CME Clearing Europe First To Receive Regulatory Approval For New Full Segregation Client Protection Model

LONDON, May 12, 2014 /PRNewswire/ -- CME Clearing Europe, CME Group's European clearing house, today announced that it is the first central counterparty (CCP) globally to receive Bank of England approval of the full segregation client protection model with enhanced protection for all bankruptcy scenarios. This new client protection model fully segregates collateral with an external custodian at the client level. The enhanced protection it offers for all bankruptcy scenarios is expected to result in favourable capital treatment.

This new account model is designed to allow the client protection and control of their securities at all times with clarity and legal certainty with regards to how client assets would be treated in all bankruptcy scenarios. The full segregation account expands client asset protection beyond European Market Infrastructure Regulation (EMIR) requirements. It is available across all of CME Clearing Europe's OTC financial and commodity derivatives as well as futures products. 

CME Clearing Europe is working with central securities depositories (CSD) and custodians to offer clients the option of holding their securities at different locations. The first CSD to offer this to their clients is SIX Securities Services. The first custodian to support this model is BNP Paribas Securities Services.

"Our innovative approach to greater protection of clients' securities in a jurisdiction of their choice with operational efficiencies is attractive to asset managers, hedge funds and regional banks that use securities for initial margin purposes at our clearing house," said Lee Betsill, CEO of CME Clearing Europe. "The legal framework that we have designed for the full segregation account matters to clearing members and their clients because it has been structured to provide preferential capital treatment."

Thomas Zeeb, CEO, SIX Securities Services, commented, "For the first time in Europe, asset managers, banks and other market participants can better manage their collateral by making the best use of the pools of securities they already hold with us at SIX SIS.   In the context of real-time clearing and future regulatory challenges, this is a major step forward. As a market, we in Switzerland are delighted to pioneer this with CME Clearing Europe as it also offers our Swiss clients the opportunity to benefit from these and other SIX services in Switzerland."

Alain Pochet, Head of Clearing and Custody Services at BNP Paribas Securities Services commented, "Protecting client assets is at the heart of everything we do. We therefore welcome this initiative and are very pleased to be the first custodian to partner with CME Clearing Europe to offer account operator services for their full segregation model. This initiative forms an integral part of our wider Collateral Access solution, which allows us to offer buy-side and sell-side firms an end to end straight through collateral and custody solution for their cleared derivatives transactions."  

Daniel Berner, Head Portfolio Management, Swiss Life AG, stated: "This new partnership between CME Clearing Europe and SIX SIS makes headway for clients aiming to mitigate the credit risk in connection with the transfer of large initial margin amounts. This is crucial for Swiss insurers who have to comply with strict regulatory rules for the safekeeping of policyholder funds. The close involvement of interested Swiss insurance companies at various stages of development shows client centric focus of CME Clearing Europe and SIX SIS."

Oliver Decker, Legal Counsel, BayernInvest, says, "We are delighted to be Germany's first investment company (KAG/KVG) to partner with CME Clearing Europe to offer the enhanced level of protection to our clients in Germany. Full segregation ensures bankruptcy remoteness, which is an advanced structure that makes a real difference to us."

Nadine Chakar, Head of Product Development and Strategy for Global collateral services business at BNY Mellon and Chairman of BNY Mellon CSD, says: "There is much greater complexity around the movement, safekeeping and segregation requirements of collateral these days. Working in partnership with CME Clearing Europe and our buy side clients we aim to offer them opportunities across their entire portfolios and an holistic view of their collateral at the enterprise-level."

CME Clearing Europe lists a broad range of interest rate swaps and offers more than 200 OTC commodities contracts for clearing and provides services for CME Europe, CME Group's London-based derivatives exchange. CME Clearing Europe offers four client protection account models to clients; net omnibus; gross omnibus; individual client and individual client with full segregation.

About CME Group and CME Clearing Europe

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk.  CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.  CME Group brings buyers and sellers together through its CME Globex^® electronic trading platform and its trading facilities in New York and Chicago.  CME Group also operates CME Clearing, one of the world's leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.

CME Clearing Europe (www.cmeclearingeurope.com), a wholly owned subsidiary of CME Group, has been established in London with the aim of offering services as a multi-product clearing house focused on non-US customers. CME Clearing Europe provides world class clearing for a broad base of customers and extends CME Group's clearing services, ensuring stability and increasing transparency in the markets cleared, helping to reduce and contain systemic risk. CME Clearing Europe Limited was approved as a Recognised Clearing House (RCH) by the Financial Services Authority (FSA) of the United Kingdom in December 2010 and is regulated and supervised by the Bank of England.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc.  CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc.  KCBOT, KCBT and Kansas City Board of Trade are trademarks of The Board of Trade of Kansas City, Missouri, Inc.  All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

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SOURCE CME Clearing Europe