On May 31, the Commodity Futures Trading Commission issued no-action relief to the Shanghai Clearing House regarding its registration as a derivatives clearing organization in the U.S. The relief effectively means that the Chinese clearinghouse can clear interest rate swaps for U.S. banks, but not for their customers.
The relief covers swaps that are subject to the People's Bank of China's clearing mandates, namely certain types of interest rate swaps that are denominated in renminbi. The relief was granted on an interim basis while the Shanghai Clearing House seeks a more permanent exemption from U.S. regulatory requirements.
The relief was issued shortly before the U.S.-China Strategic and Economic Dialogue, a high-level series of meetings that took place in Beijing in June. CFTC Chairman Tim Massad, who participated in those meetings, issued a statement emphasizing the importance of the relief as a step towards stronger relationships between U.S. and Chinese regulators. "I have been very focused on strengthening our relationship with Chinese regulators, particularly given the importance of the Chinese markets to the markets that we regulate and to the global economy," Massad said. "Today’s announcement is an important step in that regard, and we will continue seeking opportunities to enhance cooperation and dialogue between the CFTC and both the PBOC and the China Securities Regulatory Commission."
