The application of the derivatives trading obligation to certain credit default swaps

In view of the discontinuations of credit default swap (CDS) clearing services by ICE Clear Europe Ltd. (ICEU) in October 2023 and to faciliate migration to other central counterparties (CCPs), the Financial Conduct Authority (FCA) has published a press statement. Therein, the Authority states that it will refrain from enforcing the trade execution obligation under article 28 of UK MifIR which would normally require certain CDS to be executed on trading venues. That way, counterparties will be able to transfer their positions outside regulated exchanges via corresponding executions. Additionally, counterparties will not have to report on any such executions pursuant to article 21 of UK MiFIR.
The FCA states that this measure is exceptional and will only apply to CDS affected by the business termination of ICEU. Furthermore, the FCA expects that all transactions be completed by October 27, 2023 and that counterparties can verify their corresponding intentions upon request.