Federal Register: Requirements for Derivatives Clearing Organizations, Designated Contract Markets, and Swap Execution Facilities Regarding the Mitigation of Conflicts of Interest

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Dodd-Frank Timeline, DCO,DCM,SEF Conflicts of Interest Mitigation
Proposal Date Comment Deadline Final Rule Proposal
October 18, 2010 June 3, 2011 First Qtr. 2012

On October 1, 2010, the Commodity Futures Trading Commission (CFTC) held the first of a series of open meetings to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was a proposed rule regarding the mitigation of conflicts of interest for derivatives clearing organizations (DCOs),designated contract markets (DCMs), and swap execution facilities (SEFs).<ref>Open Meeting on First Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 3, 2011.</ref>

The commission identified three areas decision making in which the governing body of a DCO may encounter conflicts of interest:

  • whether a swap contract is capable of being cleared;
  • the minimum criteria that an entity must meet in order to become a swap clearing member; or
  • whether a particular entity satisfies such criteria.

For DCMs and SEFs, areas of potential conflict of interest were identified as issues regarding "balancing the advancement of commercial interests and the fulfillment of self-regulatory responsibilities, including with respect to determinations on access."

To mitigate potential conflicts of interest, the commission proposed:

  • structural governance requirements specifying the composition of Boards of Directors, risk management and regulatory oversight committees; and
  • ownership and voting rights specifying an that an individual member may not own more than 20% of ownership or voting equity.

Related Documents: Fact Sheet, Q&A, and Rule Proposal as it Appeared in the Federal Register[edit]



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