CFTC Staff Letter 14-151: Extension of No-Action Relief for OTC Clearing Hong Kong Limited Regarding Section 5b(a) CEA

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5000
Facsimile: (202) 418-5521 www.cftc.gov
Division of Clearing and
Risk
CFTC Letter No. 14-151
No-Action
December 18, 2014
Division of Clearing and Risk
Mr. Calvin Tai
Chief Executive
OTC Clearing Hong Kong Limited
One International Finance Centre
1 Harbour View Street
Central, Hong Kong
Re: Extension of No-Action Relief with Regard to Section 5b(a) of the Commodity Exchange Act and Commission Regulations Thereunder Dear Mr. Tai:
This is in response to your undated letter received on December 5, 2014 (“Letter”) to the Division of Clearing and Risk (“Division”) of the Commodity Futures Trading Commission (“Commission”). In the Letter, you request that the Division extend the no￾action relief granted to OTC Clearing Hong Kong Limited (“OTC Clear”) by letter dated May 7, 2014, 1 from the derivatives clearing organization (“DCO”) registration requirement under
Section 5b(a) of the Commodity Exchange Act (“CEA”).
Pursuant to the no-action relief, OTC Clear is permitted to clear interest rate swaps (“IRS”) denominated in four currencies – Chinese Renminbi (“RMB”), Hong Kong Dollar, U.S. Dollar, and Euro – and non-deliverable forwards (“NDFs”) denominated in four currencies – RMB, Taiwan Dollar, Korean Won, and Indian Rupee – for proprietary trades of U.S. clearing members. The relief is set to expire at the earlier of: (i) December 31, 2014; or (ii) the date on which the Commission either registers OTC Clear as a DCO under Section 5b(a) of the CEA, or the Commission exempts OTC Clear from registration pursuant to
Section 5b(h) of the CEA.
By letter dated November 26, 2014, the Division informed OTC Clear that it was amenable to extending the no-action relief until December 31, 2015, subject to OTC Clear notifying the Division, no later than December 15, 2014, that it will file by June 30, 2015: (i) a materially complete Form DCO application for registration as a DCO; or (ii) a petition for