The Securities and Exchange Commission today took further action to help regulate over-the-counter derivatives by approving conditional exemptions that will allow ICE Clear Europe Limited and Eurex Clearing AG to operate as central counterparties (CCPs) for clearing credit default swaps.
These conditional exemptions provide the SEC with regulatory oversight of the central counterparty, and should enhance the quality of the credit default swap market and the Commission's ability to protect investors.
"Today's actions represent an additional piece in the Commission's ongoing efforts, in coordination with other regulators, to promote central clearing as part of a regulatory framework for credit default swaps," said SEC Chairman Mary L. Schapiro. "By facilitating the use of CCPs, these conditional exemptions should help in addressing concerns about counterparty risk, market transparency and market integrity associated with the credit default swap market, and thereby contribute to the goal of reducing systemic risk."
On Dec. 24, 2008, the SEC approved temporary exemptions allowing LCH.Clearnet Ltd. to operate as a central counterparty for credit default swaps. On March 6, 2009 and March 13, 2009, respectively, the SEC approved similar temporary exemptions for ICE US Trust LLC and the Chicago Mercantile Exchange, Inc. The SEC is soliciting public comment on all aspects of these exemptions to assist in its consideration of any further action that may be needed in this area.