The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, and CME Group, the world’s leading derivatives marketplace, today announced continued progress on their efforts to extend their existing cross-margining arrangement to end-user clients.
Specifically, the Fixed Income Clearing Corporation (FICC) has now formally filed with the Securities and Exchange Commission (SEC) to expand its long-standing cross-margining arrangement with CME Group. CME Group filed with the CFTC in late September. The CFTC has also published for comment a proposed order granting a limited exemption necessary for CME and FICC to make their existing cross-margining arrangement available to certain customers with appropriate safeguards.
Under the proposal, FICC and CME would be able to extend the existing cross-margining arrangement to end-user clients of dually registered broker/dealers and futures commission merchants (FCMs) that are common members of both organizations. End-user clients would benefit from increased capital and margin efficiencies when trading U.S Treasury securities and interest rate futures from CME Group that have offsetting risk exposures because the clearing organizations would consider the net risk for margin calculations.
As previously announced, under the proposed arrangement, FICC will designate cross-margin accounts, allowing all eligible positions in the account to offset with eligible CME Group interest rate futures. CME Group will allow participants to direct futures to end-user cross-margin accounts throughout the day, thereby making them available for offset in the cross-margin arrangement. Ahead of regulatory approvals, end-users can work to set up a new account, complete proper program legal documentation, and test end-to-end workflows.
