UPDATE 2-ICE Clear, Eurex able to clear CDS - SEC

* ICE Clear Europe, Eurex approved to clear CDS

* SEC says approvals will enhance quality of CDS market

* Oversight should reduce systemic risk - SEC

(Recasts. Adds detail on other clearinghouses, administration derivatives proposal)

WASHINGTON, July 23 (Reuters) - ICE Clear Europe and Eurex Clearing AG have been given permission to clear credit default swaps, a type of derivative that exacerbated the global financial crisis, the Securities and Exchange Commission said on Thursday.

The SEC approved conditional exemptions that will allow ICE Clear, owned by IntercontinentalExchange Inc (ICE.N) , and Eurex, a derivatives exchange owned by Deutsche Boerse (DB1Gn.DE), to operate as central counterparties.

The approvals should help to enhance the quality of the credit default swap market and the SEC's ability to protect investors, the commission said in a statement.

Policymakers on both sides of the Atlantic have been pushing for clearinghouses to clear derivatives such as credit default swaps (CDS) that are not traded on exchanges.

The swaps, used to insure against debt defaults and speculate on a borrower's credit quality, were central to the credit crisis and almost toppled insurer AIG (AIG.N).

A central counterparty would help to reduce risk in the financial system by assuming the risk if one party defaults.

The SEC has already granted temporary exemptions to allow others to operate as central counterparties for the swaps. Those include LCH.Clearnet Ltd, ICE US Trust LLC and the Chicago Mercantile Exchange Inc.

Clearing the swaps is one of the key components of the Obama administration's plan to overhaul the country's financial regulation.

The administration also wants to clamp down on the $450 trillion over-the-counter derivatives market and is pushing for substantially greater use of standardized derivatives, clearinghouses, exchanges and regulated electronic trading venues.

Facilitating the use of central counterparties should help address concerns about "counterparty risk, market transparency and market integrity associated with the credit default swap market, and thereby contribute to the goal of reducing systemic risk," SEC Chairman Mary Schapiro said in a statement. (Reporting by Rachelle Younglai; Editing by Ted Kerr and Steve Orlofsky)