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. 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.  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. 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
Kimberly S. Taylor is president of CME Clearing.
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.
- U.S. Government Agencies
- Select Mortgage Backed Securities
- Letters of Credit
- Specialized Collateral Program: IEF5
Category 2 collateral is capped at 40 percent of core requirement per currency requirement.
- Specialized Collateral Program: IEF3
- Specialized Collateral Program: IEF4
- Corporate Bonds
- Foreign Sovereign Debt
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.
In October 2014 the clearing house announced that on January 2, 2015 it would institute changes to its collateral acceptance program which would result in clearing members being charged for the below asset types when posting collateral to meet client and house performance bond requirements:
- Exchange Traded Funds
- Foreign Sovereign Debt
- Mortgage Backed Securities
- Treasury Inflation Protection Securities
- U.S. Treasury Securities
- U.S. Government Agency Securities
- U.S. Treasury STRIPS
Fees will be calculated on daily balances and charged monthly.
(For more on collateral types and caps, see "Collateral Types Accepted for Futures, Options & Forwards" at the CME Group web site.)
- Clearing Overview. CME Group.
- CME Group Clearing. CME Group.
- Collateral Types Accepted for Futures, Options & Select Forwards. CME Group.
- CME Clearing House to change collateral program. CME press release via Futures Magazine.
- Summary. Eris Exchange.
- CME Clearing Financial Safeguards. CME Group.
- The Green Exchange. Green Exchange.