The first sustainable derivatives clearing service is introduced by CME Group

Published on: 18 September 2021
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Clearing companies and their customers will now be able to demonstrate support for environmental, social, and governance (ESG) goals and green hedging activities through clearing.

CME Group, the largest and most diverse derivatives marketplace in the world, made the announcement today that it is launching the first-ever Sustainable Clearing service for the derivatives industry. This service will assist market participants in tracking and reporting on how their hedging activities are moving them closer to achieving their sustainability goals. Beginning on September 27, 2021, users will be able to access the service.

Trading products like carbon offsets, battery metals, and bioenergy as well as engaging in interest rate and foreign exchange futures hedging activity are all examples of sustainable derivatives. These activities are carried out to support sustainable businesses.

According to Julie Winkler, Chief Commercial Officer of CME Group,

"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. Sustainability continues to be an increasing priority for our global clients. This new framework for clearing sustainable derivatives will make it easier for our clients to measure the impact of their support for sustainable activities. It may also be a part of the solution to encourage further growth in this important sector as the economy transitions to net-zero emissions."

According to Sunil Cutinho, President of CME Clearing, "this innovative clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows." [Clearing] "This innovative clearing offering makes it simple for firms to track their sustainable derivatives positions." Our solution ensures that all sustainable trades continue to benefit from our established risk management approach, which includes full margin offsets in cases where they are applicable. This creates efficiencies for both our clients and the end users who use our products.

According to Raphael Masgnaux, Global Head of Prime Solutions and Financing and G10 Rates at BNP Paribas,

"We consider it our duty to assist our clients in reaching their sustainable related goals through the Sustainable Clearing service. As the bank for a changing world, we consider it our duty to assist our clients in reaching their sustainable related goals."

"Standard Chartered is delighted to have contributed to CME's Sustainable Clearing solution and support the sustainable agenda of market participants,"

said Mick Hill, Global Product Owner, Exchange Traded Derivatives, Standard Chartered Bank.

"As a firm believer in how finance can catalyse a positive impact on our environment, Standard Chartered is delighted to have contributed to CME's Sustainable Clearing solution,"

In order to identify and categorise their sustainable trades, the eligibility criteria for Sustainable Clearing will be made available to all participating futures commission merchants. The eligibility criteria will be aligned to external standards such as the Social & Green Bond Principles developed by the International Capital Markets Association (ICMA). In order to guarantee that only standards established by impartial third parties are utilised, CME Group has committed to maintaining a "criteria neutral" stance.

CME Benchmark Administration Limited, an independent legal entity that is a part of CME Group and is responsible for the management and operation of the company's benchmarks and indices, will be in charge of the administration of the criteria and governance of Sustainable Clearing. Sustainable Clearing will be able to maintain its integrity and transparency in its operations by implementing a robust governance framework and an inclusive criteria committee, both of which are based on ICMA principles. This will allow Sustainable Clearing to maintain a close proximity to relevant industry standards as they continue to develop and mature.

Please visit www.cmegroup.com/sustainable-clearing for further information on Sustainable Clearing, including specifics on how trades will be defined and allocated, as well as other relevant information.

CME Group (www.cmegroup.com), the world's leading and most diverse derivatives marketplace, enabling clients to trade futures, options, cash and OTC markets, optimise portfolios, and analyse data. This gives market participants worldwide the ability to effectively manage risk and seize opportunities. The exchanges that are part of the CME Group provide the broadest selection of global benchmark products across all of the major asset classes. These products include interest rates, equities indexes, foreign currency, energy, agricultural products, and metals. Trading in futures and options on futures can be done using the company's CME Globex® platform. Trading in fixed income can be done through BrokerTec, and trading in foreign exchange can be done through the EBS platform. In addition to that, it runs CME Clearing, which is one of the most successful central counterparty clearing providers in the entire world.

Chicago Mercantile Exchange Inc. is the owner of the trademarks CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini. The Board of Trade of the City of Chicago, Inc. is the owner of the trademarks for CBOT and the Chicago Board of Trade. The New York Mercantile Exchange, as well as NYMEX and ClearPort, are all registered trademarks of the New York Mercantile Exchange, Inc. Commodity Exchange, Inc. is the owner of the trademark for the term "COMEX." Both BrokerTec and EBS are registered trademarks of their respective companies, BrokerTec Europe LTD and EBS Group LTD. Dow Jones, Dow Jones Industrial Average, S&P 500, and S&P are either services or trademarks owned by Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC, or S&P/Dow Jones Indices LLC, depending on the context. Chicago Mercantile Exchange Inc. has been granted a licence to use these trademarks. All other trademarks belong to their respective owners and cannot be used without permission.

Source: CME Group news

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