[ by Howard Haykin ]

Beginning next month, swaps dealers will have 2 minutes to accept or reject trades that will be sent to clearinghouses, the CFTC said in the most-detailed requirement about timing to date.  The rule is set to become effective 10/1/12.

And, 90 days after the CFTC rules are published in the Federal Register, the time allowed for trade approval falls to one minute - that according to a 9/21 email from Ananda Radhakrishnan, director of the division of clearing and risk.

Banks Protest Limited Time Frames. Large banks that are actively engage in the swaps markets - including JPMorgan Chase, Goldman Sachs Group, Citigroup, and Morgan Stanley - have argued that the technology to instantly verify the credit and risk allowance of their customers doesn’t exist and asked the CFTC to reconsider.

The CFTC time limits contrast with the commission’s final rule in this area, which stated that acceptance be done "as quickly after submission as would be technologically practicable if fully automated systems were used."

CFTC Director Radhakrishnan added in the e-mail: "The Commission clarified that this standard would require action in a matter of milliseconds or seconds or, at most, a few minutes, not hours or days."  It was sent to executives at clearinghouse owners CME Group, Intercontinental Exchange, LCH.Clearnet Group, and representatives of the FIA (Futures Industry Association).  The clearinghouses were asked to pass along the information to their bank clearing members.

[ Bloomberg, 9/24/12 ]