The CFTC recently granted no-action relief to the Shanghai Clearing House (“SHCH”) from DCO registration requirements. The no-action relief is effective for one year and permits the SHCH to temporarily clear certain swaps subject to mandatory clearing in the People’s Republic of China (“PRC”) for U.S. persons, or affiliates thereof, that are also members of the SHCH. In its request for no-action relief, the SHCH also represented that it intends to petition the CFTC for an exemption from the DCO registration requirements no later than 6 months following the effective date of the no-action relief.
Notably, a petition for an exemption from the DCO registration requirements under Section 5b(h) would require the CFTC to determine that SHCH is “subject to comparable, comprehensive supervision and regulation… by the appropriate government authorities in the home country of the organization.” Similar relief has been previously provided to ASX Clear (Futures) Pty Limited, Japan Securities Clearing Corporation, Korea Exchange, Inc. and OTC Clearing Hong Kong Limited. However, this would be the first time the CFTC has granted similar relief to an organization governed by PRC law.