CME Group Launches Credit Default Swaps Initiative; Begins Clearing Trades
December 15 2009 - 1:48PM
PR Newswire (US)
CHICAGO, Dec. 15 /PRNewswire-FirstCall/ -- CME Group, the world's
largest and most diverse derivatives marketplace, today announced
that with the necessary regulatory approvals in place, it has begun
clearing credit default swaps (CDS) through CME Clearing. On its
first day of clearing, CME Group cleared both dealer to customer
and interdealer CDS trades. "Working closely with market
participants on both the buy side and sell side we have begun to
successfully clear CDS trades," said Laurent Paulhac, Managing
Director, OTC Products and Services, CME Group. "We believe our
solution is the most comprehensive credit default swap solution
available and brings together a broad range of participants who
support our offering." "BlackRock will clear CDS based on the
segregation and portability of customer collateral and the
operational benefits provided by CME," said Richard Prager, Global
Head of Fixed Income Trading, BlackRock. "We are pleased with the
progress made with respect to ensuring transparency by leveraging
the CME's proven risk management practices. We are excited that CME
has launched its CDS clearing service and look forward to further
participation." "Our firm supports the development of clearing
solutions which address the primary concerns of the investor
community, which are the reduction of counterparty risk and
development of regulatory regimes which protect customer margin and
allow for trade portability following a dealer default," said Ted
MacDonald, Treasurer of the D. E. Shaw group. "In this regard, we
welcome the ability of our dealer counterparties to clear CDS
transactions through a clearinghouse with both significant capital
backing up trades and dedicated reserves which could be accessed by
the other dealers should a clearing member default." "The advent of
central clearing of CDS for clients is a significant milestone and
underscores the dealer community's commitment to help bring central
clearing to investors," said Paul Mitrokostas, Chief Operating
Officer, Credit Trading Barclays Capital. "We look forward to
introducing our clients to the significant benefits of central
clearing." "The CDS market continues to make enormous progress with
respect to the reduction of operational and systemic risk," said
James Hill, Managing Director and Global Credit Derivatives Officer
at Morgan Stanley. "Providing clients with access to clearinghouses
for CDS transactions is a very important step in this evolution and
we are happy to have worked closely with the CME, the dealer
community and buy side firms to make this happen." CME Group's
cleared-only CDS initiative, which was jointly developed with its
founding members, offers both buy-side and dealer market
participants the ability to clear CDS. The dealer founding members
are Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman
Sachs, J.P. Morgan, Morgan Stanley, and UBS. The buy-side founding
members are AllianceBernstein, BlackRock, BlueMountain Capital
Management, Citadel, the D. E. Shaw Group and PIMCO. In addition,
Bank of America Merrill Lynch and Nomura Group are CDS clearing
member firms. CME's clearing solution provides participants with an
open-access clearing solution for over-the counter credit default
swaps, is based upon cleared CDS products that will mirror OTC
market conventions and practices and incorporates the proven
benefits of CME Group's clearing model. Additional information can
be found at http://www.cmegroup.com/cds. As the world's largest and
most diverse derivatives marketplace, CME Group
(http://www.cmegroup.com/) is where the world comes to manage risk.
CME Group exchanges offer the widest range of global benchmark
products across all major asset classes, including futures and
options based on interest rates, equity indexes, foreign exchange,
energy, agricultural commodities, metals, weather and real estate.
CME Group brings buyers and sellers together through its CME
Globex® electronic trading platform and its trading facilities in
New York and Chicago. CME Group also operates CME Clearing, one of
the largest central counterparty clearing services in the world,
which provides clearing and settlement services for exchange-traded
contracts, as well as for over-the-counter derivatives transactions
through CME ClearPort®. These products and services ensure that
businesses everywhere can substantially mitigate counterparty
credit risk in both listed and over-the-counter derivatives
markets. The Globe logo, CME, Chicago Mercantile Exchange, CME
Group, Globex, E-mini and CME ClearPort are trademarks of Chicago
Mercantile Exchange Inc. CBOT and Chicago Board of Trade are
trademarks of the Board of Trade of the City of Chicago. NYMEX and
New York Mercantile Exchange are trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All
other trademarks are the property of their respective owners.
Further information about CME Group (NASDAQ:CME) and its products
can be found at http://www.cmegroup.com/. CME-G DATASOURCE: CME
Group CONTACT: Media, Michael Shore, +1-312-930-2363, or Allan
Schoenberg, +1-312-930-8189, , or Investors, John Peschier,
+1-312-930-8491, all of CME Group Web Site: http://www.cme.com/
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