The EDS, which will significantly speed the invoicing process for CBOT and CME® clearing firms, will debut along with the CME/CBOT Common Clearing Link.
CBOT Chairman Charles P. Carey said: "We listened to the requests of our clearing firms and responded with a faster, more efficient electronic delivery system. The launch of our new EDS underscores the CBOT's commitment to creating innovative solutions to meet our customers' needs and highlights the success of our cooperative efforts with CME."
CME Chairman Terry Duffy said: "We developed this new system in partnership with the clearing firms. A small group of firms tested it in September, and we made it available on a test basis in October to all the firms. Their feedback has been both positive and valuable. In particular, they have welcomed the convenience of accessing this new functionality via the Web."
This new Web-based EDS offers clearing members a superior alternative to the current system, which now is available only on select mainframe terminals. Additionally, the new EDS will offer real-time online reports, allowing firms to quickly summarize the quantities they are receiving in the delivery process. This is a particularly important development for the financial futures markets, as firms will now have the ability to pass on critical information to trading desks prior to the close of the cash market.
The new EDS also will increase the limit on the number of financial contracts each invoice can accommodate nearly 100-fold, raising the maximum to 99,999 contracts from the current 1,000 contracts. This expansion will dramatically decrease the number of invoices that each firm must process.
Created jointly by the CBOT and CME, the EDS is an integral part of the two exchanges' Common Clearing Link. The Link will provide market participants with significant margin, capital and operational efficiencies - including an estimated $1.4 billion reduction in performance bond requirements due to offsetting CME and CBOT positions, and another $200 million in reduced capital requirements due to a combined CME-CBOT financial safeguards package, based on their existing portfolios as of Oct. 3.
Operational efficiencies will include a standardized online interface and simplified business practices. The Link will begin back-office processing of trades on Nov. 24, 2003, with CME clearing approximately one-third of CBOT's products, including agricultural, Fed funds, swap, muni and DowSM contracts. When it is fully operational on Jan. 2, 2004, the CME/CBOT Common Clearing Link will clear approximately 85 percent of U.S. futures and futures options volume, based on combined 2002 volume levels of 902 million.
For more information about the CME/CBOT Common Clearing Link, visit www.cbot.com or www.cme.com.
