Cleared OTC Interest Rate Swaps - Collateral Expansion

Corporate Bonds as Collateral for Cleared Interest Rate Swaps

CME Group currently accepts corporate bonds through a specialized collateral program called IEF4, supported by a partnership with Bank of New York, Brown Brothers Harriman & Co and JPMorgan Chase. The program allows clearing firms to transfer securities into a triparty account controlled by CME Group at either bank as a term pledge to receive margin credit. We are expanding the utilization of IEF4 to meet margin requirements through establishing a list of eligible CUSIPs that will be accepted through the program for the benefit of clearing members and clearing member clients.

Effective March 12, 2012, CME Group will allow corporate bonds to be pledged as initial margin collateral for Cleared OTC Interest Rate Swaps. Previously, we only accepted corporate bonds as collateral for futures. With this expansion, Clearing Members will be able to post up to $5 Billion in select assets, including corporate bonds, with specific limits determined by the needs and margin requirements of their customers. Read this paper from CME Clearing for further details.

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As the world's leading and most diverse derivatives marketplace, CME Group 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 the CME Globex electronic trading platform and 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.

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CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX, and COMEX.