CME, the world’s largest financial exchange, is planning to launch Clearing360, a clearing solution for over-the-counter market participants.
Clearing360 has been designed as an extension to existing CME clearing services, and will permit bilateral over-the-counter (OTC) interest rate transactions to be converted into futures contracts, beginning with ‘substitutions’ using CME Eurodollar futures.
Substitutions, or ‘subs,’ allow customers to substitute CME futures contracts for an OTC transaction in standard contract terms, such as an interest rate swap or forward rate agreement (FRA), with flexible settlement dates.
The efficiencies offered by CME Clearing are a natural fit for the OTC market, and another example of CME expanding its reach into new markets, said CME chairman Terry Duffy.
With this service, OTC market participants can take advantage of existing systems and infrastructure offered by CME Clearing and clearing member firms, along with the existing benefits offered by exchange-traded products.