CFTC Considers Proposal on Mandatory Swap Clearing, Barnett Says

The Commodity Futures Trading Commission, the main U.S. derivatives regulator, may propose within months which swaps must be guaranteed by central clearinghouses, said Gary Barnett, the agency’s director of swap dealer and intermediary oversight.

The CFTC may seek comment about which types of swaps will face the 2010 Dodd-Frank Act’s clearing mandate that is designed to reduce risk in the $708 trillion global market, Barnett said at the International Swaps and Derivatives Association Inc.’s annual meeting in Chicago.

“We hope that in the next couple of months we will move in that direction,” Barnett said. Clearinghouses seek to reduce risk in swaps by accepting margin, or collateral, from trading parties in the transactions.

Dodd-Frank was enacted after largely unregulated swaps helped fuel the 2008 credit crisis.

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