04.04.2018

CME Partners for Pre-funded Treasury Facility

The CME Group, the world’s leading and most diverse derivatives marketplace, and GCSA Capital, a leading provider of collateral and risk transfer solutions for central counterparties and OTC cleared and uncleared derivatives counterparties, today announced they have collaborated to develop the Prefunded Treasury Facility (“PTF”) as a permitted form of collateral at the clearinghouse division of CME (CME Clearing) for performance bond (initial margin) requirements for clearing members’ proprietary (House) positions in futures and options contracts. The PTF is a letter of credit issued by a bankruptcy-remote trust that is fully collateralized and secured by U.S. Treasury securities that are deposited into a custody account controlled by CME Clearing. The PTF is designed to be an efficient, lower cost, and more stable form of term funding for clearing members.

“We are excited to announce the acceptance of the PTF program. We’ve worked closely with GCSA Capital over the past two years to ensure that the design of the PTF program is aligned with CME’s risk management standards for acceptable collateral and provides efficiencies to our clearing members,” said Sunil Cutinho, President, CME Clearing. “We are pleased to continue expanding our acceptable collateral programs to offer solutions like these which bring capital efficiencies to our customers.”

“The PTF is a useful form of collateral that can be a big benefit to the clearing member community. We are committed to providing innovative collateral solutions such as the PTF to the marketplace and we are excited to announce GCSA Capital’s collaboration with CME Clearing. We look forward to working with clearing members to bring the product to market,” said Chris Cononico, President of GCSA Capital.

“As a clearing member, we appreciate this initiative by CME Clearing and GCSA Capital to develop flexible funding solutions for market participants,” said Michael Parodi, Director, Credit Suisse.

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