Alert January 25, 2011

CFTC Proposes Rules and Guidance for Derivatives Clearing Organizations

The CFTC issued a release proposing rules and guidance regarding core principles for Derivatives Clearing Organizations (“DCOs”).  The proposed rules are designed to implement Title VII and Title VIII of the Dodd-Frank Act and would establish the regulatory standards for compliance with DCO core principles, including participant and product eligibility, risk management, default rules and procedures and system safeguards.  The proposal addresses DCOs’ credit exposure to participants and related margin requirements.  The CFTC is seeking comment on the proposed rules; comments are due on or before March 21, 2011.