CME Group has launched clearing services for over the counter (OTC) London gold forwards.
Clearing services will be available through CME ClearPort. Clearing services for house business will commence on 23 August for trade date 24 August, with customer segregated activity following within 90 days of commencement. These contracts are made available for clearing on COMEX through CME ClearPort, and are subject to COMEX and CME rules and regulations.
CME Clearing will provide post-trade clearing services for physically delivered OTC London gold forwards. The positions will remain as forwards to the date in clearing and settle with ‘London Good Delivery’ gold via the market standard book-entry transfer system. Positions will be marked-to-market daily with margins applied to open positions. CME Clearing will remain in the delivery process throughout settlement and ensure transfer of gold and dollars between counterparties.
“Launching our clearing services for London gold forwards is in direct response to customers’ need for a secure way to manage counterparty credit exposure,” says Joe Raia, managing director of energy and metals products, CME Group. “This post-trade service allows trades to be privately negotiated and executed off-exchange and then submitted through CME ClearPort for clearing. This allows counterparties to continue to trade as they always have while transferring credit risk to CME Group.”
“Counterparty credit concerns stemming from the global credit crisis have acted as a constraining influence on financial markets,” says Barry Wainstein, vice chairman and deputy head, Global Capital Markets and Global Head of Foreign Exchange and Precious Metals at Scotia Capital. “Introducing centrally cleared products, such as the London Gold forwards, will assist in returning normalcy to the markets by mitigating counterparty credit risk.”
L.D.