CME Group announced that it will exit the company's credit default swap (CDS) clearing business by mid-2018, freeing up $650 million in clearing member capital. Going forward, in order to meet customer needs in light of uncleared margin rules, CME will focus its over-the-counter (OTC) clearing services on interest rate swaps (IRS) and foreign exchange (FX), as well as on developing further capital efficiencies for market participants.
CME Group will work with CDS open interest holders and regulators to ensure an efficient and seamless transition for the credit market. During this transition, CME will continue to provide full clearing services so that participants can continue to manage their risk, including the roll to CDX 29. Pending regulatory approval, the company will provide fee waivers on CDS clearing, as well as facilitate the bulk transfer of open positions. Following the transition, CME will dissolve CME Clearing's CDS guarantee fund, which will return $650 million to CDS clearing members.
The company also will accelerate additional OTC clearing innovations to provide further efficiencies to market participants, including:
More information on the company's OTC products and services can be found at www.cmegroup.com/otc.