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Federal Register / Vol. 86, No. 4 / Thursday, January 7, 2021 / Rules and Regulations List of Subjects 17 CFR Part 39
Clearing, Derivatives clearing organization, Exemption, Procedures, Registration, Swaps.
17 CFR Part 140
Authority delegations Government agencies, Organization and functions Government agencies.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR
chapter I as follows:
PART 39DERIVATIVES CLEARING
ORGANIZATIONS
1. The authority citation for part 39
continues to read as follows:

Authority: 7 U.S.C. 2, 6c, 7a1, and 12a5; 12 U.S.C. 5464; 15 U.S.C. 8325;
Section 752 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L.
111203, title VII, sec. 752, July 21, 2010, 124
Stat. 1749.

2. Revise 39.1 to read as follows:

39.1

Scope.

The provisions of this subpart A
apply to any derivatives clearing organization, as defined under section 1a15 of the Act and 1.3 of this chapter, that is registered or is required to register with the Commission as a derivatives clearing organization pursuant to section 5ba of the Act, or that is applying for an exemption from registration pursuant to section 5bh of the Act.
3. In 39.2, add definitions of the terms Exempt derivatives clearing organization, Home country, Home country regulator, and Principles for Financial Market Infrastructures, in alphabetical order, and amend the definition of Good regulatory standing, to read as follows:
39.2

Definitions.

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Exempt derivatives clearing organization means a derivatives clearing organization that the Commission has exempted from registration under section 5ba of the Act, pursuant to section 5bh of the Act and 39.6.

Good regulatory standing means, with respect to a derivatives clearing organization that is organized outside of the United States, and is licensed, registered, or otherwise authorized to act as a clearing organization in its home country, that:
1 In the case of an exempt derivatives clearing organization, either
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there has been no finding by the home country regulator of material nonobservance of the Principles for Financial Market Infrastructures or other relevant home country legal requirements, or there has been a finding by the home country regulator of material non-observance of the Principles for Financial Market Infrastructures or other relevant home country legal requirements but any such finding has been or is being resolved to the satisfaction of the home country regulator by means of corrective action taken by the derivatives clearing organization; or 2 In the case of a derivatives clearing organization registered subject to compliance with subpart D of this part, either there has been no finding by the home country regulator of material nonobservance of the relevant home country legal requirements, or there has been a finding by the home country regulator of material non-observance of the relevant home country legal requirements but any such finding has been or is being resolved to the satisfaction of the home country regulator by means of corrective action taken by the derivatives clearing organization.
Home country means, with respect to a derivatives clearing organization that is organized outside of the United States, the jurisdiction in which the derivatives clearing organization is organized.
Home country regulator means, with respect to a derivatives clearing organization that is organized outside of the United States, an appropriate government authority which licenses, regulates, supervises, or oversees the derivatives clearing organizations clearing activities in the home country.

Principles for Financial Market Infrastructures means the Principles for Financial Market Infrastructures jointly published by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions in April 2012.

4. Add 39.6 to read as follows:
39.6 Exemption from derivatives clearing organization registration.

a Eligibility for exemption. A
derivatives clearing organization that is organized outside of the United States shall be eligible for an exemption from registration as a derivatives clearing organization for the clearing of swaps for U.S. persons, and thereby exempt from compliance with provisions of the Act and Commission regulations
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applicable to derivatives clearing organizations, if:
1 The derivatives clearing organization is subject to comparable, comprehensive supervision and regulation by a home country regulator as demonstrated by the following:
i The derivatives clearing organization is organized in a jurisdiction in which a home country regulator applies to the derivatives clearing organization, on an ongoing basis, statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the Principles for Financial Market Infrastructures;
ii The derivatives clearing organization observes the Principles for Financial Market Infrastructures in all material respects; and iii The derivatives clearing organization is in good regulatory standing in its home country; and 2 A memorandum of understanding or similar arrangement satisfactory to the Commission is in effect between the Commission and the derivatives clearing organizations home country regulator, pursuant to which, among other things, the home country regulator agrees to provide to the Commission any information that the Commission deems necessary to evaluate the initial and continued eligibility of the derivatives clearing organization for exemption from registration or to review its compliance with any conditions of such exemption.
b Conditions of exemption. An exemption from registration as a derivatives clearing organization shall be subject to any conditions the Commission may prescribe including, but not limited to:
1 Clearing by or for U.S. persons and futures commission merchants. The exempt derivatives clearing organization shall have rules that limit swaps clearing services for U.S. persons and futures commission merchants to the following circumstances:
i A U.S. person that is a clearing member of the exempt derivatives clearing organization may clear swaps for itself and those persons identified in the definition of proprietary account set forth in 1.3 of this chapter;
ii A non-U.S. person that is a clearing member of the exempt derivatives clearing organization may clear swaps for any affiliated U.S.
person identified in the definition of proprietary account set forth in 1.3
of this chapter; and iii An entity that is registered with the Commission as a futures commission merchant may be a clearing member of the exempt derivatives
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