Golden Opportunity
This fall, CME Group will launch clearing services for over-the-counter (OTC) London Gold Forward contracts through CME ClearPort, a set of flexible clearing services for the OTC market. With this new post-trade service for gold, counterparties such as banks can offset or hedge risk that they take on as part of their gold trading and lending business.
"Launching our clearing services for London Gold Forwards is in direct response to customers' need for a secure way to manage counterparty credit exposure," says Joe Raia, CME Group managing director, energy and metals products. "This post-trade service allows trades to be privately negotiated and executed off-exchange and then submitted through CME ClearPort for clearing."
"Counterparty credit concerns stemming from the global credit crisis have acted as a constraining influence on financial markets," says Barry Wainstein, Scotia Capital's vice chairman and deputy head, global capital markets and global head of foreign exchange and precious metals. "Introducing centrally cleared products, such as the London Gold Forwards, will assist in returning normalcy to the markets by mitigating counterparty credit risk."
Cleared London Gold Forwards can be set and agreed upon by counterparties to each transaction, according to the rules and regulations of the London Bullion Market Association. The delivery date can be set for any business day up to 10 years forward and can be set in increments of 100 troy ounces. The contract ends in physical delivery.
Entrepreneurial Spirit
CME Group Executive Chairman Terry Duffy and Chief Executive Officer Craig Donohue received an Ernst & Young Entrepreneur of the Year 2009 award in the Midwest region. The CME Group leaders won in the investment/financial services category.
Duffy and Donohue, as well as the other regional winners, are eligible for consideration for the Ernst & Young LLP Entrepreneur of the Year 2009 national awards in November.
Now in its 23rd year, Ernst & Young's Entrepreneur of the Year award is the world's most prestigious business award for entrepreneurs who demonstrate extraordinary success in the areas of innovation, financial performance and personal commitment to their businesses and communities.
Get on Board
CME Group is putting a bit of wind in the sails of a new race boat during the 2009 Chicago Match Race Center Regatta season at Chicago's Belmont Harbor.CME Group is sponsoring one of eight new Tom 28 match race boats, which will compete in four regattas in the inaugural season; three grade-3 events and one grade-2 event. Competitors include Olympic, American Cup and World Cup sailing veterans.
"The futures industry and the sport of match racing share the characteristics of being dynamic and fast paced," says Donald Wilson, chief executive officer of DRW trading and a Chicago Match Race Center (CMRC) founder. "As the founder of the Chicago Match Race Center, I am excited that CME Group has decided to sponsor CMRC in its inaugural year of operation."
Wait a Tick
In response to customer feedback, CME Group will increase, pending CFTC approval, the minimum trading increment for U.S. Treasury Bond futures from 1/2 of 1/32nd to 1/32nd.
"There is a renewed focus on the 30-year contract due to the recent uptick in the issuance in the long end of the Treasury curve," says Robin Ross, CME Group managing director, interest rate products. "Customer feedback indicates that increasing the tick size will broaden participation from active traders who provide much needed liquidity to this important sector of the Treasury market."
The minimum trading increments for futures intermonth and intercommodity spreads as well as options are unchanged.
Latin Connection
Continuing its strategy to link Latin American-based customers to leading risk management products, CME Group launched the Latin American Commercial Incentive program, which enables commercial hedgers to receive reduced fees on their proprietary trading of CME Group agricultural products.
Firms based in Latin America with a primary business that includes growing, trading, processing or merchandising agricultural commodities will qualify for the incentive. The program will be introduced to firms in 31 countries.
Earlier this year, CME Group launched a South American Incentive program, geared toward bank proprietary trading activity.
FIX/FAST Takes First
CME Group received an Inside Market Data 2009 award for "Best Real Time Market Data Initiative (Vendor)" for the migration of all customers receiving CME Globex market data in the legacy RLC format to the FIX/FAST market data feed in December 2008.
This seamless transition, which began in October 2007, involved customer and vendor development, certification, implementation of new software, as well as hardware and network upgrades. Overall, the migration encompassed 329 worldwide customer sites, 34 software vendors, 112 proprietary trading systems and 35 quote vendors.
FIX provides a standard market data format for reporting all forms of market prices and events, as well as support for book management. FAST is a compression technology that reduces the amount of bandwidth necessary to transmit data – and is especially effective at compressing market data.
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