Derivatives Clearing Organizations Recovery and Orderly Wind-Down Plans; Information for Resolution Planning

Following an announcement by the US Commodity Futures Trading Commission (CFTC) in June this year (please see EventID 21565 in this context), the Commission has now published in the Federal Register its proposed rule amendments to Statutory Instrument 17 CFR Part 39 as regards recovery and orderly wind-down plans of systemically important derivatives clearing organizations (SIDCOs) and other Subpart C derivative clearing organizations (DCOs) which are DCOs opted be treated in accordance with the rules for SIDCOs.
In brief, the proposed rule amendments would primarily align U.S. regulation with international standards and guidance, as the current U.S. rules haven’t been updated since 2013 and much has been done internationally since then to enhance the resilience of SIDCOs and DCOs in general. As a consequence, the proposed revisions also aim to enhance risk management, ensure financial integrity, and avoid systemic risk in the derivatives markets. Specifically, the U.S. CFTC proposes to
– define the core elements to be included in SIDCO’s or Subpart C DCO’s recovery and orderly wind-down plans;
– modify the information provision procedures for resolution planning;
– define the types of information to be provided to the Commission; and
– require all other DCOs (non Subpart C DCOs) to maintain and submit orderly wind-down plans similar to those required for SIDCOs and Subpart C DCOs.
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The consultation will remain open for public comment until September 26, 2023.