Derivatives Clearing Organization

This Issue in United States

Concept of Derivatives Clearing Organization (DCO) in Futures Trading

In this context of financial law, the following is a definition of Derivatives Clearing Organization (DCO): A clearing organization registered with the CFTC that, in respect to a contract (a) enables each party to the contract to substitute, through novation or otherwise, the credit of the derivatives clearing organization for the credit of the parties; (b) arranges or provides, on a multilateral basis, for the settlement or netting of obligations resulting from such contracts; or (c) otherwise provides clearing services or arrangements that mutualize or transfer among participants in the derivatives clearing organization the credit risk arising from such contracts. See 7 USC 1a(15).