• FDIC Temporary Liquidity Guaranteed Collateral - Performance Bond

      • To
      • Chief Financial Officers, Chief Compliance Officers, Collateral Managers
      • From
      • Audit Department, Clearing House Division
      • #
      • AIB 09-01
      • Notice Date
      • 10 February 2009
      • Effective Date
      • 10 February 2009
    • Recently, CME Group Inc.’s Audit Department has been sought for additional clarification in determining the acceptability of collateral issued under the Federal Deposit Insurance Corporation (“FDIC”) Temporary Liquidity Guarantee Program (“TLGP”).


      Chicago Mercantile Exchange Inc. (“CME”), Chicago Board of Trade, Inc. (”CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) allow clearing members to accept readily marketable securities (as defined by SEC Rule 15c3-1(c)(11) and applicable SEC interpretations) as performance bond from their account holders under CME Rule 930.C.1., CBOT Rule 930.C., and NYMEX Rule 930.C. respectively.


      Newly issued unsecured debt issued by participating entities, meeting certain criteria imposed by the FDIC may be afforded a FDIC guarantee of principal and interest. However, there has been no demonstration that these TLGP issued debt instruments are highly liquid or have immediate quotations from independent bona fide offers; and therefore, are not considered acceptable performance bond.  


      In addition, CME’s Clearing House accepts readily marketable and highly liquid performance bond deposits from its clearing members. Therefore, collateral issued under the FDIC TLGP will not be considered an acceptable performance bond deposit at CME’s Clearing House.


      If you have any questions, please call the Audit Department at (312) 930-3230 or at (212) 299-2120.