CME To Rework Financial Safeguards For CDS Clearing Platform

CME Group Inc. (CME) is planning to rework financial safeguards for its derivatives clearing platform for credit default swaps over the next quarter or two, establishing a separate default fund for CDS clearing, the company said Tuesday.

When CME first launched CDS clearing on Dec. 15, 2009, it was backed up by its roughly $8 billion futures and options default fund, which benefited from capital contributions from the exchange's CDS clearing members.

The change will not have a big operational impact on customers, said Laurent Paulhac, head of OTC products and services at CME Group.

"We will be relaunching our CDS clearing solution using a separate default fund structure," said Paulhac. "It has been a learning process; originally we thought there would be more benefits and efficiencies by putting it all together."

-By Katy Burne, Dow Jones Newswires; 212-416-3084; katy.burne@dowjones.com

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