Requirements for Mandatory Clearing
The recommendations to set up a mandatory clearing regime are in relation to:
- Determination of whether a mandatory clearing obligation should apply to a product or set of products;
- Consideration of potential exemptions to the mandatory clearing obligation;
- Establishment of appropriate communication among authorities and with the public;
- Consideration of relevant cross-border issues in the application of a mandatory clearing obligation; and
- Monitoring and reviewing on an ongoing basis of the overall process and application of the mandatory clearing obligation.
This report outlines two general approaches to the determination that a product or set of products should be subject to a mandatory clearing obligation:
- The bottom-up approach considers products that a central counterparty (CCP) proposes to or is authorised to clear; and
- The top-down approach considers products that should be assessed for a mandatory clearing obligation, but where there may be no CCP clearing or seeking to clear that product.
This report recommends that authorities implementing a mandatory clearing regime consider using these bottom-up and top-down approaches in their decision-making processes.