FCA publishes final rules on derivatives trading obligation

The FCA has published a policy statement on the derivates trading obligation (DTO) and post-trade risk reduction services.

The policy statement includes the FCA’s final rules on the classes of secured overnight financing rate overnight index swaps (SOFR OIS) subject to the DTO. The decision to expand the DTO scope reflects the transition in the UK and elsewhere from swaps based on LIBOR to those based on risk-free rates.

The FCA has also set out the framework for post-trade risk reduction services, which allows investment firms to benefit from certain exclusions, including exemptions from the DTO, best execution and the transparency requirements.