CME Group and DTCC to Enhance Existing Cross-Margining Arrangement, Extending Benefits to End Users in December 2025

Rhea-AI Summary

CME Group and DTCC have announced plans to expand their existing cross-margining arrangement by December 2025, subject to regulatory approval. The enhancement will allow eligible end users at CME Group and DTCC's Fixed Income Clearing (FICC) to access capital efficiencies when trading U.S. Treasury securities and CME Group interest rate futures with offsetting risk exposures.

To participate, clients must use the same dually registered Futures Commission Merchant (FCM) and broker/dealer at both CCPs. The initiative aligns with expanded U.S. Treasury Clearing requirements, promoting central clearing and reducing systemic risk. Under the arrangement, FICC will designate cross-margin accounts for eligible position offsetting, while CME Group will enable participants to direct futures to end-user cross-margin accounts throughout the day.

Positive

• Enhanced capital efficiencies for end users through cross-margining
• Potential cost reduction and improved liquidity in U.S. Treasury markets
• Reduced systemic risk through promotion of central clearing

Negative

• None.

Insights

Financial Market Infrastructure Analyst

This strategic enhancement of the CME-DTCC cross-margining arrangement marks a pivotal evolution in market infrastructure that will significantly impact both institutional efficiency and market stability. The extension to end users represents a major operational advancement that will unlock substantial capital efficiencies across the U.S. Treasury and futures markets.

The arrangement's architecture is particularly sophisticated, allowing for real-time position offsetting between Treasury securities and interest rate futures. This creates a powerful capital optimization mechanism that could substantially reduce collateral requirements for market participants. For context, similar cross-margining arrangements typically achieve margin savings of 20-40% for eligible positions, though actual savings will vary based on portfolio composition.

Three key strategic implications deserve attention:

• The timing aligns perfectly with expanded U.S. Treasury Clearing requirements, positioning CME Group advantageously in the evolving regulatory landscape
• The requirement for dually registered FCMs creates a natural moat, potentially strengthening CME's competitive position in interest rate derivatives
• The initiative promotes greater central clearing adoption, which could drive increased trading volumes and clearing revenues for CME Group while enhancing market stability

From a risk management perspective, this arrangement introduces sophisticated netting capabilities that reduce counterparty exposure while maintaining robust risk controls. The ability to direct futures to end-user cross-margin accounts throughout the day provides valuable flexibility for active traders and portfolio managers seeking to optimize their capital usage.

The initiative's focus on end users suggests a strategic pivot toward expanding market accessibility and efficiency, which could drive increased participation in both cash and futures markets. This expansion of cross-margining benefits beyond traditional institutional players represents a significant democratization of market infrastructure capabilities.

NEW YORK and LONDON and HONG KONG and SINGAPORE and SYDNEY , Feb. 24, 2025 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, and The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today confirmed plans to expand their existing cross-margining arrangement to provide increased margin savings and capital efficiencies to end users by December 2025.

Subject to regulatory approval, this proposed enhancement to the long-standing CME-DTCC cross-margining arrangement will allow eligible end user clients at CME Group and the Government Securities Division (GSD) of DTCC's Fixed Income Clearing Corporation (FICC) to access capital efficiencies that are available when trading U.S. Treasury securities and CME Group interest rate futures that have offsetting risk exposures. To participate in end-user cross margining, clients will need to leverage the same dually registered Futures Commission Merchant (FCM) and broker/dealer (as registered with the SEC) at both CCPs. Aligning enhanced cross-margining for end-user customers with the regulatory timeline for expanded U.S. Treasury Clearing requirements encourages greater utilization of central clearing, therefore reducing systemic risk.

"Bringing the benefits of cross-margining to the end-user is a critical step in enhancing capital efficiencies across U.S. Treasury market participants," said Laura Klimpel, Managing Director and Head of DTCC's Fixed Income and Financing Solutions. "Our ongoing collaboration with CME Group remains focused on extending cross-margin benefits to more customer accounts and eventually, to other products. Doing so will enable even greater efficiency, cost reduction, improved liquidity and increased risk management in the U.S. Treasury markets."

"Extending our cross-margining agreement to client accounts is an important milestone in our efforts to make U.S. Treasury markets more efficient for all market users," said Suzanne Sprague, CME Group Chief Operating Officer and Global Head of Clearing and Post-Trade Services. "Building on more than 20 years of partnership, we look forward to working with DTCC and regulators to deliver even greater benefits to both cash and futures market participants."

Under the proposed arrangement, FICC will designate cross-margin accounts, allowing all eligible positions in the account to offset with eligible CME Group interest rate futures. CME Group will allow participants to direct futures to end-user cross-margin accounts throughout the day, thereby making them available for offset in the cross-margin arrangement. Ahead of the regulatory approvals, end-users can work to set up a new account, complete proper program legal documentation and test end-to-end workflows.

About CME Group
As the world's leading derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the S&P 500 Index are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

About DTCC
With over 50 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From 20 locations around the world, DTCC, through its subsidiaries, automates, centralizes, and standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm innovates purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem. In 2023, DTCC's subsidiaries processed securities transactions valued at U.S. $3 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $85 trillion. DTCC's Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes more than 20 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, X, YouTube, Facebook and Instagram.

CME-G

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SOURCE CME Group

FAQ

When will CME Group's enhanced cross-margining arrangement with DTCC become effective?

The enhanced cross-margining arrangement is scheduled to become effective in December 2025, subject to regulatory approval.

What are the requirements for clients to participate in CME-DTCC cross-margining?

Clients must use the same dually registered Futures Commission Merchant (FCM) and broker/dealer at both CCPs to participate in the cross-margining arrangement.

How will CME Group's cross-margining enhancement benefit end users?

The enhancement will provide increased margin savings and capital efficiencies when trading U.S. Treasury securities and CME Group interest rate futures with offsetting risk exposures.

What products are eligible for CME-DTCC cross-margining under the new arrangement?

The arrangement covers U.S. Treasury securities and CME Group interest rate futures that have offsetting risk exposures.

How does CME's cross-margining arrangement affect systemic risk in markets?

The arrangement encourages greater utilization of central clearing, which helps reduce systemic risk in the U.S. Treasury markets.