The CME Cash with Interest Program does not require a capital adjustment – or “haircut” – and is completely liquid at all times. Under CME Cash with Interest, CME clearing members can satisfy a portion of their initial margin requirement using cash as collateral and earn “hard dollar” monthly returns. Cash designated by Futures Commission Merchants (FCMs) for IEF5 and allocated to Fifth Third is placed in CME-controlled accounts and is administered by Fifth Third Bank.
“CME Cash with Interest is another innovative product introduced by the CME Clearing House to enhance financial flexibility for the management of initial margin – or performance bond – requirements for FCMs,” said Kim Taylor, Managing Director and President of CME Clearing House. “Working with leading financial institutions like Fifth Third Bank allows CME to further enhance capital efficiencies for our members and global market participants.”
”We are pleased to partner with the Chicago Mercantile Exchange to provide our customers and investors with highly-specialized programs that offer meaningful returns on their investments, said Carson Lugibihl, senior vice president, Fifth Third Bank Investment Advisors.”
“Our cash collateral program is a unique funding platform that provides Clearing Futures Merchants with additional investment sources and expands our product set and commitment to this important market,” said Louis L. Weinzelbaum, senior vice president, Fifth Third Bank Investment Advisors.
CME’s specialized Collateral Management Program’s were launched in 1997 with the CME Managed Fund Program. CME Cash with Interest was launched in July 2004 and includes the following benefits:
- CME Cash with Interest is a bank account that pays a monthly “hard dollar” benefit;
- The “hard dollar” benefit is based on the Fed Funds effective rate; and,
- CME processes all transfers on behalf of the clearing firm.
