CME Group, the derivatives marketplace, and The Depository Trust & Clearing Corporation (DTCC), the post-trade market infrastructure for the global financial services industry, announced their enhanced cross-margining arrangement has received Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) approvals.
The arrangement will enable capital efficiencies “for clearing members that trade and clear both U.S. Treasury securities and CME Group Interest Rate futures and is expected to launch in January 2024.”
The cross-margining arrangement will “permit eligible clearing members of CME and the Government Securities Division (GSD) of DTCC’s Fixed Income Clearing Corporation (FICC) to cross-margin an expanded suite of products, including CME Group SOFR futures, Ultra 10-Year U.S. Treasury Note futures and Ultra U.S. Treasury Bond futures, and FICC-cleared U.S. Treasury notes and bonds. Repo transactions that have Treasury collateral with a remaining time to maturity greater than one year will also be eligible for the enhanced cross-margining arrangement.”
Suzanne Sprague, CME Group Global Head of Clearing and Post-Trade Services, said:
“In line with our longstanding commitment to provide capital efficiencies to market users, we are very pleased to bring this enhanced cross-margining arrangement to the Treasury marketplace in January.”
Laura Klimpel, General Manager of Fixed Income Clearing Corporation (FICC) & Head of SIFMU Business Development at DTCC, said:
“The approval of the arrangement paves the way for increased efficiency and resiliency of the overall U.S. Treasury Market, and we look forward to working with CME Group to deliver upon these important enhancements.”
As the derivatives marketplace, CME Group says it “enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities.”
CME Group exchanges “offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals.”
The company offers futures and options on futures trading “through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform.”
In addition, it operates one of the central counterparty clearing providers, CME Clearing.