Derivatives clearinghouses owned by CME Group and Intercontinental Exchange have been designated systemically important by U.S. regulators, a step that moves them closer to heightened supervision.
ICE Clear Credit, the world’s largest credit-default swap clearinghouse, and CME Inc., the clearinghouse owned by the world’s largest futures exchange, received the designation from the Financial Stability Oversight Council.
The moves were confirmed by Kelly Loeffler, a spokeswoman for Intercontinental Exchange, and Michael Shore, a spokesman for CME Group.
The designations were approved this week by the FSOC as part of an initial set of so-called financial market utilities that require increased oversight by regulators including the Federal Reserve. The designations, which are subject to appeal, may be completed “as early as this summer,” according to the Treasury Department.
The Dodd-Frank Act requires most swaps to be guaranteed by clearinghouses that stand between buyers and sellers to reduce risk in the financial system. The systemic designation will be the FSOC’s first delineation of which companies aside from banks would threaten the economy in the event of a failure.
Clearing House Payments Co., which operates a cross-border and domestic wire transfer system, also received a letter of designation, according to Erica Hurtt, vice president for communications at The Clearing House. The Clearing House Interbank Payment System, known as CHIPS, handles $1.5 trillion of transactions daily, according to its website.