Thursday, April 9, 2009

SEC Permits CME to Operate as a Central CDS Counterparty

On March 13, the SEC issued conditional exemptive relief allowing the Chicago Mercantile Exchange, Inc. (the CME) to operate as a central counterparty for clearing credit default swaps. The conditional exemption was requested by the CME and Citadel Investment Group LLC, and will provide the SEC with extensive oversight of the central counterparty, and should "and should enhance the quality of the credit default swap market and the Commission's ability to protect investors."

In December of 2008, the SEC approved temporary orders similar to the CME order for LCH.Clearnet Ltd., and again on March 6, 2009 for ICE US Trust LLC to operate as central counterparties for credit default swaps.

The SEC has requested public comment on these exemptions to assist in its consideration of additional action that may be needed in the CDS market.

The CME exemptive order is available at:

CME's request for exemptive relief is available at: