Assessment of Chicago Mercantile Exchange Inc. against the Financial Stability Standards for Central Counterparties – September 2014 Introduction

The Chicago Mercantile Exchange Inc. (CME) has applied for a licence to operate a clearing and settlement (CS) facility in Australia. Accordingly, under the Corporations Act 2001, CME is required to comply with the Financial Stability Standards for Central Counterparties (CCP Standards). The Reserve Bank of Australia (the Bank) has identified several areas in which it expects CME to conduct further work to ensure that it fully observes the CCP Standards, should a licence be granted.

Some of these expectations arise from the Council of Financial Regulators' (CFR) policy Ensuring Appropriate Influence for Australian Regulators over Cross-border Clearing and Settlement Facilities (the CFR influence policy), which is embedded in the CCP Standards. The Bank does not expect that CME will be systemically important to Australia or have a strong connection to the Australian financial system in the near to medium term. Therefore, at least initially, CME would be subject only to the foundational requirements of the CFR influence policy.

The CCP Standards are made up of 21 headline standards, each of which is accompanied by a number of more detailed sub-standards. In assessing whether a facility has met each of the CCP Standards, the Reserve Bank takes into account associated guidance.^[1] The following provides details of how CME observes each of the CCP Standards (including sub-standards).

Footnote

The guidance is available at <https://www.rba.gov.au/payments-system/clearing-settlement/standards/central-counterparties/2012/>. [1]