The Division of Clearing and Risk issued a letter providing guidance to ASX Clear (Futures) Pty Limited (“ASXCLF”) regarding compliance with the condition to No-Action Letter 14-07, which requires ASXCLF to comply wit...

Summary: The Division of Clearing and Risk issued a letter providing guidance to ASX Clear (Futures) Pty Limited (“ASXCLF”) regarding compliance with the condition to No-Action Letter 14-07, which requires ASXCLF to comply with the reporting obligations applicable to registered derivatives clearing organizations under the Commissions Part 45 regulations.

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5430

Facsimile: (202) 418-5547

aradhakrishnan@cftc.gov

a

Ananda Radhakrishnan

Director

Division of Clearing and Risk

CFTC Letter No. 14-17

Other Written Communication

February 18, 2014

Division of Clearing and Risk

Ms. Amanda J. Harkness

Group General Counsel & Company Secretary

ASX Group

Exchange Centre

20 Bridge Street

Sydney NSW 2000

PO Box H224

Australia Square NSW 1215, Australia

Dear Ms. Harkness:

The purpose of this letter is to provide further guidance to ASX Clear (Futures) Pty

Limited ("ASXCLF") regarding compliance with the condition to the no-action relief granted by

the Division of Clearing and Risk on February 6, 2014, that ASXCLF comply with the reporting

obligations applicable to registered derivatives clearing organizations (“DCOs”) under the

Commission's Part 45 regulations.

In this regard, please note that if an ASXCLF clearing participant clears through

ASXCLF a swap (referred to as the “alpha” swap) that has been reported to a Commission-

registered swap data repository (“SDR”) pursuant to Part 45 of the Commission’s regulations1,

then ASXCLF must report to an SDR, pursuant to Part 45, data regarding the two swaps

resulting from the novation of the alpha swap that had been submitted to ASXCLF for clearing

(referred to as the “beta” and “gamma” swaps).2

1 See Swap Data Recordkeeping and Reporting Requirements, 77 Fed. Reg. 2136 (Jan. 13, 2012) (adopting Part 45)

hen ASXCLF must report to an SDR, pursuant to Part 45, data regarding the two swaps

resulting from the novation of the alpha swap that had been submitted to ASXCLF for clearing

(referred to as the “beta” and “gamma” swaps).2

1 See Swap Data Recordkeeping and Reporting Requirements, 77 Fed. Reg. 2136 (Jan. 13, 2012) (adopting Part 45).

2 Pursuant to Commission Regulation 39.12(b)(6), during the clearing process, a swap submitted for clearing to a

DCO (the alpha swap) is extinguished or terminated, and two new swaps (the beta and gamma swaps) are created.

A DCO must then report the beta and gamma swaps to an SDR under Part 45 and associate the unique swap

identifier (“USI”) of the alpha swap with the beta and gamma swap in order for the Commission to confirm that

such alpha swaps were cleared.

See Statement of the Commission concerning CME Rule 1001 (March 6, 2013), page 6, available at:

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/statementofthecommission.pdf.

Ms. Amanda J. Harkness

February 18, 2014

Page 2

2

In order to avoid duplicative reporting for such transactions, ASXCLF should have rules

that prohibit the Part 45 reporting of the beta and gamma swaps by the original counterparties to

the alpha swap. These rules should make it clear to market participants that ASXCLF is

reporting the beta and gamma swaps as if it were a registered DCO under the Part 45 rules.

Should you have any questions, please do not hesitate to contact Eric Lashner, Special

Counsel, at elashner@cftc.gov, 202-418-5393, or Andrea Musalem, Special Counsel, at

amusalem@cftc.gov, 202-418-5167

rparties to

the alpha swap. These rules should make it clear to market participants that ASXCLF is

reporting the beta and gamma swaps as if it were a registered DCO under the Part 45 rules.

Should you have any questions, please do not hesitate to contact Eric Lashner, Special

Counsel, at elashner@cftc.gov, 202-418-5393, or Andrea Musalem, Special Counsel, at

amusalem@cftc.gov, 202-418-5167.

Sincerely,

Ananda Radhakrishnan

Director

cc: Andrea Musalem

Eric Lashner

See also Commission Regulation 45.4(a) (“[R]eporting counterparties and [DCOs] required to report swap

continuation data must do so in a manner sufficient to ensure that all data in the [SDR] concerning the swap remains

current and accurate, and includes all changes to the primary economic terms of the swap occurring during the

existence of the swap.”); 77 Fed. Reg. at 2153 (“[T]he final rule requires registered entities and reporting

counterparties to report continuation data in a manner sufficient to ensure that the information in the SDR

concerning the swap is current and accurate, and includes all changes to any of the primary economic terms of the

swap.”).