CME and Tullett Liberty to Join Forces to Introduce Innovative Matching and Clearing Capabilities for OTC Markets
With CME's industry-leading clearing capabilities and Tullett Liberty's extensive customer base and market expertise, derivative dealers can now manage their positions and counterparty exposure more efficiently via execution of daily FRA contracts listed by CME. The new functionality will enable contract matching on a weekly basis, employing a match algorithm designed to facilitate true multilateral spread trading of these FRA contracts.
The FRA contracts, which are essentially Eurodollar futures with flexible daily expiration dates, will be automatically matched and executed on GLOBEX®, CME's electronic trading platform, and cleared by the CME Clearing House, the largest futures clearing house in the world.
"By partnering with Tullett Liberty to introduce this trade matching and clearing functionality, we will provide the interest rate OTC market with a powerful new tool to better manage the unwanted counterparty risk that is inherent in their business," said CME Chairman Terry Duffy. "CME is pleased to be part of this groundbreaking venture that will combine the best of exchange-traded and OTC markets and benefit market users worldwide."
The unique matching technology mitigates forward interest rate gap exposure for dealers while providing additional benefits of cross margining, straight through processing and order aggregation in a centralized marketplace that is supported by CME's Clearing House. The resulting system will create substantial matching and capital efficiencies for participants in the derivatives markets.
"We are very pleased to be joining the CME in this new venture which continues to demonstrate our commitment to innovative product development for the marketplace," said Tullett Group CEO Bruce Collins. "Enhanced capital usage and the provision of another avenue of risk management are in our view key elements to the success of this product. The application of technology should allow for rapid rollout of further currencies and asset classes with the additional expected benefits of real time risk elimination, trade confirmation and error reduction."
"We are leveraging our position as the world's largest futures clearing organization to undertake the first in a series of over-the-counter clearing initiatives designed to grow our business," said CME CEO Craig Donohue. "We also are providing our customers with greater capital performance bond efficiencies."
"The need for derivative traders to eliminate mis-matched interest rate exposure is the logical driver of this development. This product offering maximizes the efficiency of the exchange approach with the demand by the derivative trading community to eliminate basis risk," said Tullett Liberty Senior Managing Director of Capital Markets Vinayek Singh.
About Tullett Liberty - www.tullib.com
Established in 1971, Tullett Liberty is one of the world's leading wholesale financial brokers. Represented in all major financial centers, Tullett Liberty has leading positions in Fixed Income Securities, Interest Rate Derivatives, Equities, Energy, Credit Derivatives and FX and Money Markets. Tullett Liberty is the wholesale broking arm of Collins Stewart Tullett plc, a London Stock Exchange listed company (ticker symbol: CSTL). CSTL also owns the UK's largest independent stockbroking group, Collins Stewart.
About the Chicago Mercantile Exchange Inc. - www.cme.com
The Chicago Mercantile Exchange 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 as of 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.
Chicago Mercantile Exchange, CME, the globe logo and GLOBEX are registered trademarks of Chicago Mercantile Exchange Inc.
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 is available in the Investor Information section of the CME Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Chicago Mercantile Exchange Inc.
CONTACT: Anita S. Liskey, +1-312-466-4613, news@cme.com , or Emma Kane of Red Leaf Communications, +011-44-20-7955-1410, ek@redleafpr.com Web site: http://www.tullib.com 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.