CFTC Issues Order Enabling NetThruPut, Inc., To Operate A Multilateral Clearing Organization For OTC Derivative Instruments In The US

The Commodity Futures Trading Commission (Commission) has issued an Order pursuant to Section 409 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) with respect to the multilateral clearing activities for over-the-counter (OTC) derivative instruments of NetThruPut, Inc. (NTP). NTP is a recognized clearing agency in Alberta, Canada that clears and settles transactions in certain crude oil, condensate, and other energy products listed on its online trading platform. In the Order, the Commission determined that NTP’s activities are subject to appropriate foreign supervision and, as such, NTP may operate a multilateral clearing organization (MCO) for OTC derivative instruments in the United States.

This Order is the second action taken by the Commission pursuant to Section 409 of FDICIA, which was added by the Commodity Futures Modernization Act of 2000 (CFMA). Section 409 provides that a MCO for over-the-counter derivative instruments, such as NTP, may operate in the U.S. if, among other alternatives, the MCO is supervised by a foreign financial regulator that the Commission, or one of several other U.S. financial regulators, has determined satisfies appropriate standards. In 2002, the Commission issued its first Order pursuant to Section 409 regarding the clearing activities of NOS Clearing ASA, a Norwegian clearing institution, in connection with transactions entered into on the International Maritime Exchange.

NTP’s clearing activities are supervised by the Alberta Securities Commission (ASC). The Commission reviewed the ASC’s oversight of NTP. The ASC has represented that it will share information on NTP’s clearing activities with the Commission.

Copies of the Order may be obtained from the Commission's Office of the Secretariat at Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or via the Commission’s website at http://www.cftc.gov/foia/fedreg06/foi060303a.htm.