On 26 September 2022, ICE Clear Europe announced the cessation of clearing for all classes of credit default swaps (CDS) contracts from 27 October 2023. Counterparties will need to close out their CDS positions on ICE Clear Europe and establish equivalent ones on other central counterparties (CCPs) before 27 October 2023.
Some index CDS are subject to the derivatives trading obligation under article 28 of UK Markets in Financial Instruments Regulation (UK MiFIR), which requires certain financial and non-financial counterparties to conclude transactions in specified derivatives on trading venues. The list of CDS subject to the derivatives trading obligation can be found on our register.
To achieve an orderly migration of positions, market participants intend to execute trades outside a trading venue. To facilitate that migration, we will not require counterparties subject to the trading obligation to apply that obligation to transactions in the relevant CDS which are concluded for the purpose of transferring existing positions to a new CCP. We do not expect counterparties to publicly report those trades in accordance with article 21 of UK MiFIR.
We expect all such trades to have been completed by 27 October 2023 and may contact firms to validate that off venue trades in relevant instruments were executed for the purpose specified above.
We are acting in coordination with the US Commodity Futures Trading Commission and the European Securities and Markets Authority who are also issuing statements on the application of their derivatives trading obligations to the migration of positions in CDS.