ISDA comments to SEC on clearing agency standards for operation and governance

29 April 2011

The letter contains the response of the ISDA to SEC notice of proposed rulemaking, regarding the regulations to implement risk management standards for designated clearing entities, consistent with the authority to adopt such regulations provided by the Dodd-Frank Act.

ISDA welcomes this opportunity to share its comments with the Commission, and looks forward to assisting the Commission and its staff in implementing an appropriate risk management framework for clearing agencies that offer central counterparty (“CCP”) services (“Clearing Agencies”), with a view to enhancing market liquidity, reducing risk and fostering financial stability.

The public policy rationale for the Dodd-Frank Act is to reduce risk, increase transparency and promote financial market stability by, inter alia, imposing risk management regulations for Clearing Agencies. ISDA believes that the Commission’s NPR provides a strong and thorough set of regulations that should, assuming the concerns set out above are addressed, facilitate prudent Clearing Agency risk management and protect the integrity of the US clearing system. Finally, ISDA urges the CFTC and SEC to coordinate and cooperate on these and other regulations to build a harmonised framework to regulate OTC derivatives. A harmonised framework will increase transparency, reduce regulatory arbitrage and further strengthen confidence in US markets.

Full letter 

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