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CME Group/Chicago HQ
Local: +1 312 930 1000
Toll Free: +1 866 716 7274
Global Customer Contacts
Product inquiries, website issues,
and specific questions
Phone: +1 312 930 2316
Toll Free: +1 800 331 3332
More CME Group Direct Lines
Phone list by department
What Is Clearing?
People who buy and sell futures contracts on a futures exchange do not buy and sell directly to one another. They actually buy contracts from and sell contracts to a clearing house, which stands in between all trades to ensure that the obligations involved in the trades are made good.
By serving as the buyer to every seller and the seller to every buyer, the clearing house virtually eliminates credit risk for each market participant.
Why Central Counterparties Are Important
A central counterparty provides an important customer advantage compared to over-the-counter markets – the OTC markets.
In those markets, participants trade directly with one another. This leaves them open to the possibility of default by one of the parties to the trade. Central clearing was created to remove that risk.
What Is a Clearing House?
A clearing house is a financial institution comprised of members, highly capitalized, closely monitored and carefully selected companies that keep funds on deposit with the clearing house. Clearing members represent the trades of their customers and vouch for the soundness of their customers’, as well as their own, accounts.
The Legal Term: Novation
The substitution of counterparties is accomplished through a legal process called contract novation.
Novation discharges the contract between the original trading counterparties and creates two new, legally binding contracts – one between each of the original trading counterparties and the central counterparty.
Other Roles of the Central Counterparty
The role of the central counterparty has expanded over time to include:
Why CME Clearing
By marking positions to market twice each day, CME Clearing helps to limit the accumulation of losses or debt - helping each customer manage its risk as well as containing risk for the market as a whole.
CME Clearing is available 24-hours a day, six days a week. It has helped customers manage risk during periods of unprecedented derivatives industry growth and times of economic uncertainty.