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The submitter may additionally provide a trade identifier to identify the single-sided trade. CME ClearPort validates the trade for product, account and credit (if explicit claim by the clearing firms is not required) and acknowledges the submitter after assigning a trade identifier to the single-sided trade. A failure of any of the required validations results in the trade being rejected by CME ClearPort.
Match occurs when when the opposite side submits a single-sided trade, based on the match criteria defined for the asset class. Participants can request all the alleged trades where the participant is the counterparty and then submit their side of the deal.
If a match does not occur, the trade remains in an “Unmatched” state in CME ClearPort until the contract expires. Once a match occurs, sends a single-sided match notification to both the submitters (MQ) and updates the trade status to reflect the match (HTTP and WebSphere MQ) after assigning a Deal Id with a status of Cleared or Pending Clear. CME ClearPort will use one of the following risk limit check model based on the asset class and account account profile.
The API also supports submitting allocations while submitting single sided trades. Any allocations submitted with the trade, will not participate in the matching process. For details on the matching process and match criteria, refer to the section on matching single sided trades.
CME Hosted Automatic Credit Check Model
In this risk check model, clearing members are required to set risk limits in CME Account Management Service and have CME perform risk checks on their behalf. The asset classes that support this workflow are futures, energy and other commodities swaps.
The trade will clear instantly if the trade passes the CME Hosted Automatic Risk Limit model. The trade is then sent to clearing and clearing firms are notified of the cleared trades. CME ClearPort notifies the submitter automatically if the trade was submitted using WebSphere MQ as a transport. Alternatively, submitters using HTTP must request for the status of the trade. If allocations were submitted, each allocation will be credit checked if it is not going to be claimed by the clearing firms. If any of the allocations fail the credit check, the entire trade will be rejected by CME ClearPort.
CME Hosted / Explicit Claim Model
In this risk check model, clearing members can choose to 1) set risk limits in CME Account Management Service and have CME perform risk checks on their behalf or 2) perform their own credit checks and explicitly accept and reject trades in FEC. The risk check method can be configured at the account level during account registration in CME Account Management Service. The ability to choose the risk check method at an account level in CME Account Management Service is available for Interest Rate Swaps, and OTC FX asset classes.
In this model, there is a choice of two risk checking methods: hosted credit check or explicit claim. This model, which is applicable to the IRS, and OTC FX asset classes, the account administrator has the ability to choose the risk check method of either hosted credit limit or explicit claim.
If a trade is submitted with pre-allocated accounts (i.e., multiple accounts on one side) for a product subject to this second risk checking model, then that trade may partially clear irrespective of whether the accounts in the pre-allocation were set up as all hosted, all explicit claim, or a combination of the two. For example, if hosted limit credit checks are applicable to all accounts in a pre-allocation side of a product subject to the second risk model, the credit checks on each account are executed independent of one another, and some allocations may pass while others fail, resulting in a potential partial fill for the original trade submission. This contrasts with the credit checks for a pre-allocation trade done for a product subject to the first risk checking model. In this case, if one allocation fails, the entire trade will fail and it is not possible to have a partially filled trade.
The trade goes into the explicit accept/reject workflow. As each side/allocation is claimed a claim status update will be available to both submitters. CME ClearPort notifies the submitter automatically if the trade was submitted using MQ as a transport. Alternatively, submitters using HTTP must request for the status of the trade.