CME Equity Options Compression Overview

CME Group is offering a multi-lateral post-trade Equity option compression service. The intent of this service is to provide market participants and their FCMs with capital relief in listed Equity options without materially changing the risk exposure of a given participant’s portfolio. This approach is designed to increase liquidity across the Equity option complex and minimize the impact of Basel III capital requirements on clients and clearing members by reducing the amount of open interest held by participants.

In preparation of deploying this new compression offering, CME conducted multiple test compression cycles with active participants in the listed Equity option on futures markets. On average, the compression cycles resulted in a 35% reduction in open interest across participating firms.

Participant Eligibility

To participate in a given compression cycle, participants will need to meet a set of eligibility criteria. These requirements will consist of demonstrating operational capability to participate, as well as meeting portfolio- and volume-sizing standards. Additionally, participants will be required to sign a compression services agreement and to obtain FCM approval.

Upcoming Compression Cycles: December 2018

Following our successful compression run on November 26 with a reduction of nearly 1.2M contract sides, our compression service will be extended to two runs in December.

Key dates for the December cycles: 

  1. December 18: Production multi-lateral cycle 1
  2. December 19: Production cycle 1 fallback dates 
  3. December 26: Production multi-lateral cycle 2
  4. December 27: Production cycle 2 fallback date

To participate, reach out to our team. Contact details are listed below. 

Compression Cycle Net OI Change Report

This report provides aggregate net change in open interest by option strike following each compression cycle:

Useful Information

Contact Us

To learn more, view our frequently asked questions or contact:

Tom Boggs
Executive Director – Equity Products
Email
+1 312 930 3038

Graham McDannel
Director – OTC Products
Email
+1 312 454 5209

Steve Ishmael
Director – Clearing Solutions Services
Email
+1 312 648 5409

Madeline Lindgren
Manager - Clearing Solutions
Email
+1 312 930 4507

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