The consolidation of the two clearing associations combines the guarantee funds of each clearinghouse to total $130 million. The insurance policy was underwritten by Radian Asset Assurance after a detailed due diligence review of all of the Exchange's clearing and surveillance processes, including its recent AA+ long-term counterparty credit rating from Standard & Poor's. It would be invoked in the unlikely event that the guarantee fund is completely depleted due to a default by a clearing member firm.
The separate clearing organizations predate the merger of the New York Mercantile Exchange and the Commodity Exchange, Inc., in 1994, and have both been operated under the auspices of the Exchange clearing department since that time. Among the benefits of the consolidation, COMEX Division trades are now processed on the Clearing 21® system alongside the NYMEX Division trades in a single processing stream.
Exchange President J. Robert Collins, Jr., said, "The consolidation of the clearing functions have benefits that permeate through to participants in the Exchange's markets at every level, from clearing members to floor traders to customers. This is a major step in achieving the goals of the original merger in streamlining the clearing process and increasing its security and efficiency. Our decision to seek the insurance policy demonstrates our commitment to our market participants and to expanding the financial resources to support this commitment."
