As the counterparty to every trade, CME Clearing settles accounts, clears trades, collects and maintains performance bonds/margins, regulates delivery and reports data. It is the world's largest derivatives clearing facility, processing more than one billion trades per year.

To view a list of CME Clearing firms, please click here.

CME Clearing offers a number of financial and risk management benefits:

• The clearing member structure
• Maintenance of membership requirements
• Collection of initial and variation margin in support of member positions
• Multi-lateral netting
• Margin offsets against correlated positions
• Economies of scale and scope in computer processing
• Market monitoring
• Mutualized risk

About Central Counterparties
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.
CME Clearing’s status as the CCP allows it to deliver operational and financial efficiencies to market participants, while reducing the risk inherent in trading activities. 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 drive the unprecedented growth in CME Group markets.

About Transaction Processing
CME Clearing builds and maintains clearing systems with the capacity to process the current and anticipated transaction volumes of CME Group – currently exceeding one billion trades per year. Our systems are designed to:

• Reliably process transactions in the most efficient manner
• Reduce member firm operational risk
• Supporting the physical delivery of instruments in settlement of contracts.

Matched transactions submitted are accepted and novated with trades recorded, posted to current position accounts, and managed by post-trade applications available to authorized member firm personnel through the Front-End Clearing system.

©2008 CME Group, Inc.