Singapore exchange receives clearing house nod from US regulator

31 December 2013   Category: News, Asia, Singapore   By Asia Asset Management

The Singapore Exchange (SGX Derivatives Clearing) has become Asia’s first clearing house for derivatives contracts after receiving the green light from the Commodity Futures Trading Commission (CFTC).

The bourse said on its website that new and existing US customers will be able to clear their derivatives contracts efficiently through SGX’s derivatives clearing house in compliance with the latest US laws and regulations, including the US Dodd-Frank Act, the Commodity Exchange Act and CFTC’s regulations.

To allow for an orderly transition, SGX clearing members which are not registered with the CFTC as futures commission merchants (FCMs) can continue clearing swap contracts for US persons via SGX Derivatives Clearing following an extension of the “no action relief” from CFTC to 31 March 2014.

“SGX is delighted to be recognised as Asia’s first Derivatives Clearing Organization. This reaffirms our commitment to serve our US customers with the necessary regulatory authorisation. It also underscores our position as a leading exchange with the highest international standards and practices which clients can rely on for their business and risk management needs,” said Muthukrishnan Ramaswami, President of SGX.

SGX Derivatives Clearing and SGX’s securities clearing house, The Central Depository (CDP), have also applied to the European Securities and Market Authority for recognition as third country central counterparties under the European Market Infrastructure Regulation in order to continue providing clearing services to European Union customers.

In November, SGX Derivatives Clearing and the CDP were endorsed by the International Monetary Fund’s Financial Sector Assessment Programme for satisfying high levels of compliance with the Principles for Financial Market Infrastructures (PFMI). The PFMI embody the international standards for payment, clearing and settlement.

CFTC has awarded the licenses of DCO to a number of US and European exchanges including AE Clearinghouse, BrokerTec Clearing Company, Cantor Clearinghouse, Chicago Board of Trade, Chicago Mercantile Exchange, CME Clearing Europe, and Eurex Clearing AG.

Hong Kong Exchange and Clearing, the major regional rival of Singapore Exchange, told local media that the bourse is applying for the permission of OTC settlement in the European Union. It is still studying the possibility of applying for the DCO license.