Indian FX Clearing House Gets No-Action Letter from US Financial Regulator

India’s clearing and settlement solution for money markets and foreign exchange, Clearing Corporation Of India Ltd (CCIL), has been granted relief from the US financial derivatives regulator. The CCIL failed to register as a derivatives clearing organization with the Commodity Futures Trading Commission (CFTC).

The Clearing Corporation Of India received a no-action letter from the CFTC’s Division of Clearing and Risk. According to the official statement, the no-action relief is limited to CCIL’s clearing of Indian rupee-denominated interest rate swaps and Indian rupee-denominated forward rate agreements for the proprietary trades of US clearing members. The no-action relief is effective until December 31, 2014.

CCIL was established in 2001 as a mechanism for efficient clearing and settlement of Indian financial instruments. The clearing house has a number of solutions for member firms including, FX-Clear, a Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Dealing System which offers Order Matching and negotiation Modes for dealing.

The FX-Clear solution covers a number of FX derivatives contracts including the interbank US Dollar-Indian Rupee (USD INR) Spot and swap transactions, as well as major currency crosses such as EUR USD, USD JPY and GBP USD. FX-Clear’s main FX pair is the USD INR which constitutes 85% of the total transactions cleared through the system.

The latest relief comes after Mr. R. Sridharan, pictured, Managing Director of CCIL, initiated dialogue with the CFTC in July requesting that the commission refrain from taking enforcement action against the Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term. As stated, CCIL has until the end of 2014, after which it will have received registration as a derivatives clearing organization or the CFTC's exemption from registering as a derivatives clearing organization.