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Chicago Mercantile Exchange Partners With JPMorgan To Offer Innovative Cash Collateral Management Program; New IEF5 Program Represents Industry’s First Interest-Bearing Cash Instrument

Date 08/07/2004

Chicago Mercantile Exchange (CME) and JPMorgan have jointly announced that CME Clearing House, the largest futures clearing organization in the world, will now offer customers an innovative and highly flexible collateral management program that for the first time allows customers to earn interest on 100% liquid cash accounts.

This program, IEF®5, is the first cash product that does not require a capital adjustment – or haircut – and is completely liquid at all times. Under IEF5, CME clearing members can satisfy their initial margin requirement using cash as collateral and earn hard dollar monthly returns. Cash designated by Futures Commission Merchants (FCMs) for IEF5 is placed in CME-controlled accounts and is administered by JPMorgan as the collateral agent.

IEF5 is the latest product in a series of new collateral management programs introduced by CME Clearing House this year to enhance financial flexibility for the management of initial margin – or performance bond – requirements for FCMs.

“CME is excited to expand our collateral management offerings through JPMorgan on this ground-breaking cash management solution that provides significant financial benefits to CME clearing members and their customers,” said Kim Taylor, Managing Director and President of CME Clearing House. “Working with leading financial institutions like JPMorgan allows CME to further enhance capital efficiencies for our members and other market participants.”

“This partnership demonstrates JPMorgan’s strong commitment to FCMs and their clients,” said Ed Corral, Senior Vice President and head of JPMorgan’s Clearance and Collateral Management Division, which operates JPMorgan’s Regulatory Cash Collateral Management group. “IEF5 represents yet another example of how JPMorgan delivers innovative regulatory cash collateral solutions for the futures market.”

The IEF5 program follows the March 2004 decision by the Commodity Futures Trading Commission to allow the use of cash to be used as collateral to meet margin requirements of clearing corporations and exchanges.

Earlier this year, CME, in conjunction with JPMorgan and Bank of New York, initiated two other programs, IEF®3 and IEF®4, which allowed a broad range of readily marketable securities – including select corporate and municipal securities – to be used in conjunction with collateral management programs.

Chicago Mercantile Exchange Inc. (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® electronic trading platform. CME offers futures and options on futures contracts primarily in four areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.6 billion per day in settlement payments in the first half of 2004 and managed $39.1 billion in collateral deposits at June 30, 2004. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index. Chicago Mercantile Exchange, CME, the globe logo and GLOBEX are registered trademarks of Chicago Mercantile Exchange Inc. Further information about CME and its products is available on the CME Web site at www.cme.com.

J.P. Morgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.1 trillion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity. A component of the Dow Jones Industrial Average, J.P. Morgan Chase & Co. has its corporate headquarters in New York and its U.S. retail financial services and commercial banking headquarters in Chicago. Under the JPMorgan, Chase and Bank One brands, the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients. Information about the firm is available on the Internet at www.jpmorganchase.com.