“We talked to a number of clearing members and regulators to determine what solution might satisfy the concerns and also create the least adverse impact for clearing members and their customers,” she said. “Our conversations with regulators indicated that they were looking for an outcome in which the clearinghouse didn’t access the discount window directly, but still used it effectively through primary dealers.”
Sorting out how to keep clearinghouses solvent is critical, said Will Rhode, director of fixed income research in New York at Tabb Group LLC, a financial-markets research and advisory firm.
“This is a massive deal because it’s coming down to the fact that somebody’s going to have to step in” to prevent a major clearinghouse from failing in times of stress, he said during an interview. “The potential of a clearinghouse default is equivalent to several Lehmans,” he said, referring to the 2008 collapse of Lehman Brothers Holdings Inc., one of the largest swap dealers at the time.Bloomberg News
CME Seeks to Broaden Cash Options in Clearinghouse Default Rules
As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through the CME Globex electronic trading platform and trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort.