Initial products are energy, rapeseed oil and freight
CME Clearing Europe, a wholly-owned London-based subsidiary of CME Group, today announced that it will begin clearing more than 150 over the counter (OTC) energy and commodity derivative products beginning Friday, 6 May.
“The start of clearing at CME Clearing Europe is timely in light of the need for enhanced risk management in commodity markets and the imminent legislative change mandating the clearing of OTC derivatives,” said Andrew Lamb, chief executive officer of CME Clearing Europe. “While the initial focus of our product expansion will be on commodity products – energy, metals and agricultural – we aim to introduce clearing for OTC financial derivatives, beginning with interest rate swaps, in parallel with the deepening of the commodity clearing. Our goal is to offer a full multi-asset OTC clearing service, building on CME Group’s clearing experience as well as its established and growing European presence.”
Fifteen international financial firms are on track to become initial clearing members, including Bache Commodities Limited, BHF-BANK AG, BNP Paribas Commodity Futures Limited, Citigroup Global Markets Limited, Deutsche Bank AG, INTL Global Currencies Limited, HSBC Bank PLC, MFGlobal UK Limited, Newedge Group (UK Branch), Royal Bank of Scotland PLC, State Street Bank GmbH, and UBS Limited. In addition, Citibank will join Barclays Bank PLC and J.P. Morgan as settlement banks for CME Clearing Europe and its clearing members.
As part of its launch, CME Clearing Europe will clear eight OTC contracts based on the Dubai Mercantile Exchange‘s (DME) Oman crude oil futures contract that will continue to be available for clearing through CME Clearing. CME Clearing Europe will also begin clearing an OTC derivative contract based on rapeseed oil prices. Rapeseed oil is used for food and non-food usage (e.g., cosmetics) as well as in the manufacturing of biodiesel fuels. The rapeseed oil contract is an expansion of CME Group’s European product offering, which goes beyond the existing product range listed for clearing in the United States and will be followed by additional regionally specific products.
CME Clearing Europe was approved as a Recognised Clearing House (RCH) by the Financial Services Authority (FSA) of the United Kingdom in December 2010. Separately, CME Clearing Europe has applied to the Commodity Futures Trading Commission (CFTC) to become a registered Derivatives Clearing Organization (DCO).
