CME to launch first sustainable clearing service

CME Group plans to launch the world’s first Sustainable Clearing service that enables clearing clients to track their sustainable derivatives positions.

The Chicago-based exchange said the new clearing service, set to launch on September 27, enables clearing brokers to track their positions in sustainable products such carbon offsets, battery metals or biomass as well as the interest rate or foreign exchange hedging positions they are managing on behalf of sustainable clients.

The exchange group said clearing brokers will also be able to offer visibility to their clients such as asset managers so those investors can track the sustainability performance of their various clearing brokers.

“Sustainability continues to be an increasing priority for our global clients as they significantly expand both the risk management that they provide to green businesses and environmental projects,” said Julie Winkler, Chief Commercial Officer, CME Group.

“This new framework for clearing sustainable derivatives will make it easier for our clients to measure the impact of their support for sustainable activities and can be part of the solution to encourage further growth in this key sector as the economy transitions to net-zero emissions.”

CME said all participating clearing brokers will be provided with Sustainable Clearing eligibility criteria aligned with industry standards. Participating brokers will then be able to identify and tag their relevant trades, enabling them to track these positions and show these to underlying clients.

“This innovative clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows,” said Sunil Cutinho, President, CME Clearing. “Our solution ensures that all sustainable trades continue to benefit from our established risk management approach, including full margin offsets where applicable, which creates efficiencies for clients and end users.”

CME said the clearing service was developed following requests from banks keen to test their sustainable credentials against an external, objective benchmark. The exchange group said a handful of banks, including BNP Paribas and Standard Chartered, worked with the CME clearing house to develop and test the new clearing service. 

The Chicago-based exchange group expanded in May its suite of e-mini futures tied to ESG indices with a contract based on the S&P Europe 350 ESG Index.