Regulatory · CFTC
The central-counterparty leg for orbital derivatives.
- Filing
- CFTC Form 7-R
- Status
- Pre-filing readiness
- Default fund
- Cover-2 standard
- Public docket
- cftc.gov / DCO filings
What this authorises
Novation. Margin. Default. Recovery. Resolution.
- 01
Deterministic novation
At the moment of match, the bilateral contract dissolves and two replacement contracts crystallise — buyer-with-Wavestar and seller-with-Wavestar. Bilateral counterparty risk is extinguished on the trade timestamp. - 02
Risk-based margin framework
Initial margin calibrated per contract class at the prescribed confidence level over a prescribed close-out period. Variation margin collected at least daily, intraday on threshold breach. Stress-testing against credible but extreme scenarios. - 03
Cover-2 default fund
Mutualised default-fund tranche sized to absorb the simultaneous default of the two clearing members generating the largest credit exposure in extreme but plausible market conditions. Contributions graduated by member risk profile. - 04
Skin-in-the-game tranche
A dedicated Wavestar capital layer — on-balance-sheet and transparent — sits ahead of mutualised member contributions in the default waterfall. Alignment of incentives between clearing-house and membership. - 05
Orbital-native deliverables
Physical-settlement instruments — propellant kilograms, ISL Gbps-hours — delivered against signed observer attestations. DCO status encompasses the settlement attestation as part of the cleared-contract lifecycle. - 06
Recovery and resolution plan
Pre-filed recovery tools — assessment rights, VMGH, tear-up — and an orderly resolution pathway. Tested annually in regulator-observed exercises.
Core Principles
Compliance with Core Principles A through R.
Core Principle coverage — mapping summary
- A — Compliance
- Chief Compliance Officer + programme
Annual CCO report; quarterly board review.
- B — Financial resources
- Minimum liquid resources + skin-in-the-game
Quarterly stress of resources against top-two default.
- C — Participant and product eligibility
- Clearing-member admission criteria; contract listing policy
Fair, open and risk-based.
- D — Risk management
- Enterprise risk framework; margin methodology
Margin recalibration events documented; back-testing continuous.
- E — Settlement procedures
- T+0 atomic for cash; T+event for physical
Deterministic procedures with documented fail handling.
- F — Treatment of funds
- Segregated member funds; LSOC treatment
Legally-segregated-operationally-commingled for cleared swaps.
- G — Default rules and procedures
- Published waterfall; auction protocol
Tested in quarterly default simulation drills.
- H — Rule enforcement
- Investigation, discipline, appeals
Independent Rules Enforcement Committee at the board level.
- I — System safeguards
- Reg SCI-aligned resilience
- J — Reporting
- Daily, weekly, monthly and annual reports
Reported to CFTC; selected metrics published publicly.
- K — Recordkeeping
- Five-year minimum; transparency-log substrate
Signed, canonical, anchored.
- L — Public information
- Rulebook, fee schedule, key metrics
Published in the filings archive.
- M — Information sharing
- MOUs with peer regulators; FMI cooperation
International Organisation of Securities Commissions (IOSCO) principles.
- N — Antitrust considerations
- Rules reviewed for competitive impact
Compliance programme oversight.
- O — Governance
- Board independence; conflict protocols
See the governance page.
- P — Conflicts of interest
- Declared, managed, disclosed
Annual conflicts certification by all directors and officers.
- Q — Composition of governing boards
- Majority independent; risk-committee independence
Chairs of Risk and Audit committees are independent.
- R — Legal risk
- Robust legal framework; enforceability opinions
Netting enforceability opinions for every member jurisdiction.
Default waterfall
A waterfall designed for orbit — not equities or rates.
- Tier 1 · Defaulter IM
- First
- Tier 2 · Defaulter DF
- Second
- Tier 3 · Skin-in-the-game
- Third
- Tier 4 · Mutualised DF
- Fourth
- Tier 5 · Assessment
- Fifth
- Tier 6 · VMGH
- Sixth
- Tier 7 · Partial tear-up
- Seventh
- Resolution
- Final
Initial margin of the defaulting clearing member.
Default-fund contribution of the defaulting clearing member.
Wavestar's own committed capital — on-balance-sheet, transparent.
Non-defaulter default-fund contributions, cover-2 sized.
Recovery-period assessment on non-defaulters, capped per rulebook.
Variation-margin gains haircut on winners of the defaulted book.
Targeted tear-up of positions in the defaulted book, documented procedure.
Orderly resolution plan and, where needed, filed resolution-authority pathway.
Filing timeline
Twelve to eighteen months from pre-filing to effective DCO.
- Month 9Planned
Pre-filing engagement with CFTC DCR
Voluntary pre-filing meetings with the Division of Clearing and Risk. Framework walk-through, core-principle mapping, and preliminary discussion of the orbital-native settlement model. - Month 12Planned
Rulebook public-comment window
Publish draft DCO rulebook, margin methodology and default-management procedures for public comment. Responses incorporated into the Form 7-R package. - Month 18Planned
Form 7-R filed
Full Form 7-R filing submitted — legal opinions, financial resources attestations, Core Principle mapping, risk framework documentation. - Month 22Planned
CFTC completeness review
Completeness review and initial round of staff comments. Response deadlines coordinated with CCO. - Month 26Planned
Default management simulation
Regulator-observed default-management fire drill. Auction procedures, VMGH execution, and assessment mechanics exercised end-to-end. - Month 30Planned
Order of registration
CFTC issues an order registering Wavestar as a DCO. Continuous obligations attach; first annual CCO report schedule begins.
Ongoing obligations
Registered doesn't mean done.
A DCO that doesn't publish its waterfall isn't a DCO. It's a counterparty dressed up as infrastructure.
Public documents
The Form 7-R filings register.
CFTC filings register
- Form 7-R — Initial filing
Target filing window: month 18.
- Draft rulebook — public comment
Versioned in the transparency log; every revision signed.
- Margin methodology
Detailed parameters subject to confidential treatment; methodology summary is public.
- Default-management procedures
Auction protocol, VMGH mechanics, assessment caps.
- Annual CCO report
First report published twelve months after order of registration.
Next in the arc
From DCO clearing to SEF/DCM execution.
DCO status clears bilateral trades. SEF and DCM registrations add a pre-trade execution layer — central limit order books, request-for-quote, and exchange-traded instruments.