An Introduction to the US Cleared Swap Infrastructure
Clifford Chance
June 15, 2011
Executive Summary
In September 2009, the leaders of the G-20 stated that "All standardized OTC derivatives contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest."
In the United States, legislation to give effect to this statement was a central pillar of the over-the-counter derivates provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). Dodd-Frank requires that, following the effective date of detailed rules, standardized swaps that are accepted for clearing by clearing organizations must be submitted by the parties to the relevant clearing organization, unless one of the parties is an end-user exempt from the clearing requirement. Further, unless an end-user exemption applies, if a swap is accepted for trading by a registered execution facility, it must be traded on the exchange or by an approved off-exchange transaction like a block trade or "request-for-quote".