Derivatives Clearing Organizations Regulation - Comment Letter - LCH.Clearnet - December 13, 2010

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Dodd-Frank Timeline, Financial Resources Requirements for Derivatives Clearing Organizations
Proposal Date Final Rule Issue Effective Date
December 13, 2010 October 18, 2011 January 9, 2012

Financial Resources Requirements for Derivatives Clearing Organizations
December 13, 2010

From the comment letter:

“We believe it is of the utmost importance that the CCP’s resources following a member default – especially if the default is of such a magnitude as to exhaust the margin provided by that member – be immediately and unconditionally available. Such resources should therefore be pre-funded and under the control of the CCP. We believe that assessments should be allowed as part of the DCO’s “waterfall” of protections, but should not be taken into account to meet the specific test outlined under 39.11(a)(1).” Additionally, “in our view stress testing should be carried out by the DCO on at least a daily basis, and we would strongly urge the Commission to amend its proposal accordingly. LCH.Clearnet does not believe that monthly stress-testing is adequate, as experience has shown that market conditions and member positions can change rapidly during periods of market turmoil.”



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