Chicago Mercantile Exchange, Shanghai Futures Exchange Sign SPAN® Licensing Agreement
Today's announcement follows a Memorandum of Understanding (MOU) signed one year ago in which SHFE and CME agreed to pursue joint business development initiatives in derivatives products, the first such agreement between SHFE and a North American exchange. Under the MOU, the two exchanges agreed to discuss a variety of issues, including cooperation related to product development, information sharing and market regulation.
"SHFE is proud to become the first exchange in Mainland China that adopts the international margin and risk management system," said SHFE Chairperson Madam Wang Lihua. "This is one of several steps SHFE takes to upgrade its risk management mechanism. This globally recognized system will help SHFE to better incorporate itself in the international futures market landscape."
"We are pleased that our important relationship with SHFE has resulted in this agreement," said CME Chairman Terry Duffy. "CME remains focused on long- term growth. By achieving common goals with SHFE, we are well positioned in the expansion of the Chinese marketplace."
In 1988, CME developed and implemented the SPAN methodology for calculating performance bond requirements. SPAN was the first futures industry performance bond system ever to calculate requirements exclusively on the basis of overall portfolio risk. Today, SPAN has become the industry standard; the program is now the official performance bond mechanism employed by 47 exchanges and clearing organizations around the world.
The Shanghai Futures Exchange was established after the merger of Shanghai Metal Exchange, Shanghai Cereals and Oil Exchange and Shanghai Commodity Exchange in December 1999. Now the most actively traded contracts through the SHFE are copper, natural rubber and aluminum. In the year of 2003, the SHFE traded 80,159,500 contracts, 229.25% higher year on year. The SHFE has become one of the major marketplaces for trading copper and natural rubber in the world, and as such, it aims to provide primary trading services to the market users. Currently, the marketplace has the active participation of 217 members, among which 85% are futures brokerage firms. With Shanghai's robust financial development, the SHFE looks to listing China's first financial derivative product, so as to ensure investors from home and abroad can have their financial risks managed.
Chicago Mercantile Exchange Inc. ( www.cme.com ) is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX® electronic trading platform. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.4 billion per day in settlement payments in 2003 and managed $39.5 billion in collateral deposits at Jan. 31, 2004. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index.
Statements in this news release that are not historical facts are forward- looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, which can be obtained at its Web site at www.sec.gov . We undertake no obligation to publicly update any forward- looking statements, whether as a result of new information, future events or otherwise.
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SOURCE Chicago Mercantile Exchange Inc.
CONTACT: Anita S. Liskey of Chicago Mercantile Exchange, +1-312-466-4613, firstname.lastname@example.org , or Yang Ke of Shanghai Futures Exchange, 68400000, email@example.com Web site: http://www.cme.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Chicago Mercantile Exchange's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.