About Central Counterparties

The presence of a central counterparty like CME Clearing is an important customer advantage compared to over-the-counter markets. CME Clearing’s status as the central counterparty allows it to deliver operational and financial efficiencies to market participants, while reducing the risk inherent in trading activities.

Upon a transaction’s acceptance by CME Clearing, a central counterparty (CCP) imposes itself as the legal counterparty to every trade. This substitution of counterparties is accomplished through the legal process of contract novation, which discharges the contract between the original trading counterparties and creates two new, legally binding contracts – one between each of the original trading counterparties and CME Clearing.

Initially devised as a mechanism to reduce transaction costs by calculating members’ net obligations to post margin and to settle contracts, the role of the CCP has expanded over time to include:

  • Robust transaction processing
  • Post trade management functions
  • Financial management of members collateral deposits
  • Final settlement of outstanding obligations through financial payment or physical delivery
  • The overall risk management of market participants
  • A financial guarantee of performance of its contracts

CME Clearing prides itself on developing innovative solutions to the marketplace along with superior customer service, available 24-hours a day, six days a week. Indeed the many benefits derived from the role of CME Clearing as CCP have helped customers manage risk during both periods of unprecedented derivatives industry growth and times of economic uncertainty.

Futures & Options Trading

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.