The Clearing Corporation
|The Clearing Corporation|
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.
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.
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. 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.
On Dec. 20, 2007, CCorp announced a restructuring of its ownership to 17 stockholders, including 12 dealers, three inter-dealer brokers and Eurex. It also announced plans to enter the OTC market, initially through credit default swaps.
Under the restructuring, all shares in CCorp, which remained a Delaware corporation, were held by:
- Bank of America
- Bear Stearns
- Credit Suisse
- Deutsche Bank
- Goldman Sachs
- JP Morgan
- Lehman Brothers
- Merrill Lynch
- MF Global
- Morgan Stanley
- GFI Group
- Creditex Group
- Markit Group
On May 29, 2008, CCorp and The Depository Trust & Clearing Corporation (DTCC) signed an agreement to provide central counterparty services (CCP) for the over-the-counter (OTC) derivatives market. Under the agreement, CCorp will offer its netting and risk management processes to its members for OTC trades, and DTCC will provide the capabilities of its Trade Information Warehouse (Warehouse). The Warehouse is the industry's only global repository and centralized post-trade infrastructure for OTC credit derivatives. The agreement with DTCC would allow CCorp members to use CCorp as the central counterparty (CCP) guarantor for OTC contracts in credit derivatives while continuing to utilize the Warehouse as the "golden" record for net open positions and post trade processing. The launch of this initiative is planned for the 3rd quarter off 2008.
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. The acquisition closed on March 6, 2009, and CDS products began trading on March 9, 2009.
As of July 8, 2011, ICE Trust has cleared over $18.3 trillion in gross notional value in CDS.
- Thomas J. Hammond, President
- Kevin R. McClear, Chief Operating Officer, General Counsel and Corporate Secretary
Kevin McClear had previously served as general counsel, vice president and secretary of CCorp.
- Intercontinental, Clearing Corp. Merger Is Approved. Bloomberg.
- Clearing Corporation History. The Clearing Corporation.
- Official history. CCorp.
- BOTCC seeks investors after Chicago quits. Financial Times.
- CBOT 'Rubik cube' nearer to a solution. The Financial Times.
- Press release. The Clearing Corporation.
- CCorp and DTCC Announce Credit Default Swap Clearing Facility. www.clearingcorp.com.
- ICE in takeover of Clearing Corporation. Financical Times.
- ICE Trust to Begin Processing and Clearing Credit Default Swaps March 9. ICE.
- [https://www.theice.com/publicdocs/ICE_CDS_Fact_Sheet.pdf ICE CDS Clearing: Leading Risk Management Services for Credit Derivatives]. ICE.
- About Us. The Clearing Corporation.
- Clearing Corp Announces New Officers. The Clearing Corporation.
- Dennis A. Dutterer. Dubai Mercantile Exchange.