CME Group - 40 Years of Innovation and Global Growth

This year CME Group celebrates 40 years of trading financial futures beginning with foreign currency contracts in 1972. It has the largest regulated marketplace in the world for FX with US$121 billion dollars traded in average daily volume with US$250 billion of open interest residing at the CME Group Clearing House with growth rates over the last five to six years for listed FX that has significantly outperformed the broader OTC FX market. Derek Sammann, global head of FX & interest rate products at the CME Group speaks to e-Forex about the firm’s plans to deliver expanded FX trading and clearing services.

First Published: e-Forex Magazine 49 / Provider Profile / October, 2012

Derek what’s driving demand for cleared products on exchanges? There are really two things. Firstly is the concern about counterparty risk and the second part is regulatory requirement. If you look at what’s been going on in the global market, starting with the events of 2008 and accelerating through the sovereign debt crisis of last year, we’ve seen a significant increase in risk associated with counterparties. The market has been quick to move to a listed-product environment where you have counterparty risk mitigation in the form of central clearing. The other side is regulation, not only Dodd-Frank, but also the parallel rules via the European Market Infrastructure Regulation (EMIR) and globally BASEL III. From a capital charge perspective the latter is the most compelling argument for the use of central counterparty risk mitigants for OTC transactions. Which currency products do you currently clear and  why have you selected them? The statutory piece of Dodd Frank...continued

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