Swaps dealers will have two minutes to accept or reject trades that will be sent to clearinghouses starting next month, the Commodity Futures Trading Commission said in the most-detailed requirement about timing to date.
The time allowed for trade approval will fall to one minute 90 days after the CFTC rules are published in the Federal Register, according to a Sept. 21 e-mail sent by Ananda Radhakrishnan, director of the division of clearing and risk. Banks including JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Citigroup Inc. (C) and Morgan Stanley (MS) have argued that the technology to instantly verify the credit and risk allowance of their customers doesn’t exist and asked the CFTC to reconsider.
The CFTC time limits, verified by spokesman Steve Adamske, contrast with the commission’s final rule in this area, which stated that acceptance be done “as quickly after submission as would be technologically practicable if fully automated systems were used.” The rule is set to become effective Oct. 1.
“The Commission clarified that this standard would require action in a matter of milliseconds or seconds or, at most, a few minutes, not hours or days,” Radhakrishnan said in the e-mail, a copy of which was obtained by Bloomberg News. It was sent to executives at clearinghouse owners CME Group Inc. (CME), Intercontinental Exchange Inc., LCH.Clearnet Group Ltd. and representatives of the Futures Industry Association. Radhakrishnan asked that the clearinghouses inform their bank clearing members of the change, according to the e-mail.