On November 15, the Commodity Futures Trading Commission finalized rules establishing additional standards for systemically important derivatives clearing organizations (SIDCOs). Designed to be consistent with the Principles for Financial Market Infrastructures (PFMIs), the rules introduce various new procedural and substantive requirements for any derivatives clearing organization (DCO) designated as a SIDCO by the Financial Stability Oversight Council. The requirements relate to governance, financial resources, liquidity resources, system safeguards, special default rules and procedures for uncovered losses, risk management, additional disclosure requirements, efficiency, and recovery and wind-down procedures.

Once implemented, the rules will enable SIDCOs to be recognized as qualifying central counterparties for the purposes of international bank capital standards. Qualifying central counterparty status permits bank and bank affiliate members of the SIDCOs to gain favorable capital treatment in the form of lower capital charges for exposures arising from derivatives cleared through the qualifying central counterparty. Other DCOs may elect to opt-in to the new regulatory requirements in order to gain the same favorable capital treatment.

The final rules are available here.