The Singapore Exchange (SGX) has received regulatory approval by the Commodities Futures Trading Commission (CFTC) to become the first Asian exchange authorized as a Derivatives Clearing Organization (DCO).?
This means new and existing U.S. customers such as asset managers, banks and financial institutions in the Asian region can now clear their derivatives contracts via SGX?s derivatives clearing house. The exchange is in compliance with US laws and regulations, such as the US Dodd-Frank Act, the Commodity Exchange Act and CFTC?s regulations.?
Muthukrishnan Ramaswami, SGX president, said in a press release, “SGX is delighted to be recognised as Asia?s first Derivatives Clearing Organization. This reaffirms our commitment to serve our US customers with the necessary regulatory authorisation. It also underscores our position as a leading exchange with the highest international standards and practices which clients can rely on for their business and risk management needs.”
A transition phase will take place and for the SGX clearing members not registered with the CFTC as futures commission merchants (FCMs), they can continue clearing swap contracts for US persons via SGX Derivatives Clearing after an extension of the ?no action relief? from the CFTC until March 31, 2014. ?
In addition to its US customer reach, SGX hopes to also extend its clearing services for European institutions. It is still waiting for European regulatory approval with similar recognition for those desiring to utilize SGX’s Asian clearing services, reported The Financial Times.