CME Group Announces Launch of Cleared OTC Options on Physical Agricultural Commodities
31 July 2009 - 1:00AM
PR Newswire (US)
CHICAGO, July 30 /PRNewswire-FirstCall/ -- CME Group, the world's
largest and most diverse derivatives marketplace, today announced
the launch of cleared over-the-counter (OTC) options on physical
agricultural commodities beginning August 24. Clearing will be
available through CME ClearPort , a set of flexible clearing
services open to OTC market participants to substantially mitigate
counterparty risk and provide neutral settlement prices across
asset classes. These contracts are listed by the CBOT for clearing
only through CME ClearPort, and are subject to CBOT rules and
regulations. The exchange will launch 10 OTC cash-settled options
products for clearing: European- and Asian-style options on corn,
wheat, soybeans, soybean meal and soybean oil. These are in
addition to the listed cleared OTC agricultural swaps already
available for clearing through CME ClearPort. "These two types of
options on grains and oilseeds will enable market participants to
not only privately negotiate the option contract terms but they
also will receive the safety and benefits of having them cleared
through CME Clearing, virtually eliminating counterparty credit
risk," said Barry Goldblatt, CME Group Managing Director of
Commodity, Energy and Metals Products and Services. "Our customers
said they want to have the flexibility to define option strike
prices as well as their month and quantity so they can better
tailor trades to more precisely fit their portfolio management
needs." A European-style option is when the payment is determined
based on a predefined point of time. An Asian-style option is when
the payment is determined by the average underlying price over a
pre-set period of time. Both types of options may only be exercised
at the expiry date. An OTC option is an agreement exclusively
between buyer and seller that gives the buyer the right, but not
the obligation, to buy or to sell a particular underlying asset at
a later date at and agreed upon price. Cleared OTC agricultural
commodity option market participants must have a net worth of at
least $10 million and meet other CFTC regulatory requirements. For
more information, please go to http://www.cmegroup.com/otcags. As
the world's largest and most diverse derivatives marketplace, CME
Group (http://www.cmegroup.com/) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural commodities, metals, weather
and real estate. CME Group brings buyers and sellers together
through its CME Globex electronic trading platform and its trading
facilities in New York and Chicago. CME Group also operates CME
Clearing, one of the largest central counterparty clearing services
in the world, which provides clearing and settlement services for
exchange-traded contracts, as well as for over-the-counter
derivatives transactions through CME ClearPort . These products and
services ensure that businesses everywhere can substantially
mitigate counterparty credit risk in both listed and
over-the-counter derivatives markets. The Globe logo, CME, Chicago
Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort
are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago
Board of Trade are trademarks of the Board of Trade of the City of
Chicago. NYMEX and New York Mercantile Exchange are trademarks of
New York Mercantile Exchange, Inc. COMEX is a trademark of
Commodity Exchange, Inc. All other trademarks are the property of
their respective owners. Further information about CME Group and
its products can be found at http://www.cmegroup.com/. CME-G
DATASOURCE: CME Group CONTACT: Media, Mary Haffenberg,
+1-312-930-3435, or Allan Schoenberg, +1-312-930-8189, ,
http://www.cmegroup.mediaroom.com/, or Investors, John Peschier,
+1-312-930-8491, all of CME Group Web Site: http://www.cme.com/
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