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CFTC Issues Staff Letters Related to Eurex Clearing AG

On December 20, the US Commodity Futures Trading Commission’s Division of Clearing and Risk (DCR) and Division of Swap Dealer and Intermediary Oversight (DSIO) issued several staff letters related to Eurex Clearing AG (Eurex) for the purpose of (1) authorizing Eurex to clear and settle swaps on behalf of US persons and (2) facilitating such clearing activities on behalf of cleared swaps customers as defined in Part 22 of the CFTC’s regulations. Set forth below is a description of each letter.

Although the CFTC granted Eurex registration as a derivatives clearing organization (DCO) by order dated February 1, 2016, the order provided that Eurex could not clear or settle swaps on behalf of US persons until Eurex demonstrated that it could comply with the straight-through-processing requirements of CFTC Regulation 39.12(b)(7). By Staff Letter 18-30, DCR determined that Eurex is able to comply with the requirements of CFTC Regulation 39.12(b)(7) and authorized Eurex to commence the clearing and settling transactions on behalf of US persons that are:

(1) Clearing members;

(2) US persons that are affiliates of a clearing member; and

(3) Customers of a futures commission merchant (FCM).

Staff Letter 18-30 also approved several rules submitted by Eurex.

Staff Letter 18-31, issued jointly by DCR and DSIO, provided no-action relief permitting Eurex and its clearing member FCMs to maintain customer securities as margin for cleared swap transactions with Clearstream Banking AG, a central securities depository based in Germany (CBF), notwithstanding that (1) CBF does not maintain regulatory capital in excess of $1 billion, as required by CFTC Regulations 1.49(d)(3) and 22.9, and (2) any US dollar-denominated securities held at CBF would appear to be contrary to CFTC Regulation 1.49(e)(1)(i), which provides that US dollar-denominated assets held to meet US dollar obligations to customers must be held in the US.

The no-action relief set forth in Staff Letter 18-31 is subject to certain conditions, including, but not limited to, each FCM clearing member of Eurex obtaining an acknowledgment letter from CBF in accordance with CFTC Regulations 1.20 and 22.5 upon opening an account with CBF to hold customer securities as margin for cleared swap transactions. The relief contained in Staff Letter 18-31 is limited to CBF’s holding of customer-owned securities as margin for customer swap transactions cleared through Eurex. Such relief does not extend to CBF’s holding of customer margin for futures contracts.

Staff Letter 18-32 modifies previous no-action relief provided in Staff Letter 16-05, which permitted Eurex to obtain from Deutsche Bundesbank, and provide the CFTC with, an executed version of the acknowledgment letter as required under CFTC Regulation 22.5, in a form other than that which is set forth in Appendix B to CFTC Regulation 1.20. After reviewing proposed changes to the Bundesbank form with respect to the specific information that could be requested by certain CFTC personnel, DCR determined that the new language was sufficiently broad to cover the items contemplated by the more general language previously included as part of the form.

Staff Letter 18-30 is available here.

Staff Letter 18-31 is available here.

Staff Letter 18-32 is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.


Stanley V. Polit, Katten Muchin, Financial Services lawyer, Corporate Regulatory Matters Attorney

Stanley Polit concentrates his practice in transactional, corporate and regulatory aspects of financial services matters. Stan is able to provide legal services to a wide variety of clients including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Stan served as a council member for a national crisis management firm, where he specialized in crisis communication and merged media strategies. He has lectured extensively and conducted trainings related to these topics at numerous national and international conferences, including the National Communication Association's National Convention, the International Crisis and Risk Communication Conference and the Disaster Recovery Journal's World Business Continuity Conference.