The first sustainable derivatives clearing service is introduced by CME Group
CME Group Inc.
The first-ever Sustainable Clearing service for the derivatives industry has been launched by CME Group, the largest and most diverse derivatives marketplace in the world, to assist market participants in tracking and reporting on how their hedging activities are advancing their sustainability goals. Beginning on September 27, 2021, the service will be accessible.
In order to support a sustainable business, sustainable derivatives include both the trading of products like carbon offsets, battery metals, and bioenergy as well as interest rate and foreign exchange futures hedging.
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."
"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 used as a part of the solution to encourage further growth in this important sector as the economy moves toward net-zero emissions,"
says the author.
According to Sunil Cutinho, President of CME Clearing,
"This cutting-edge clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows. Our solution makes sure that all sustainable trades continue to gain from our well-established risk management strategy, including full margin offsets when appropriate, which benefits clients and end users."
Raphael Masgnaux, Global Head of Prime Solutions and Financing and G10 Rates, BNP Paribas, stated: "As the bank for a changing world, we consider it our duty to assist our clients in reaching their sustainable related goals through the Sustainable Clearing service."
"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."
The Sustainable Clearing eligibility criteria will be made available to all participating futures commission merchants so they can identify and categorise their sustainable trades. The eligibility requirements will be in line with outside standards, such as the Social & Green Bond Principles of the International Capital Markets Association (ICMA). In order to guarantee that only unbiased third-party standards are used, CME Group will be "criteria neutral."
CME Benchmark Administration Limited, a separate legal entity within CME Group that manages and runs the company's benchmarks and indices, will oversee the Sustainable Clearing criteria and governance. Sustainable Clearing will operate with integrity and transparency, adhering to pertinent industry standards as they develop and mature, thanks to a strong governance structure and an inclusive criteria committee built on ICMA principles.
Visit www.cmegroup.com/sustainable-clearing for more information on Sustainable Clearing and specifics on how trades will be defined and allocated.