Press Release
New York Fed Welcomes CDS Central Counterparty Legal Analysis
July 13, 2009

The Federal Reserve Bank of New York welcomes today’s publication of a cross-jurisdictional analysis of legal and regulatory issues facing credit default swap central counterparties (CDS CCPs) with respect to customer access to central clearing platforms. The analysis describes the present environment for protection of customer initial margin and portability of CDS positions in the event of a CCP clearing member default.

“Segregation and portability are key elements in building robust central counterparties. We requested the analysis because market participants were not making enough progress to analyze and address these buy-side issues. This is a good first step and, as we move the OTC derivatives market to central clearing, we will work to strengthen the regulatory and legal environment for buy-side clearing,” said William C. Dudley, president of the New York Fed.

The analysis was conducted independently by a group of dealer and buy-side market participants. Supervisors did not participate in the drafting and are evaluating the specific issues raised by the analysis.

Supervisors expect market participants to continue to work with regulators and other authorities to strengthen the foundations for buy-side clearing as they work to honor their commitment to start clearing customer trades by December 15, 2009.

Deborah Kilroe
(212) 720-6143
(646) 720-6143
deborah.kilroe@ny.frb.org

Cover Letter to William Dudley pdf offsite
Distilled Report pdf offsite
Full Report pdf offsite
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Annexes and Appendices to the analysis:

Annex A – see Full Report p.141
Annex B – see Full Report p.142

Annex C

CME Clearing Memo pdf offsite
CME Clearing Memo Exhibit A pdf offsite
CME Clearing Memo Exhibit B pdf offsite

Appendix A

CME Clearing Questionnaire pdf offsite
Eurex Clearing AG Questionnaire pdf offsite
ICE Clear Europe Questionnaire pdf offsite
ICE Trust U.S. LLC Questionnaire pdf offsite
LCH.Clearnet Limited/NYSE Liffe Questionnaire pdf offsite

Appendix B

see Full Report p.147

Appendix C

see Full Report p.153