Page:United States Statutes at Large Volume 114 Part 5.djvu/437

 PUBLIC LAW 106-554—APPENDIX E 114 STAT. 2763A-397 "(1) is excluded from this Act by section 2(a)(l)(C)(i), 2(c), 2(d), 2(f), or 2(g) of this Act or title IV of the Commodity Futures Modernization Act of 2000, or exempted under section 2(h) or 4(c) of this Act; or "(2) is a security futures product cleared by a clearing agency registered under the Securities Exchange Act of 1934. "(b) VOLUNTARY REGISTRATION.—^A derivatives clearing organization that clears agreements, contracts, or transactions excluded from this Act by section 2(c), 2(d), 2(f), or 2(g) of this Act or title IV of the Commodity Futures Modernization Act of 2000, or exempted under section 2(h) or 4(c) of this Act, or other over-the-counter derivative instruments (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991) may register with the Commission as a derivatives clearing organization. "(c) REGISTRATION OF DERIVATIVES CLEARING ORGANIZATIONS. — "(1) APPLICATION.— ^A person desiring to register as a derivatives clearing organization shall submit to the Commission an application in such form and containing such information as the Commission may require for the purpose of making the determinations required for approval under paragraph (2). " (2) CORE PRINCIPLES. — "(A) IN GENERAL. —To be registered and to maintain registration as a derivatives clearing organization, an applicant shall demonstrate to the Commission that the applicant complies with the core principles specified in this paragraph. The applicant shall have reasonable discretion in establishing the manner in which it complies with the core principles. "(B) FINANCIAL RESOURCES. —The applicant shall demonstrate that the applicant has adequate finsmcial, operational, and managerial resources to discharge the responsibilities of a derivatives clearing organization. " (C) PARTICIPANT AND PRODUCT ELIGIBILITY. —The applicant shall establish— "(i) appropriate admission and continuing eligibility standards (including appropriate minimum financial requirements) for members of and participants in the organization; and "(ii) appropriate standards for determining eligibility of agreements, contracts, or transactions submitted to the applicant. "(D) RISK MANAGEMENT,— The applicant shall have the ability to manage the risks associated with discharging the responsibilities of a derivatives clearing organization through the use of appropriate tools and procedures. "(E) SETTLEMENT PROCEDURES.— The applicant shall have the ability to— "(i) complete settlements on a timely basis under varying circumstances; "(ii) maintain an adequate record of the flow of funds associated with each treinsaction that the applicant clears; and "(iii) comply with the terms and conditions of any permitted netting or offset arrangements with other clearing organizations.

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