CME Group Reports First Credit Derivatives Trades Cleared

CME Group Inc. (CME) on Tuesday launched its long-awaited credit derivatives clearing service, opening up a new front for the derivatives exchange operator.

A CME spokesman confirmed that its clearinghouse had begun handling credit default swap transactions early Tuesday, but volume figures were not yet available.

A spokesman for Barclays Capital said that the bank had transacted one of the first trades on the CME platform for a customer around 3 a.m. EST on Tuesday.

CME's new venture, one of several exchange-backed efforts to apply the clearinghouse model to over-the-counter swap products, went live after months of wrangling and preparation to secure support from dealer banks that dominate trade in the $26.6-trillion credit derivatives market.

In early December, CME announced that eight banks had signed on as clearing members, after the exchange operator lined up agreements from a half-dozen asset managers and hedge funds earlier in the fall.

Rival IntercontinentalExchange Inc. (ICE) remains the leader in credit derivatives clearing, having handled around $4.3 trillion in notional contract value since launching its service in March.

CME, the world's largest derivatives exchange operator by volume, is also seeking to clear swap products tied to interest rates and foreign exchange, and looks to launch those services in 2010.

CME shares recently were down 0.6% at $330.92.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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