CME ClearPort

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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.[1] ClearPort is a deal entry platform to clear OTC swap with CME group, it is not a trading platform. [2]

CME ClearPort Clearing provides traders an interface where transactions are posted, margin requirements are calculated, and the transactions are processed by the clearinghouse in the same manner as the NYMEX Division futures contracts. Trades can also be made off of the exchange and submitted for clearing through ClearPort Clearing as an exchange of futures for physicals (EFP) or exchange of futures for swaps (EFS).

Nearly 650 over-the-counter contracts are listed for clearing through the platform. Most of these OTC contracts have no on-exchange counterpart; they are only available for clearing.[3]

ClearPort is an open system. This means that trading firms can customize their front-end software to meet their specific trading requirements. The system lets commercial traders quote transactions in standard commercial units - such as barrels or British thermal units - while converting them to cleared contract equivalents. It uses enterprise-wide credit limits across both traded and cleared-only transactions to allow for efficient risk management. It also supports negatively priced contracts allowing the trading of location, quality and product differentials.

All market participants desiring to execute transactions on ClearPort must first establish an account with an exchange clearing member firm.

The most common method to enter ClearPort trades has been via Exchange for Risk (EFR)* or Exchange of Options for Options (EOO) mechanisms, with an underlying “transitory” swap in many instances.

Customers have three options for reporting trade for clearing through CME ClearPort. One option is that a broker enters trade into CME ClearPort web-based user interface (GUI) or CME ClearPort API. Another option is that one of the traders calls the CME ClearPort facilitation desk. The facilitation desk then contacts other trader to confirm the deal. When the desk has confirmation from both parties, it processes the trade. The third option is that two traders are matched by a third-party matching/confirmation platform. The matching platform writes trade directly into CME ClearPort API. [4]

Execution is privately negotiated swaps for EFR/EOO transactions that are subsequently cleared as futures.[5]

History

The New York Mercantile Exchange's ClearPort platform, launched in 2002, was re-named CME ClearPort after the CME Group acquired NYMEX Holdings, Inc. in a transaction that closed on Aug. 22, 2008. The CME links to the ClearPort front-end system for clearing OTC energy and metal contracts.[6]

The system lets market participants take advantage of NYMEX's clearinghouse and around-the-clock access to more than 260 energy futures contracts including natural gas location differentials; electricity, crude oil spreads and outright transactions; refined product crack and location spreads and outright transactions; and coal. Almost all of the energy swaps that are processed through ClearPort are converted into futures contracts. The grain swaps CME added since acquiring NYMEX, however, remain OTC contracts even after clearing.[7]

CME Group is offering clearing of spot and forward gold transactions at London Bullion Market Association through CME ClearPort.[8] The move is intended to provide counterparty credit risk mitigation services to the OTC London gold forward market by providing centralized clearing, settlement and delivery for OTC London unallocated gold forwards.[9]

Resources

NYMEX ClearPort services

CME ClearPort Broker Directory [[1]]

References

  1. CME ClearPort. NYMEX.
  2. CME ClearPort. CME group.
  3. The Many Flavors of OTC Clearing. Futures Industry Magazine.
  4. CME ClearPort. CME Group.
  5. Regulatory overview and CME ClearPort update. CME Group.
  6. CME and Citadel Partner to Trade and Clear OTC Derivatives. Securities Industry News.
  7. The Many Flavors of OTC Clearing. Futures Industry Magazine.
  8. Cleared OTC London Gold Forwards. CME Group.
  9. Cleared OTC London Gold Forwards. CME Group.