Cross margining

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Cross margining is a procedure for margining related securities, options and futures contracts together when different clearing organizations clear each side of the position. [1]

The CME (CME) and London Clearing House (LCH) initiated[2] the world’s first cross-margining program across international borders. The cross-margining program enables CME and LCH to provide risk-based cost savings to clearing member firms and their affiliates who have positions in the CME Eurodollar contract and the LIFFE/NYSE Euronext Euribor or Euro LIBOR contracts.[3]

Agreements

CME Group also has an agreement with the Fixed Income Clearing Corporation for cross margining.[4]

The Clearing Corporation announced a cross-margining agreement with Fixed Income Clearing Corporation on February 18, 2005 that allowed trades in 2, 5, 10 and 30-year Treasury futures on the then Eurex US exchange to be cross margined.

References

  1. Glossary of terms. U.S. Commodity Futures Trading Commission.
  2. The Chicago Mercantile Exchang's Proposal to Establish a Cross-Margining Program with the London Clearing House. U.S. Commodity Futures Trading Commission.
  3. Press Release. CME.
  4. FIXED INCOME CLEARING CORPORATION/CHICAGO MERCANTILE EXCHANGE INC.. Fixed Income Clearing Corporation.