CME announces clearing for London gold forwards
The CME has launched clearing services for over the counter (OTC) London gold forwards. The service will be available through CME ClearPort. The exchange says clearing services for house business – in other words own principal trading – will commence on August 23, while agency business (broking) should follow within 90 days. The contracts will be made available for clearing on COMEX through CME ClearPort, and are subject to COMEX and CME rules and regulations.
“Launching our clearing services for London gold forwards is in direct response to customers’ need for a secure way to manage counterparty credit exposure,” says Joe Raia, CME’s managing director of energy and metals products. “This post-trade service allows trades to be privately negotiated and executed off-exchange and then submitted through CME ClearPort for clearing. This allows counterparties to continue to trade as they always have while transferring credit risk to CME Group,” he adds.
Trades will remain as forwards to the date in clearing and settle with 'London Good Delivery' gold via the market standard book-entry transfer system. Positions will be marked-to-market daily with margins applied to open positions. CME Clearing will remain in the delivery process throughout settlement and ensure transfer of gold and dollars between counterparties.