CME Clearing

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ALSO SEE: CME Group

CME Clearing is the division of the CME Group's that handles clearing of futures, options and swap trades. It acts as the counterparty between buyers and sellers, thus virtually guaranteeing the creditworthiness of every transaction and mitigating the risk of default.[1] CME Clearing monitors and processes more than one billion trades each year, worth more than $1,000 trillion, and stands behind the financial integrity of each transaction. [2] In its history, CME Clearing has never experienced a default. The guarantee fund for CME Clearing has $8 billion.

CME Clearing handles clearing of trade for CME Group exchanges, including CME, CBOT, NYMEX and COMEX.[2] The division puts buyers together with sellers through a number of venues, including the CME Globex electronic trading platform, open outcry trading facilities in Chicago and New York, cleared privately negotiated transactions, and an array of clearing services offered through CME ClearPort.

CME Clearing encompasses a number of subsidiaries and additions, including:

  • CME Clearing Europe, a London-based wholly-owned subsidiary of CME Group, clears more than 200 OTC products and handles OTC contracts including: energy, agriculture, freight and precious metals, with plans to include OTC financial derivatives. The move to launch CME Clearing Europe stemmed largely from the European Market Infrastructure Regulation (EMIR) which is due to start in 2013 and force mandatory clearing of OTC trades.
  • CME Clearing360 offers central clearing for specially designated over-the-counter trades.
  • CME Clearport (formerly NYMEX ClearPort) is a set of clearing services open to OTC market participants. The services are designed to help customers mitigate counterparty credit risk.
  • CME SPAN

Contents

Key People

Kimberly S. Taylor is president of CME Clearing.

Collateral

Three types of collateral are accepted by the CME Clearing division to back trades. The wide range of collateral includes U.S. dollars, select foreign currencies, U.S. Treasuries, select foreign sovereign debt, asset-backed securities and agency bonds.[3]

Category 1

Category 2

Category 2 collateral is capped at 40 percent of core requirement per currency requirement.

Category 3

Category 3 collateral is capped at 40 percent of core requirement per currency requirement or $3 billion per Clearing Member Firm, the lesser of the two.

(For more on collateral types and caps, see "Collateral Types Accepted for Futures, Options & Forwards" at the CME Group web site.)

Clearing Services

CME Clearing provides outside clearing services for other exchanges, including Eris Exchange and Dubai Mercantile Exchange (DME).[4] [5]

Previously, CME Clearing provided clearing services for GreenXchange. Those contracts migrated to NYMEX in 2012 following CME Group's purchase of the balance of the ownership of the exchange.[6]

Resources

References

  1. Clearing Overview. CME Group.
  2. CME Group Clearing. CME Group.
  3. Collateral Types Accepted for Futures, Options & Select Forwards. CME Group.
  4. Summary. Eris Exchange.
  5. CME Clearing Financial Safeguards. CME Group.
  6. The Green Exchange. Green Exchange.


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