Derivatives Clearing Organizations Regulation - Comment Letter - CME Group - March 21, 2011

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Risk Management Requirements for Derivatives Clearing Organizations
March 21, 2011

From the comment letter:

“Risk management is not an assembly-line type of process that can be commoditized, codified and deployed in such a way as to ensure that risk management regimes of DCOs remain prudent and agile. Indeed, very few aspects of risk management can be standardized across all cleared markets to such an extent that a rules-based regime can describe each potential condition that can arise and the necessary actions that can and should be taken to mitigate risk. CME Group is therefore very concerned that certain provisions in the proposed regulations would diminish CME Clearing‟s ability to effectively manage risk by requiring each DCO to employ the same rigid, standardized risk management procedures… Furthermore, certain of the proposed prescriptive regulations would impose significant costs not only on DCOs and their clearing members, but on the CFTC, with little or no corresponding regulatory benefit. In that regard, CME Group is very concerned that the CFTC has not performed the required cost/benefit analyses with respect to the rulemaking proposals in the NPR.”


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