The CFTC Adopts Rules on Derivatives Clearing Organization Activities

On Tuesday, November 8, 2011, the Commodity Futures Trading Commission (the "CFTC") adopted final regulations to implement certain provisions of Title VII and Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act governing derivatives clearing organization ("DCO") activities.  The regulations establish the regulatory standards for compliance with DCO Core Principles A (Compliance), B (Financial Resources), C (Participant and Product Eligibility), D (Risk Management), E (Settlement Procedures), F (Treatment of Funds), G (Default Rules and Procedures), H (Rule Enforcement), I (System Safeguards), J (Reporting), K (Recordkeeping), L (Public Information), M (Information Sharing), N (Antitrust Considerations), and R (Legal Risk) as set forth in Section 5b of the Commodity Exchange Act.

The CFTC also updated and added related definitions; adopted implementing rules for DCO chief compliance officers; revised procedures for DCO applications, including the required use of a new Form DCO; adopted procedural rules applicable to the transfer of a DCO registration; and added requirements for approval of DCO rules establishing a portfolio margining program for customer accounts carried by a futures commission merchant that is also registered as a securities broker-dealer.  In addition, the CFTC adopted certain technical amendments and delegation provisions.

© 2011 Perkins Coie LLP