CFTC Staff Letter 14-68: No-Action Relief for OTC Clearing Hong Kong Limited

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 Division of Clearing and Risk Ananda Radhakrishnan Director CFTC Letter No. 14-68 No Action May 7, 2014 Division of Clearing and Risk Chief Executive OTC Clearing Hong Kong Limited One International Finance Centre 1 Harbour View Street Central, Hong Kong RE: Request for No-Action Relief with Regard to Sections 5b(a) and 2(h)(1)(A) of the Commodity Exchange Act and Commission Regulations Thereunder Dear Mr. Greiner:
This is in response to your letter dated February 20, 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 confirm that it will not recommend that the Commission take enforcement action against (1) OTC Clearing Hong Kong Limited (“OTC Clear”) for failure to register as a derivatives clearing organization (“DCO”) pursuant to
Section 5b(a) of the Commodity Exchange Act (“CEA”), 1
or (2) clearing members of OTC Clear that are U.S. persons or affiliates of U.S. persons (each a “U.S. Clearing Member”) for failure to clear certain interest rate swaps (“IRS”) and certain non-deliverable forwards (“NDFs”) through a registered DCO pursuant to Section 2(h)(1)(A) of the CEA and the implementing regulations thereunder. Under this requested relief, OTC Clear would be permitted to clear IRS denominated in four currencies—Chinese Renminbi (“RMB”), Hong Kong Dollar, U.S. Dollar, and Euro—and NDFs denominated in four currencies—RMB, Taiwan Dollar, Korean Won, and Indian Rupee— for the proprietary trades of U.S. Clearing Members. You request that such relief be effective until the earlier of December 31, 2014, or the date upon which the Commission, acting pursuant to its authority under Section 5b(h) of the CEA, exempts OTC Clear from the DCO registration