Commodity Futures Trading Commission ♦ Division of Clearing and Risk ♦ 202-418-5430 

Commodity Futures Trading Commission 

 Office of Public Affairs 

 Three Lafayette Centre 

 1155 21st Street, NW 

 Washington, DC 20581 

 www.cftc.gov

September 28, 2016 

Q & A – Clearing Requirement Determination under Section 2(h) of the 

CEA for Interest Rate Swaps 

To which swaps does the new clearing requirement apply? 

The clearing requirement issued today expands Commission regulation 50.4(a) to require clearing of certain 

interest rate swaps, in addition to those that have been required to be cleared since 2013 pursuant to the 

Commission’s first clearing requirement. The interest rate swaps subject to expanded regulation 50.4(a) 

include certain fixed-to-floating interest rate swaps, basis swaps, forward rate agreements, and overnight index 

swaps denominated in currencies that were not covered by the Commission’s first clearing requirement.

The expanded interest rate swap classes include: 

 fixed-to-floating interest rate swaps denominated in Australian dollar (AUD), Canadian dollar (CAD), 

Hong Kong dollar (HKD), Mexican peso (MXN), Norwegian krone (NOK), Polish zloty (PLN), Singapore 

dollar (SGD), Swedish krona (SEK), and Swiss franc (CHF); 

 basis swaps denominated in AUD; 

 forward rate agreements (FRAs) denominated in NOK, PLN, and SEK; and 

 overnight index swaps (OIS) denominated in AUD and CAD, as well as U.S. dollar-, euro-, and sterlingdenominated OIS with termination dates up to three years. 

While Australian dollar-denominated FRAs were included in proposal to expand regulation 50.4(a), the 

Commission decided not to include this swap in the final rulemaking. 

Which DCOs are eligible to clear interest rate swaps? 

Four DCOs are registered with the Commission: Chicago Mercantile Exchange Inc. (CME), Eurex Clearing AG 

(Eurex), LCH.Clearnet Ltd. (LCH), and Singapore Exchange Derivatives Clearing Ltd. (SGX). Four other 

DCOs, which the Commission has exempted from registration, are permitted to clear interest rate swaps for 

U.S. proprietary accounts: ASX Clear (Futures) Pty Ltd. (ASX); Japan Securities Clearing Corp. (JSCC); Korea 

Exchange Inc. (KRX); and OTC Clearing Hong Kong Ltd. (OTC Clear). 

May the exception and exemptions to the clearing requirement be elected with respect to 

swaps subject to the expanded clearing requirement? 

Yes, just as with the existing clearing requirement, a market participant may elect not to clear an interest rate 

swap subject to the expanded clearing requirement by electing the end-user exception under regulation 50.50, 

the exemption for cooperatives under regulation 50.51, or the exemption for swaps between affiliated 

counterparties under regulation 50.52, provided that the market participant is eligible under 50.50, 50.51, or 

50.52 and complies with the applicable requirements. 

A market participant may also rely upon an applicable no-action or interpretative letter issued by CFTC staff in 

connection with the expanded interest rate swap clearing requirement just as with the existing clearing 

requirement. 
Commodity Futures Trading Commission ♦ Division of Clearing and Risk ♦ 202-418-5430 

Will the implementation of the clearing requirement be phased? 

Yes, the Commission has decided to phase compliance with the expanded interest rate swap clearing 

requirement based on when analogous clearing requirements have taken or will take effect in non-U.S. 

jurisdictions. To promote certainty for market participants, there is a two-year time limit on the phasing 

schedule. 

Must swaps executed prior to the applicable compliance date be cleared? 

No, a market participant must only clear those swaps executed on or after the applicable compliance date.