Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

Commodity Futures Trading Commission

Office of Public Affairs

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

www.cftc.gov

Customer Clearing Documentation, Timing of Acceptance for Clearing, and 

Clearing Member Risk Management

The Commodity Futures Trading Commission (Commission) is finalizing rules concerning regulations regarding the 

documentation between a customer and a futures commission merchant (FCM) that clears on behalf of the 

customer, the timing of acceptance or rejection of trades for clearing by derivatives clearing organizations (DCOs)

and clearing members, and clearing member risk management for swap dealers (SDs), major swap participants 

(MSPs), and FCMs that are clearing members.

Customer Clearing Documentation Rules

The regulations prohibit tri-party agreements between customers and SDs, MSPs, FCMs that are clearing members, 

and DCOs. The regulations prevent agreements that would (a) disclose to an FCM, SD, or MSP the identity of a 

customer’s original executing counterparty; (b) limit the number of counterparties with whom a customer may enter 

into a trade; (c) restrict the size of the position a customer may take with any individual counterparty, apart from an 

overall credit limit for all positions held by the customer at the FCM; (d) impair a customer’s access to execution of 

a trade on terms that have a reasonable relationship to the best terms available; or (e) prevent compliance with 

specified time frames for acceptance of trades into clearing.

Time Frames for Submission and Acceptance for Clearing Rules

The regulations require a clearing member, or the DCO acting on its behalf, to accept or reject each trade submitted 

for clearing as quickly as would be technologically practicable if fully automated systems were used. This timing 

standard requires action in a matter of milliseconds or seconds or, at most, a few minutes, not hours or days. 

However, the rules accommodate trade processing with manual steps provided that the process could operate 

within the same time frame as automated systems.

The regulations also establish the time frame for an SD, MSP, FCM, swap execution facility, and designated 

contract market to submit swaps to a DCO for clearing. For submitting swaps required to be cleared, the swap must 

be submitted for clearing to a DCO as soon as technologically practicable after execution, but no later than the 

close of business on the day of execution. For swaps that are not required to be cleared, the swap must be 

submitted for clearing to a DCO not later than the next business day after execution of the swap, or the agreement 

to clear, if later than execution.

Related regulations require swap execution facilities and designated contract markets to coordinate with DCOs in 

the development of rules and procedures to facilitate clearing.

Clearing Member Risk Management Rules

The risk management rules in this rulemaking require SDs, MSPs, and FCMs that are clearing members to: (1) 

establish credit and market risk-based limits based on position size, order size, margin requirements, or similar 

factors; (2) use automated means to screen orders for compliance with the risk-based limits; (3) monitor for 
Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

adherence to the risk-based limits intra-day and overnight; (4) conduct stress tests of all positions in the proprietary 

account and all positions in any customer account that could pose material risk to the FCM at least once per week; 

(5) evaluate its ability to meet initial margin requirements at least once per week; (6) evaluate its ability to meet 

variation margin requirements in cash at least once per week; (7) evaluate its ability to liquidate positions it clears in 

an orderly manner, and estimate the cost of the liquidation at least once per month; and (8) test all lines of credit at 

least once per year.