In April 2003, Chicago Mercantile Exchange® (CME) signed a definitive agreement with the Chicago Board of Trade (CBOT®) for CME® to provide clearing and related services for all CBOT products. The CME/CBOT Common Clearing Link brings together two premier financial institutions and provides operating, margin and capital efficiencies using CME's Clearing House and existing infrastructure and processes. As a result, the link offers significant benefits to FCMs and end users of futures products. When fully operational in January 2004, the Common Clearing Link will clear approximately 85 percent of U.S. futures and futures options volume.
Benefits to the Industry:
- Performance bond savings from enhanced portfolio margining estimated to free up to $1.2 billion in collateral now posted by industry participants.
- CME's SPAN system will calculate a customer's margin requirements based on the customer's entire portfolio of positions at the two exchanges.
- A single guarantee fund will be administered for CBOT and CME products that will free up $200 million in capital currently posted by clearing firms.
- Simplified business practices-a single set of systems interfaces, including formats for data files, trade messages and reports, a standardized online interface.
