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CME Group, the world’s leading and most diverse derivatives marketplace, today announced the submission of a petition to the Commodity Futures Trading Commission (CFTC) for approval to list twelve new agricultural swaps to be available on CME ClearPort, a set of flexible clearing services open to over-the-counter (OTC) market participants to substantially mitigate counterparty risk and provide neutral settlement prices across asset classes. These contracts will be listed with, and subject to, the rules and regulations of CME and CBOT.
“Many customers want to bring OTC transactions involving agricultural products such as grains, oil seeds and livestock to a central clearing facility in order to mitigate their counterparty credit risk,” said Tim Andriesen, CME Group Managing Director of Commodity Products and Services. “These new grain swaps will complement our grain futures and options contracts, which market participants rely on as global price benchmarks.”
The requested swaps, which are all based on listed futures contracts, include “European-style” settlement swaps for corn, soybeans, wheat, soybean oil, soybean meal, live cattle and lean hogs, which will settle on a specified single day. Also requested are “Asian-style” settlement swaps for soybean oil, soybean meal, live cattle and lean hogs, which will be settled based on the average of the daily futures settlement prices during a specific month.
These new offerings will be in addition to the suite of successful agricultural swap products that began trading in April 2009. The combined notional value of the swaps for corn, wheat and soybeans already available is $380 million. In addition, more than $206 million in agricultural index swaps have traded.
All agricultural swaps will be subject to position accountability, transaction reporting, and margining and risk management standards that are comparable to futures contracts. The exchange must receive a CFTC exemption to clear the agriculture swaps, as required by the Commodity Futures Modernization Act of 2000. Pending CFTC approval, the swaps will be available later this year.
As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.
