The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, and CME Group, the world’s derivatives marketplace, announced progress on their efforts to “extend their existing cross-margining arrangement to end-user clients.”
Specifically, the Fixed Income Clearing Corporation (FICC) has “now formally filed with the Securities and Exchange Commission (SEC) to expand its long-standing cross-margining arrangement with CME Group. CME Group filed with the CFTC in late September.”
The CFTC has also published for comment a proposed order “granting a limited exemption necessary for CME and FICC to make their existing cross-margining arrangement available to certain customers with appropriate safeguards.”
Under the proposal, FICC and CME would be able “to extend the existing cross-margining arrangement to end-user clients of dually registered broker/dealers and futures commission merchants (FCMs) that are common members of both organizations.”
End-user clients would benefit from increased “capital and margin efficiencies when trading U.S Treasury securities and interest rate futures from CME Group that have offsetting risk exposures because the clearing organizations would consider the net risk for margin calculations.”
As previously announced, under the proposed arrangement, FICC will designate cross-margin accounts, “allowing all eligible positions in the account to offset with eligible CME Group interest rate futures.”
CME Group will allow participants to direct “futures to end-user cross-margin accounts throughout the day, thereby making them available for offset in the cross-margin arrangement.”
Ahead of regulatory approvals, end-users can work “to set up a new account, complete proper program legal documentation, and test end-to-end workflows.”
With more than 50 years of experience, DTCC is serving as the “post-trade market infrastructure for the global financial services industry.”
From 20 locations around the world, DTCC, via its subsidiaries, automates, centralizes, and standardizes the “processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers.”
Industry owned and governed, the firm says that it innovates “purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem.”
In 2024, DTCC’s subsidiaries processed securities transactions “valued at U.S. $3.7 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $99 trillion.”
DTCC’s Global Trade Repository service, through various locally registered, licensed, or approved trade repositories, reportedly processes more than “25 billion messages annually.”