The duo reports progress in their efforts to extend their cross-margining arrangement to end-user clients.
The Depository Trust & Clearing Corp. (DTCC), a post-trade market infrastructure provider, and derivatives exchanges company CME Group have announced “continued progress on their efforts to extend their existing cross-margining arrangement to end-user clients,” officials say.
“Specifically, the Fixed Income Clearing Corp. (FICC) has now formally filed with the Securities and Exchange Commission (SEC) to expand its long-standing cross-margining arrangement with CME Group,” according to the announcement. “CME Group filed with the CFTC [Commodity Futures Trading Commission] 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.”
The proposal would enable FICC and CME officials “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,” officials say.
“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,” officials say. “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.”
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