The go-ahead covers clearing of propriety trading by US members that involves interest rate swaps, denominated in Hong Kong dollars, renminbi (RMB), US dollars and euros, as well as non-deliverable currency forwards, denominated in RMB, Taiwan dollars, Korean won and Indian rupee.
The no-action letter is effective immediately until the earlier of December 31st 2014 or the date when the CFTC registers OTC Clear as a derivatives clearing organisation (DCO) or exempts it from registration.
"We are very pleased to receive the no-action relief from the CFTC because it will allow us to admit our US founding shareholders and other eligible US persons as clearing members," says Calvin Tai, HKEx's Head of Global Clearing (Asia). "Our US founding shareholders have a significant role in the OTC derivatives market so this is a very important step forward for OTC Clear, which is a key part of our strategy to establish a strong fixed income and currency business as we expand into more asset classes.
"OTC Clear has also submitted an application to the European Securities and Markets Authority (ESMA) to seek regulatory recognition that will allow the clearing house to accept financial institutions incorporated in the European Union as its clearing members," Mr Tai said.
Two of OTC Clear's 12 founding shareholders are affiliates of US banks. The founding shareholders together hold 25% of OTC Clear’s shares and HKEx holds the remaining 75%.