News Release

CME Group Signs Term Sheet With Global Dealers for OTC Interest Rate Swaps Clearing

Mon Feb 14 2011

CHICAGO, Feb. 14, 2011 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, today announced it has executed a non-binding term sheet with a group of 10 global swap dealers, who will serve as founding members in support of CME Group's clearing service for over-the-counter (OTC) interest rate swaps.  The founding members are BofA Merrill Lynch, Barclays Capital, Citi, Credit Suisse, Deutsche Bank Securities Inc., Goldman Sachs, J.P. Morgan, Morgan Stanley, Nomura, and UBS.  

The service was launched on October 18, 2010, has cleared just under $1 billion in gross notional value to date, and has 12 clearing members (including the 10 founding members).  Additionally, the service is supported by a client advisory board comprised of several buy-side market participants, including BlackRock, Citadel, Fannie Mae, Freddie Mac, and PIMCO.  

"Thanks to the collaboration and commitment of our founding clearing members and client advisory board members over several months, we have designed a world-class, open access and truly competitive clearing solution for interest rate swaps," said Terry Duffy, CME Group Executive Chairman.  "These groups have helped us bring to market a clearing solution for interest rate swaps that will meet the needs of all qualified market participants.  The non-binding term sheet entered into today provides additional momentum and further demonstrates dealers' commitment to support our solution and reduce systemic risk in the market."

"Our interest rate swap clearing solution provides global customers with a world-class risk management tool," said Craig Donohue, CME Group Chief Executive Officer.  "Working with a leading group of swaps dealers and customers, we have developed a solution that provides counterparty risk reduction and transparency of CME Clearing while preserving the prevailing execution processes, technology platforms, and economic structures used in the bilateral IRS market today."

CME Group's cleared OTC interest rate swaps is an open access solution that provides market participants with the flexibility of the OTC market without having to change their execution processes.  The service builds on the strength of CME Group's market leading interest rate products business as well as the risk management and legal safeguards of CME Clearing, with an anticipated goal of offering capital efficiencies through cross margining OTC products with benchmark futures.  

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As the world's leading and most diverse derivatives marketplace, CME Group ( is where the world comes to manage risk.  CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.   CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago.  CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®.   These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets. 

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