The Commodities Futures
Trading Commissions (CFTC) latest swaps proposal has
attorneys puzzled as to its purpose. As the clearing regime
develops, potential systemic risks posed by clearinghouses have
moved to the forefront of debate.
On Tuesday July 19 the CFTC
re-proposed the rule which gives clearinghouses more time to
decide whether they accept or reject a trade for
Its initial March proposal
required the decision to be made immediately. Now the CFTC
suggests clearinghouses decide as quickly as
technologically practicable if fully automated systems were
used, which it estimates to be milliseconds, seconds, or
at most a few minutes.
The reason cited for the rewrite is to allow clearinghouses
to aggregate the risks of trades to ensure they are within
participants credit limits. But observers say that only
clearing members with good credit would be part of the
clearinghouse, and so long as their guarantee...