An Alternative to Traditional Bond Performance Collateral

In October 2009, CME Clearing became the first clearing house to allow firms to post physical gold to cover non-segregated (NSEG) performance bond requirements. This enhancement continues to be available to customers as an alternative to traditional performance bond collateral.

There is a 15% asset haircut on the market value of all gold deposits. Gold is a category three asset. As such, gold is eligible either on its own or on a combined basis with IEF4, Foreign Sovereign Debt, and Stock for 40% of core requirement per currency requirement or $3 billion per Clearing Member Firm, whichever is the lesser of the two. There is a firm asset limit of $500 million. These guidelines are evaluated on a regular basis and are subject to change.

Fees for storage, insurance and handling are assessed by the custodian and passed on to the firms each month. Please contact the financial unit for storage fees for each custodian. CME Clearing sends pre-notification via email to back office managers each month, which reflect the date that these monies are debited directly from your firm’s house account.

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