Slide 1: OTC Clearing Readiness
OTC Clearing Readiness September 2012
Slide 2: Clearing Mandate Phase-In & Timeline
Clearing Mandate Phase-In & Timeline On August 7, the CFTC published the proposed clearing mandate requirement for certain IRS and CDS products, and requested comments by September 6 2013 Q1 2012 & Q2 2012 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Category 1 • Swap Dealers • Major
Slide 3: OTC Clearing Checklist
OTC Clearing Checklist How to Get Ready with CME Group Critical Items Useful Information Execute the CME Group Exchange Run margin simulations with CME User License Agreement (EULA) CORE Complete internal readiness and testing Set-up CME secure FTP site for direct process access to position
Slide 4: Exchange User License Agreement (EULA)
Exchange User License Agreement (EULA) The CME Group EULA is the registration agreement for any Investment Advisor or Fund that submits OTC trades to CME for clearing. Once the EULA process is completed, CME Group will register your Funds and notify your firm You can then communicate to your s
Slide 5: Customer Legal Documentation
Customer Legal Documentation Documentation between Customer and Clearing Member Clearing Member Futures Account Agreement (FCM Agreement) Clearing Member OTC Addendum Documentation between Customer and Execution Counterparty FIA-ISDA Cleared Derivatives Execution Agreement • The FIA and ISDA p
Slide 6: Platforms Connected to CME Clearing
Platforms Connected to CME Clearing Several market leading affirmation platforms and Swap Execution Facilities are directly connected to CME Clearing CDS Migration Bloomberg ICE Link Javelin MarkitSERV TradeWeb CME ClearPort Utility CME Clearing Bank of Deutsche Goldman Barclays BNP Paribas Citigrou
Slide 7: Testing: UAT Environment Overview
Testing: UAT Environment Overview For specific test scripts contact your Clearing Member Firm Step 1: • Submit spot trades of various tenors (2,5,10,30 years) to CME Group for Clearing • OBSERVE the following: UAT Accounts properly mapped to CME Client has the ability to select Clearing Member Fir
Slide 8: Testing: UAT Environment Overview
Testing: UAT Environment Overview Step 2: • Terminate Various Cleared Trades Verify Pricing on T+1 Settlement of Upfront Payments Confirm the Affirmation Process: Able to affirm a new trade when terminating an existing trade Netting Options Integration with Client’s internal systems Step 3:
Slide 9: Testing: Production Environment
Testing: Production Environment Steps: • Repeat Steps 1-3 of UAT Testing with Production Accounts • Verify Internal Systems are compatible with: Trade Submission Cash Flows Initial Margin Terminations © 2012 CME Group. All rights reserved 9
Slide 10: Reporting
Reporting CME Group allows buy side firms to directly access reports through a secure FTP site, which helps them fully integrate key OTC data into their internal systems. The Trade Register shows customers the end of day mark-to-market values for their cleared OTC positions. This is available at 4
Slide 11: Transparent Margins Through CME CORE
Transparent Margins Through CME CORE CME CORE (CME Online Risk Engine) enables customers to calculate and evaluate their initial margin requirements for IRS and CDS Create New or Validate and Analyze and Review Load Existing Calculate Initial Results Portfolio Margin Requirement ENHANCE REPORTS TO I
Slide 12: Product Offering - Cleared OTC IRS
Product Offering - Cleared OTC IRS CME Group has delivered a comprehensive global product scope that includes the 7 currencies that account for 95% of vanilla IRS market* EXISTING PRODUCTS • USD Fixed/Float out to 50 years- 1M, 3M and 6M LIBOR indexes • EUR Fixed/Float out to 50 years- 3M and 6M EUR
Slide 13: Product Offering - Cleared OTC CDS
Product Offering - Cleared OTC CDS Clearing Eligible North American Products Product Scope Status Series 9 – 12 Clearing Eligible 5, 7, and 10 year tenors CDX IG Series 13 – 18 Clearing Eligible 3, 5, 7, and 10 year tenors Series 11 – 18 CDX HY Clearing Eligible 5 year tenor Future Product Launches
Slide 14: Product Offering - Cleared OTC FX
Product Offering - Cleared OTC FX 12 OTC FX Non-Deliverable Forwards All settlements are in USD and maximum maturity is 2 years Brazilian Philippine Malaysian Indian Korean Chinese Renminbi Real Peso Ringgit Rupee Won Yuan Indonesian Taiwan Chilean Colombian Peruvian Russian Rupish Dollar Peso Peso
Slide 15: Helpful Links
Helpful Links CME Group Resources: • CME Group OTC Products & Services http://www.cmegroup.com/trading/otc/ • Online Exchange User License Agreement (EULA) http://www.cmegroup.com/trading/otc/files/eula-investment-advisors-fund-managers.pdf • OTC Connectivity Partners http://www.cmegroup.com/globex/