Eurodollar futures are the world's most actively traded futures contract. In 2001, a record 184 million Eurodollar futures contracts changed hands on CME, along with a record 88.2 million options on Eurodollar futures, with a combined dollar value of $272 trillion.
"GSCC is pleased to expand its cross-margining program to include CME," said Jeff Ingber, general counsel and managing director at GSCC. "This relationship will bolster GSCC's efforts to achieve two key objectives - enhance the safety and soundness of clearing systems and expand the potential for significant margin savings for participants. These savings are attributable to the magnitude of the U.S. Treasury market and the strong correlation between Government security positions and Eurodollar futures and options."
"We anticipate that this arrangement will generate savings for our clearing members, while mitigating risk at both clearing organizations," said Kim Taylor, managing director, risk management at CME. "In addition to those capital efficiencies, the benefits of the cross-margining program will be applied automatically to those firms that participate, requiring no extra work on the part of the back office."
The cross-margining program is available to firms that are both GSCC netting members and CME clearing members, or that are members of one clearing organization and have an affiliate that is a member of the other. Once the member signs (together with its affiliate, if applicable) a Cross-Margining Participant Agreement, the cross-margining will take place automatically, without further implementation requirements on the part of the member. Thus, the use of the cross-margining facility, which can reduce a participating member's margin requirement, will be virtually transparent to members from an operational standpoint.
Chicago Mercantile Exchange Inc. (CME) [www.cme.com] is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX® around-the-clock electronic trading platform. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. CME's wholly owned Clearing House clears, settles, nets and guarantees performance of all matched transactions executed on the exchange. In 2001, the underlying value of CME's trading volume totaled $293.9 trillion. On average, CME processes nearly 420,000 clearing trade transactions per day, moves about $1.5 billion per day in settlement payments and manages $28.2 billion in collateral deposits. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc.
The Government Securities Clearing Corporation (GSCC) [www.gscc.com], a subsidiary of The Depository Trust & Clearing Corporation, is the leading provider of centralized trade comparison, netting and settlement services in the U.S. Government securities industry. It processed over $329 trillion in securities transactions in 2001. GSCC's services provide risk-management and financial benefits and operational efficiencies to industry participants, who include the nation's major brokers, dealers and banks, as well as a wide range of other entities that trade U.S. Government securities.
The Depository Trust & Clearing Corporation (DTCC) is the largest financial services post-trade infrastructure organization in the world, with operating facilities in multiple locations in the U.S. and overseas. DTCC is the holding company for six subsidiary businesses - a depository and five clearing corporations - as well as the co-owner of a global joint venture with Thomson Financial. Through its subsidiaries, DTCC provides clearance, settlement and information services for virtually all equity, corporate debt, municipal debt, government securities, mortgage-backed securities, and emerging market sovereign debt trades in the U.S., totaling more than $1.7 trillion daily. It is also a leading clearinghouse for mutual funds and insurance products, linking funds and carriers with distribution networks. In addition, DTCC provides custody and asset servicing for more than two million securities issues from the U.S. and 84 other countries, worth about $23 trillion. For more information on DTCC, see www.dtcc.com.
