CME Clearing believes providing transparency on its practices is of the utmost importance. To that end, we publish a variety of documents to educate and provide details on our practices, particularly our risk management practices. CME Clearing continually seeks to work with clearing members and customers to provide them added transparency.
CME Clearing employs a variety of tools to actively manage risk to provide optimal risk management protections, including clearing membership requirements, margining, stress testing, counterparty and liquidity risk monitoring, and operational risk management, among others.
We have established two independent financial safeguards waterfalls, one for Base products (e.g., futures and options) and one for IRS products. The risk management practices and resources for managing a clearing member default event for each of these waterfalls is described further in the document below, among other documents linked on this page.
CME Clearing Risk Management and Financial Safeguards
Size of the Financial Safeguards Waterfalls
Financial Safeguards Waterfall oOerview
Overview of Stress Testing Practices
Liquidity Risk Management Overview
Counterparty Credit Risk Overview
Performance bond, often referenced as margin, is a good-faith deposit to guarantee performance of open positions against potential future losses. Performance bond requirements are designed to provide coverage for a minimum of 99% of market moves. Requirements are calculated at least once daily for clearing member and customer portfolios, but twice daily in most cases.
Product-level Margins for Exchange-Traded Derivatives
IRS Products Margining Overview
Overview of Performance Bond Practices
Customer Protection and Segregation Overview
Overview of Customer Margining at CME Clearing
CME Clearing employs a policy for establishing and reviewing criteria for acceptable collateral to meet performance bond and Guaranty Fund obligations. While CME Clearing’s collateral acceptance policy is appropriately prudent, it accepts a diverse set of asset types to meet clearing members’ and customers’ needs. Certain collateral types are subject to collateral haircuts and limits.
The Principals for Financial Market Infrastructures define international standards for clearing risk management practices. Consistent with these standards and CFTC regulations, CME Clearing publishes qualitative and quantitative disclosures, available below.
These disclosures were created to help improve the overall transparency of global clearing houses. The qualitative disclosures detail CME Clearing’s margining, stress testing, collateral acceptance, counterparty and liquidity risk management practices, and more. The quantitative disclosures provide data points relative to these practices.
For questions regarding the CPMI-IOSCO Qualitative and Quantitative Disclosures, please contact CMEPFMIResponse@cmegroup.com.
Our Board of Directors sets high standards for CME Group, providing governance and oversight for the safety and efficiency of CME Clearing. In fulfilling its oversight and governance responsibilities, the Board of Directors has established and delegated responsibilities to dedicated committees to focus on specific governance matters, including the Clearing House Oversight Committee, Clearing House Risk Committee, and IRS Risk Committee.
The Board of Directors’ Corporate Governance Principles and responsibilities of each of these committees are set forth in written charters, that are publicly available. The Board of Directors also has complete and open access to members of the senior management, including the President of CME Clearing.
CME Certificate of Incorporation
Board of Directors’ Corporate Governance Principles
Members of the Board of Directors
Members of the Management Team
Committees Established by the Board of Directors
CME Clearing provides fair and open access to its clearing services by establishing appropriate admission and continuing participation requirements for clearing members that are objective, public and risk-based. Clearing members assume full financial and performance responsibility for all transactions executed through them and cleared by CME Clearing.
The Clearing Membership Handbook, available below, is designed to familiarize firms with the requirements for clearing membership that are defined in the rules and to assist them in becoming clearing members. Additionally, the list of current clearing members and the application to become a clearing member are available below.
The rules underpinning CME Clearing’s practices, including obligations of clearing members, are publicly available below. All rule changes are filed with the CFTC pursuant to its standardized format and publicly available below.
To reduce the accumulation of debt in the system, all products cleared by CME Clearing are settled at least once daily. CME Clearing facilitates the exchange of settlement variation by requiring payments from clearing members whose positions have lost value and making payments to clearing members whose positions have gained value. Settlement procedures, available below, are defined for the normal daily settlement and final settlement of CME Group’s futures and options.
As a qualifying central counterparty CME Clearing is required to make available or calculate required data for purposes of calculating capital requirements for default fund (i.e., Guaranty Fund) exposures under the Basel III capital framework. CME Clearing computes the risk weight or ‘c-factor’ value bank or bank-affiliated clearing members may utilize in determining the amount of regulatory capital to be held against default fund contributions.
CME Clearing understands the value of keeping you informed of changes and innovations in our operations. As such press releases, clearing advisories, and market regulation advisories are publicly available.
View transaction timelines, including banking timelines, and the CME Clearing’s holiday trading calendar.
View a list of CME Group contacts.