CFTC exempts clearing in same-company swaps

WASHINGTON, April 2 (Reuters) - The top U.S. derivatives

regulator late on Monday allowed swaps between units of the same company to be traded without the intervention of a clearing house, lifting a requirement banks had said was redundant.

The Commodity Futures Trading Commission (CFTC) is drawing up scores of new rules as part of the U.S. overhaul of derivative markets, which were largely unregulated before the 2007-09 credit meltdown.

Investment banks set up the swaps industry in the 1980s, allowing companies to hedge against risks such as a rise in interest rates, and quickly developing the market into a $650 trillion playground for speculators.

From March 11, clearing houses need to stand in between buyers and sellers of swaps - which used to be traded bilaterally, and often over the phone - to reduce the risk that a deal falls through, causing a market rout.

In August, the CFTC had proposed an exemption for swaps between entities of the same company - so-called inter-affiliate swaps. The agency, which regulates swaps and futures markets, now made that exemption final.

Investment bank lobby groups had said that swaps between two units of the same company did not present a default risk, as long as the parent company was solvent.

Other industry groups, such as manufacturers, are still pushing to get a temporary exemption for reporting any inter-affiliate swaps to data warehouses, which they must do from April 10. The groups say they are not ready to do so.

(Reporting by Douwe Miedema; Editing by Chris Reese)