SEC Grants CME Group and CMDX Special Exemption to Clear and Trade Credit Default Swaps
March 13 2009 - 5:38PM
PR Newswire (US)
CHICAGO, March 13 /PRNewswire-FirstCall/ -- CME Group, the world's
largest and most diverse derivatives exchange and its associated
joint venture, CMDX, today announced that they have received a
special exemption from the U.S. Securities and Exchange Commission
(SEC) for clearing and trading credit default swaps (CDS) through
CME Clearing and the CMDX platform. With this exemption, CME Group
and CMDX have completed the regulatory reviews necessary to launch
CDS clearing and trading in the U.S. The SEC exemption allows CME
Group to use its existing clearing membership structure to offer
CDS clearing services backed by CME's industry-leading financial
safeguards package of approximately $7 billion. Clearing members
that are registered FCMs or Broker-Dealers will be able to clear
CDS trades on behalf of their qualified customers. CME Group will
utilize its robust portfolio-based margin methodology for
determining index and single name margin requirements. "We are
pleased to have successfully completed the U.S. regulatory review
process," said CME Group Executive Chairman Terry Duffy. "We are
confident our significant financial safeguards package and the
proven counterparty risk management framework of CME Clearing,
which has protected investors across a range of financial
instruments more than 100 years, can bring stability to the CDS
market." "As the CDS market migrates to a central counterparty
clearing model, participants will benefit from the financial
strength and risk management capabilities of CME Clearing - the
largest derivatives clearing organization in the world," said CME
Group Chief Executive Officer Craig Donohue. "CMDX and CME will
offer the most complete CDS solution for all market participants,
providing segregation of customer funds and positions, and the
broadest product offering, including all major CDS indices and
single-names." An open solution for CDS products, CMDX will use the
proven clearing, settlement and risk management capabilities of CME
Clearing. CMDX provides straight-through processing to CME Clearing
through CMDX's migration utility, trade booking facility and
trading platform. CME Group will also provide CDS clearing services
to market participants who submit trades directly or via
inter-dealer brokers or other execution venues. With the SEC
exemption, CME Clearing and CMDX can now offer market participants
key benefits that are distinguished from today's OTC market and
other clearinghouses. These distinguishing characteristics include:
-- A time-tested legal and regulatory framework that protects both
customer positions and margin. In the event that a CME clearing
member was to default on their proprietary positions, all customer
positions and collateral will be fully protected. -- A state of the
art clearing, settlement and risk management solution that provides
significant improvements over the existing OTC CDS infrastructure.
-- A mutualized guaranty fund of approximately $7 billion, which
provides unmatched protection for market participants. For more
information, please visit http://www.cmdx.com/. About CME Group CME
Group (http://www.cmegroup.com/) is the world's largest and most
diverse derivatives exchange and clearinghouse. Building on the
heritage of CME, CBOT and NYMEX, CME Group serves the risk
management needs of customers around the globe. As an international
marketplace, CME Group brings buyers and sellers together on the
CME Globex electronic trading platform and on trading floors in
Chicago and New York. By acting as the buyer to every seller and
the seller to every buyer, CME Clearing virtually eliminates
counterparty credit risk. CME Clearing also offers financial
safeguards to help mitigate systemic risk, providing the security
and confidence market participants need to operate, invest and
grow. CME Group offers the widest range of benchmark products
available across all major asset classes, including futures and
options based on interest rates, equity indexes, foreign exchange,
energy, agricultural commodities, metals, and alternative
investment products such as weather and real estate. CME Group is
listed on NASDAQ under the symbol "CME." 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 and its products can be found at http://www.cmegroup.com/.
About CMDX CMDX is an open-architecture electronic trading, trade
booking, and migration/clearing-only platform for credit default
swaps open to all qualified commercial market participants. Trades
executed, booked or migrated through CMDX are processed directly to
CME Clearing for multilateral netting and centralized clearing.
CMDX has been formed by joint efforts by CME Group and Citadel
Investment Group. CME Clearing is the exclusive provider of risk
management and clearing services for CMDX and follows CME
Clearing's well established policies and processes. More
information can be found at http://www.cmdx.com/. CME-G DATASOURCE:
CME Group CONTACT: Media, Anita Liskey, +1-312-466-4613, or Allan
Schoenberg, +1-312-930-8189, , or Investors, John Peschier,
+1-312-930-8491, all of CME Group Web Site:
http://www.cmegroup.com/
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