CME Secures $7 Billion Credit Line "In Case Of Clearing Member Default"

[Primal Trader]

With the recent chaos in oil futures, and to a lesser degree the dysfunction in gold futures, this is a very important development:

In a U.S. Securities and Exchange Commission filing, CME has entered into an amendment to its 364-day multi-currency credit facility with the Bank of America N.A., as administrative agent, Citibank N.A., as collateral agent and collateral monitoring agent and some of the banks under its existing facility.

This is for a secured credit facility of $7 billion, which is eligible to be increased to $10 billion.

The new credit facility is "intended to provide temporary liquidity to CME in the event of a clearing member default, a liquidity constraint or depository default, or in the event of a delay in the payment systems utilized by CME."

https://www.marketwatch.com/story/c...-against-a-clearing-member-default-2020-04-30

 

[Scataphagos]

There you go. Protection for all the ET'ers 1-sy, 2-sy MES plays.... insuring that you will get paid.

 

[speedo]

The CME would know who is already in ICU.

 

[Scataphagos]

The CME would know who is already in ICU.

Probably nobody right now. They're just getting ready for the BIG CRASHOLA!

 

[R1234]

CME has 66 clearing member firms. I have an account at one of those.
Several years ago I was proactive in pulling out my $ just prior to the PFG Best collapse as well as the MF Global collapse. Food for thought.

 

[Primal Trader]

Being proactive was indeed wise, great move on your part! Many traders don't even look at the underlying financials of the firms they are trusting their lives with so to speak. Note that Deutsche Bank is a clearing firm, to me that is a bit scary! When I got a new futures account with a clearing firm recently, I was extremely impressed with the financial details of the firm on the application

 

[Scataphagos]

CME has 66 clearing member firms. I have an account at one of those.
Several years ago I was proactive in pulling out my $ just prior to the PFG Best collapse as well as the MF Global collapse. Food for thought.

I had a few of those failures too.

Each FCM has a "capital account" which is there to cover debits of their own investors. The money in this story is to cover other brokers/investors in case the capital account at an FCM gets exhausted with their own customer debits. A good thing all around.

 

[systematictrader]

There you go. Protection for all the ET'ers 1-sy, 2-sy MES plays.... insuring that you will get paid.

Hahahaha
Very good one

 

[systematictrader]

CME has 66 clearing member firms. I have an account at one of those.
Several years ago I was proactive in pulling out my $ just prior to the PFG Best collapse as well as the MF Global collapse. Food for thought.

Dang that was a while ago
I got stuck with them and dudnt get anything till 2 years later
Good thing it was a very small account back then

 

[VolSkewTrader]

Just like the carnage in 2008-2009 (although big banks have been spared) lots of traders, prop groups, hedge funds, and black boxes have blown up or closed down these past 2 months. It's never a good idea to treat your unprotected trading account (at a clearinghouse) like a bank account..always keep the minimum required amount. One or two rogue accounts can take down an FCM or clearinghouse and all of its trader clients (see Ronin Capital). CME also learned its lesson from the MF Global debacle.