The CFTC issued a proposed exemptive order that would allow certain derivatives clearing organizations ("DCOs") to invest futures and swap customer funds in French and German sovereign debt. The DCOs that would qualify for the proposed relief are ICE Clear Credit LLC, ICE Clear US, Inc., and ICE Clear Europe Limited. Absent an exemption, does not permit DCOs to invest customer funds in foreign sovereign debt.
As previously covered, the DCOs also requested relief that would "expand the universe of counterparties and depositories they may use in connection with these investments given the structure of the market for repurchase agreements in euro-denominated sovereign debt." This relief would allow the DCOs to enter into reverse repo agreements with certain foreign banks, certain regulated securities dealers, or the European Central Bank and the central banks of Germany and France.
Additionally, the DCOs requested exemptive relief that would allow them to hold securities purchased through reverse repo agreements in a safekeeping account with a non-U.S. bank.
Comments on the proposal must be received by January 16, 2018.
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