Derivatives Clearing Organizations Regulation - Comment Letter - CME Group - December 13, 2010

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Financial Resources Requirements for Derivatives Clearing Organizations
December 13, 2010

In their comment letter, CME Group offers the following suggestions, among others, to the Commission:

  • In regards to the haircut requirements – and the fact that nonpayment of an assessment would result in the non-paying firm itself being in default to the DCO – we do not believe that a further haircut is necessary, and we are aware of no valid reason to cap the use of assessments at 20 percent as proposed.
  • In response to the proposed liquidity requirement covering more than a one-day settlement cycle, CME suggests that if the clearing member had a pay in its customer account and a collect in its house account, the amount should be the greater of (i) the customer pay minus the house collect, or (ii) zero. If the result in such case were zero, that day’s variation settlement should not be included in the calculation.
  • Additionally, we suggest that, rather than adopting Regulation 39.29 as proposed, the Commission should adopt a regulation that subjects SIDCOs to more frequent stress testing and reporting requirements than any DCOs the Council does not designate as systemically important.

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