The Clearing Corporation

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The Clearing Corporation
Clearing Corp logo.gif
Founded 1925
Headquarters Chicago
Products Clearing services
Website www.clearingcorp.com

The Clearing Corporation is a wholly-owned subsidiary of the IntercontinentalExchange (ICE), and provides the risk management and clearing framework for ICE Clear Credit and ICE Clear Europe, which clear credit default swaps.

In 1925, The Clearing Corporation ("CCorp"), then named The Board of Trade Clearing Corporation (BOTCC), became the first independent clearinghouse for futures markets in the United States. CCorp was formed as a clearing organization independent from the CBOT, but for many years it cleared only for the CBOT. Much later it was used as a clearinghouse by the Chicago Climate Futures Exchange, which remains a current clearing participant, and the US Futures Exchange. In March of 2009, U.S. authorities approved ICE’s acquisition of Clearing Corp., advancing an effort to create a clearinghouse for the $27 trillion credit-default swap market.[1]

Since CCorp's opening in 1925, no customer has lost money as a result of a default by a clearing participant to The Clearing Corporation.[2]

History

The Board of Trade Clearing Corporation was founded by the Chicago Board of Trade membership on Sept. 3, 1925.[3]

The BOTCC changed its name after the Chicago Board of Trade (CBOT) moved its clearing business to the Chicago Mercantile Exchange's clearing organization in 2003.[4] This move was exacerbated by BOTCC's agreement to clear Eurex US business, at that time thought to be in direct competition with the CBOT due to the duplicate products being offered to traders by both exchanges.[5]

On Dec. 20, 2007, CCorp announced a restructuring of its ownership to 17 stockholders, including 12 dealers, three inter-dealer brokers and Eurex[6]. It also announced plans to enter the OTC market, initially through credit default swaps.

Under the restructuring, all shares in CCorp, were held by a consortium of banks and brokerage houses, including Bank of America, Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, MF Global, Morgan Stanley, UBS, Eurex, GFI Group, ICAP, Creditex, and Markit.

On Oct. 30, 2008, The Intercontinental Exchange (ICE) announced a deal with CCorp to purchase the clearinghouse as part of its ongoing efforts to break into the credit default swaps market.[7] The acquisition closed on March 6, 2009, and CDS products began trading on March 9, 2009.[8]

As of July 8, 2013, ICE Clear Credit has cleared $25 trillion in gross notional value in index and single name CDS, and ICE Clear Europe has cleared nearly EUR 13 trillion in gross notional CDS.[9]

Key People

Kevin McClear had previously served as general counsel, vice president and secretary of CCorp.

Brett Paulson was previously the president and COO.[10][11]

Previously, Dennis Dutterer was a long-serving CEO and president of CCorp, where he worked for 20 years.[12]

References

  1. Intercontinental, Clearing Corp. Merger Is Approved. Bloomberg.
  2. Clearing Corporation History. The Clearing Corporation.
  3. Official history. CCorp.
  4. BOTCC seeks investors after Chicago quits. Financial Times.
  5. CBOT 'Rubik cube' nearer to a solution. The Financial Times.
  6. Press release. The Clearing Corporation.
  7. ICE in takeover of Clearing Corporation. Financical Times.
  8. ICE Trust to Begin Processing and Clearing Credit Default Swaps March 9. ICE.
  9. Volume. ICE Clear CreditICE.
  10. About Us. The Clearing Corporation.
  11. Clearing Corp Announces New Officers. The Clearing Corporation.
  12. Dennis A. Dutterer. Dubai Mercantile Exchange.
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