Clearing House Calculus II: Exchanges Expand the Boundaries of Self Clearing

The CME Group is the latest Futures exchange and clearinghouse that has proposed allowing buy-side clients with direct access to self-clearing. This proposal will kick off a market structure change that will result in the by- passing of the FCMs in terms of process and work flow. This proposal follows a similar initiative put forth from Eurex Group earlier in the year. Both exchanges recognize the changing FCM landscape and are willing to look to new and innovative ways to serve their client base.

The exchanges know that any change to market structure must not threaten the integrity and financial safety of the market participants. Both CME and Eurex have taken steps to ensure that the FCMs are still available to cover any contingent liability that these new membership categories may introduce. The convergence of technology, consolidation, regulation, and capital constraints allow the exchanges to somewhat safely explore new boundaries when it comes to clearing the futures markets.