THE Singapore Exchange (SGX) is consulting the market on a new remote membership class, which will enable futures commission merchants registered with the US Commodity Futures Trading Commission (CFTC) to clear swaps for existing and new US customers through SGX's clearing house.
This follows regulatory changes in the United States under the Dodd-Frank Act, which requires that US customers clearing swaps do so through a clearing house registered with the CFTC as a derivatives clearing organisation and through clearing members who are futures commission merchants.
SGX Derivatives Clearing has applied to the CFTC for registration as a derivatives clearing organisation and currently enjoys no-action relief for its clearing activities in the US pending registration.
This new remote membership class further enables SGX Derivatives Clearing to admit futures commission merchants as clearing members and to clear swaps for these merchants' customers.
While this proposal is initially aimed at meeting US regulatory requirements, SGX Derivatives Clearing may admit members of other jurisdictions as remote clearing members in the future.
Further, SGX Derivatives Clearing and SGX's securities depository, The Central Depository, have also applied under European regulations to conduct their clearing businesses in the EU.
Other SGX initiatives amid international regulatory changes include SGX's adoption on Jan 8 of the latest global standards for payment, and clearing and settlement.
SGX Derivatives Clearing is also a Qualifying Central Counterparty under the Basel III framework for banks, enabling bank members to benefit from lower capital requirements.
The consultation paper is open to public comment till Nov 8.