CME Group Clearing360

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CME Group extended its existing clearing services to the over-the-counter (OTC) marketplace with the introduction of Clearing360.

The Clearing360 program offers central clearing for specially designated over-the-counter trades. To participate in Clearing360 services you need to be a CME clearing member or have a relationship with a CME clearing member firm. [1]

The first OTC marketplace able to participate in this new service is the short-term interest rate swap marketplace (which parallels the CME Group Eurodollars market) and the CME Group weather products. CME expects to extend CME Clearing360 services to more markets in the future. CME Clearing360 will allow hedge funds, proprietary trading firms and global and regional banks to substitute OTC trades for cleared-only futures or options positions, providing clients access to the same performance guarantees that have previously only been available with exchange-traded products. [2]

Clearing360 includes transactions executed on FXMarketSpace, cleared interest rate swaps, block trades executed through Pivot, ethanol calendar swaps and substitutions. CME Group also serves OTC market participants in the credit derivatives markets through its subsidiary CMA.[3]

Products offered for substitution include substituting Eurodollar futures for similar OTC interest rate products such as swaps and FRAs, and substitutions on Euroyen and LIBOR futures. [4]

The CME Clearing360 application programming interface provides a new and more efficient means to report privately-negotiated trades and get them submitted to clearing. The goal is to make processing easier and more straight-through for traders, brokers and clearing firms. The new “CME Clearing360 Trade Reporter” feature of the CME EOS Trader user interface is one of the most important applications which can write to the API. Using the Web-based Trade Reporter application, for example, a trader can report a block trade in a Eurodollar options strategy. The API will:

  • Price all the legs of the strategy;
  • Verify that the trade conforms with minimum quantity rules for Eurodollar blocks;
  • Eliminate the need for a phone call to the CME Group Globex Control Center (GCC), and cause the trade to be reported to the market;
  • Submit the trade to clearing and;
  • Cause the trade automatically to be loaded to the two clearing firms, once the trade has either passed a credit check on both sides, or been explicitly accepted.[5]