User Help System

 

 

Credit Controls

Clearing Member and Execution firm administrators can use the Credit Controls function to manage CME Globex, CME ClearPort and CME Direct account level credit (preferred currency and maximum credit limit, for the overall account) and order submission (maximum permissible long / short) limits, for a product group and individual products.

Trader / Trader Risk Administrators can use Credit Controls to search and view risk settings, which includes credit and maximum permissible long / short quantity limits.

Order handling:

  • Credit limit checks utilize top of day trading activity; starts flat each trading day.
  • Orders that are within limits are approved for execution.
  • CME Globex trades, submitted using CME Direct, can be viewed in Firmsoft.
  • Orders are rejected if they contain restricted products or requested quantities exceed limits.
  • Margin rates and intra-commodity spread credits are used to determine credit usage, by product and type of trade.
  • Completed orders are viewable in Front-End Clearing (FEC+).
  • Options product limits are set independently of futures and are subject to overall credit limit.

Rejected order handling: An authorized clearing / execution firm administrator must increase the limit and / or configure additional products.

  • To manage account credit controls:

Users can specify the Currency, Credit Limit, Maximum Quantity Long / Short Limits (product quantity limits are not required for CME ClearPort).

  1. After confirming Markets, Products and Brokers, go to the Credit Controls page.
  2. Specify the Currency and Credit Limit (CME Direct) / RAV Limit (CME ClearPort) and product limits (Maximum quantity long / short).

Margin rates and intra-commodity spread credits are used to determine credit usage, remaining credit and percent used; by product and type of trade.

  1. For the Permissible Products field, select from available options:
  • Show all products with unique limits: Filter the Product list to products that have user specified limits.
  • Show all products tradable in this account: View all authorized products, via Market Types - Available Products.
  1. For each product that will be authorized, specify the Max Qty Long / Max Qty Short.

Note: For Globex ICC only: Default value is Not Set, which uses the Globex Admin Policy settings to determine order entry and trading permission.
Admin Settings - Unset Limit Rule: When limits are not set (by either Clearing Member or Execution Firm) for the specified account, the account is limited to trading products within the overall firm Credit Limit.
Additional considerations: Refer to calculation option limits, below.

  1. To finalize Credit Control settings, select Save.
  2. (For new / pending accounts) On the account creation dialog that appears, select an account creation option: 

Create Account as:

  • Active: Finalize credit controls and activate the account. Additional configuration, for other applications / services, may be necessary.
  • Inactive: Finalize credit controls, but do not activate the account. Additional configuration can be performed or the account configuration can be used as the basis for additional related accounts (via the Copy function).

Note: To activate the account later, search and select the inactive account.
From the Account Settings page, select Activate.

Additional Options:

Manage Spot FX Credit Controls

Calculating / Setting Option Limits

Risk controls allow for setting long / short option limits, which is an optional setting. If limits are not set, trading may occur up to the specified futures long / short product limit and/or available credit.

Options are converted into futures equivalents by multiplying options quantity * delta.

Example

Account: ABC

Credit Limit: $5,000,000

Product: Eurodollar Futures

Max Long Quantity Limit: 10,000

Max Short Quantity Limit: 10,000

Product: Eurodollar Options

Max Long Quantity Limit: 20,000

Max Short Quantity Limit: 20,000

Avg. Maintenance Margin Rate for Eurodollars: $400

The order is entered as:

Buy 10,000 Eurodollar DEC14 9950 Straddle

GEZ4 9950 Calls (.51Δ)

GEZ4 9950 Puts (.49Δ)

Note: The example assumes there are no existing fills or orders for the account.

Futures

Max Qty Short Usage = Buy Puts (10,000*.49) = 4,900

Options

Max Qty Long Usage = Buy Call (10,000) + Buy Put (10,000) = 20,000

Max Qty Short Usage = 0

Margin Usage = 5,100 * $400 = $2,040,000

 

 





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