SEC Approves Exemptions Allowing Chicago Mercantile Exchange to Operate as Central Counterparty for Credit Default Swaps

Washington, D.C., March 13, 2009 (LAWFUEL) – The Securities and Exchange Commission today took further action to help increase the transparency of credit default swaps by approving conditional exemptions that will allow the Chicago Mercantile Exchange Inc. (CME) to operate as a central counterparty for clearing them.

These conditional exemptions, based on a request by the CME and Citadel Investment Group LLC, provide the SEC with regulatory oversight of the central counterparty, and should enhance the quality of the credit default swap market and the Commission’s ability to protect investors.

“The SEC is committed to increasing investor protection and reducing systemic risk by facilitating the development and oversight of central counterparties to clear credit default swaps,” said SEC Chairman Mary L. Schapiro. “Today’s actions will further enhance opportunities to manage the risk related to credit default swaps and improve the transparency and integrity of the market for these products.”

On Dec. 24, 2008, the SEC approved temporary exemptions allowing LCH.Clearnet Ltd. to operate as a central counterparty for credit default swaps. On March 6, 2009, the SEC approved similar temporary exemptions for ICE US Trust LLC. The Commission has worked in close consultation with the Board of Governors of the Federal Reserve System and the Commodity Futures Trading Commission, executing a Memorandum of Understanding in November 2008 to lay out a framework related to central counterparties for credit default swaps.

The SEC is soliciting public comment on all aspects of these exemptions to assist in its consideration of any further action that may be needed in this area.

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