CME Group will offer clearing of OTC London Gold spot and forward transactions through CME ClearPort. By offering our clearinghouse experience, financial safeguards and post-transaction services, CME Group is uniquely positioned to provide counterparty credit risk mitigation services to the OTC London gold forward market. This service will provide centralized clearing, settlement and delivery for OTC London unallocated gold forwards (no conversion to futures).
Clearing services for house business will commence on August 23 for trade date August 24, with customer segregated activity following within 90 days of commencement. These contracts are made available for clearing on COMEX through CME ClearPort, and are subject to COMEX and CME rules and regulations.
Key Features
- This is a post-trade clearing service - execution remains in the OTC market
- Contracts remain as forwards in clearing and are not converted to futures contracts. Every trade establishes a new open position. There is no liquidation. Upon reaching delivery, positions are netted down and CME Clearing remains in the delivery process. Delivery occurs at London Precious Metals Clearing (LPMCL) member banks using "London Good Delivery Gold."
- Open trades are held on a gross basis at their original trade price.
- Each business day, every open trade is marked from original trade price to the daily settlement price, with +/- differentials discounted to present value. The resulting net discounted mark-to-market amount is "collateralized." That is, it establishes a margin (performance bond) credit or liability.
- Clearing coverage for all good forward maturities that are physically deliverable into unallocated "London Good Delivery" gold (as defined by the LBMA) extends 10 years out.
 To view contract specifications and further information, please click here.
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