cleared swaps in a cleared swaps account or accounts maintained in accordance with Section 4d(f) of the Act (including any orders issued pursuant to Section 4d(f) of the Act) and the regulations thereunder, and provide for portfolio margining of such cleared security-based swaps and swaps, subject to the requirements of Commission Regulation 39.13(g)(4). All such customer property shall be accounted for and treated and dealt with as belonging to the cleared swaps customers of the participating FCM/BD Clearing Members, consistent with Section 4d(f) of the Act and the regulations thereunder.”

The CFTC issued the same relief to ICE Clear Credit and ICE Clear Europe in 2013.

 

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