CME to Challenge DTCC with U.S. Repo Clearing

Chicago-based exchange giant, CME Group, is planning to introduce a clearing service for repo trades, bringing it into direct competition with the Depositary Trust & Clearing Corporation (DTCC).
By Joe Parsons(2147488729)
Chicago-based exchange giant, CME Group, is planning to introduce a clearing service for repo trades, bringing it into direct competition with the Depositary Trust & Clearing Corporation (DTCC).

The move, which will open repo clearing competition in the U.S., comes as clearing houses are increasing their services to include securities financing markets.

“Repo clearing is an endeavour that CME Group, among others, are pursuing,” says Phupinder Gill, CEO of CME Group on an earnings call.

The launch of clearing is the next step for CME after it announced it would launch tri-party repo futures derivatives based on daily U.S. tri-party repo indices provided by BNY Mellon last November.

Regulators in the U.S. have recently expressed concerns about the repo market, where financial institutions from large banks to asset managers pawn their assets in exchange for trillions of dollars’ worth of short term financing.

In the face of this, banks are pushing for an expanded role for clearing houses in the repo and securities lending market.

The announcement from CME Group comes one week after Frankfurt-based Eurex Clearing partnered with BNY Mellon and State Street to expand its clearing services for securities lending to the U.S.

The opening of competition in the space comes as the Fixed Income Clearing Corporation (FICC), a subsidiary of the DTCC, is lobbying regulators to expand central clearing mandates to include the tri-party repo market.

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