CME Group has said its credit default swap joint venture with
Citadel Investment Group will only be a clearing service. It
had previously been planned as a CDS trading and clearing
As part of its refocus, CME has issued shares in the venture
to investment firms AllianceBernstein, BlackRock, BlueMountain
Capital Management, the DE Shaw group and Pimco.
CME Group said several leading sell-side firms were in the
process of becoming founding members.
Craig Donohue, CME’s chief executive, said the
increasing participation in the project was a reflection of
confidence in it.
"Our solution offers point-of-execution clearing of CDS
trades, the greatest breadth of products to clear, which
includes single name CDS, a comprehensive and transparent risk
management system, the security of our approximately $8bn
financial safeguards package, and an established regulatory
framework to protect customer positions and offer margining
efficiencies," Donohue said.
Meanwhile, CME’s rival, Intercontinental
Exchange, had cleared $3tr of credit default swaps by late
During the week starting September 28, ICE Clear Europe
processed a record €136bn ($200bn) of European CDS
contracts, bringing its total since opening at the end of July
to €514bn ($750bn). Open interest was €64bn.
That week ICE Trust in the US cleared $91bn of CDS
transactions. It has cleared $2.3tr of contracts since March
and has $190bn of open interest.
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