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CME Hosted Automatic Credit Check Model - Trade Cleared

This scenario illustrates submitting a dual-sided trade to CME ClearPort using MQ as a transport to be cleared at CME DCO.  Both the clearing members have setup risk limits in CME. CME ClearPort does the credit check and the trade is successfully cleared. The trade can be submitted using either transport. 

Trade Submission Using MQ 

This scenario illustrates submitting a dual-sided trade to CME ClearPort using MQ as a transport to be cleared at CME DCO. The steps include:

• CME ClearPort validates the trade for product, account, credit and other trade information.

• If the trade passes all validations, the submitter receives a positive Acknowledgment with cleared trade, and the trade is sent to Clearing.

• Once the trade posts to clearing after the necessary validations, CME ClearPort sends a clear trade confirm to the submitter.

Open

Trade Submission Using HTTP

This scenario illustrates submitting a dual-sided trade to CME ClearPort using HTTP as a transport to be cleared at CME DCO. The steps include:

• CME ClearPort validates the trade for product, account and other trade information.

• If the trade passes all validation, the submitter receives a positive acknowledgment and the trade is sent to Clearing.

• CME ClearPort then validates the trade for credit. This is an asynchronous process.

• The submitter may send a request for status of the trade.

• CME ClearPort responds with the status of the trade.

Open

Trade Submission with Allocations

This scenario illustrates submitting a dual-sided trade to CME ClearPort using MQ or HTTP as a transport by a platform. In this model, where ClearPort performs the credit check, all accounts must validate and pass the credit check or the entire trade is rejected. 

CME Hosted / Explicit Claim Model (Choice) - Trade Cleared

Explicit Claim by Both Sides

In this scenarios, the clearing firms of both sides perform their own credit checks and explicitly accept or reject trades. 

Trade Submitted Using MQ

In this use case, a submitter sends a dual-sided affirmed trade to be claimed by clearing firms into CME ClearPort using MQ as a transport. The trade goes into the clearing member claim workflow.

• CME ClearPort receives a dual-sided trade: It acknowledges the receipt of the trade back to the submitter if the trade is valid and notifies the clearing firms of the pending clear trade.

• One of the clearing firm claims: The submitter receives a claim notification that provides the submitter, visibility into the clearing process.  

• When the second clearing firm claims, the trade is considered cleared and CME ClearPort sends a cleared trade notification to the submitter.

Trade Submitted Using HTTP

In this use case, a submitter sends a dual-sided affirmed trade to be claimed by clearing firms into CME ClearPort using HTTP as a transport. The trade goes into the clearing member claim workflow.

• CME ClearPort receives a dual-sided trade: It acknowledges the receipt of the trade back to the submitter if the trade is valid and notifies the clearing firms of the pending clear trade.

• A clearing firm claims trade: Claim notifications are not sent to the submitter automatically. The submitter must request for the status of the trade.

• CME ClearPort clears the trade, clear trade notifications are not sent to the submitter automatically. The submitter must request for the status of the trade.

• CME ClearPort notifies the submitter of the status of the trade only in response to the request.

CME Hosted Credit Check by Both Sides

In this scenario, the clearing firms of both sides have setup risk limits at CME  had have CME perform the credit check. 

Trade Submitted Using MQ

In this use case, a submitter sends a dual-sided affirmed trade to be claimed by clearing firms into CME ClearPort using MQ as a transport. The trade is credit checked at CME.

• CME ClearPort receives a dual-sided trade: CME ClearPort acknowledges the receipt of the trade back to the submitter after the necessary validations. If the trade is valid, CME ClearPort notifies the clearing firms that the trade is pending clear.

• CME does the credit check for both sides: The submitter receives auto-claim notification(s) (similar to a claim notification from a clearing firm)  to indicate the trade has been risk checked and has passed credit.

• If both sides pass credit, the trade is considered cleared and CME ClearPort sends a cleared trade notification to the submitter.

CME Hosted Credit Check by One Side and Explicit Claim by Other

In this scenario, one of the the clearing member performs its own credit check and explicitly accept or reject trades and the other clearing member has setup risk limits at CME.

Trade Submitted Using MQ

In this use case, a submitter sends a dual-sided affirmed trade to be claimed by clearing firms into CME ClearPort using MQ as a transport to be cleared at CME DCO. 

• CME ClearPort receives a dual-sided trade and validates the trade for product, account and credit. Credit check is done for the side that has their risk limits set at CME.

• CME ClearPort sends a positive acknowledgment if the trade passes  all validations including credit.

• An auto claim notification is sent to the submitter for the side that passes credit at CME.

• When the clearing member claims, the submitter receives a claim notification.

• At this point the trade is considered to be cleared and CME ClearPort sends a cleared trade notification to the submitter.

Trade Submission With Allocations - Pre-Clear

This scenario illustrates submitting a dual-sided trade into CME ClearPort with an asset manager (AM) on one side and an executing broker (EB) on the other side using MQ as a transport. The AM side includes two customer allocations, Alloc1 for 60MM and Alloc2 for 40MM.  This workflow uses explicit claim by the all the clearing members. The steps include:

• CME ClearPort receives the dual-sided trade, acknowledges the submitter, and then notifies the corresponding clearing firms.

• When the clearing firm of Alloc2 claims, CME ClearPort sends a claim notification to the submitter.

• The submitter receives claim notices for both the trades of the EB when the clearing firm of EB claims the trades.

• In this scenario, Alloc2 for 40M is the first to clear. CME ClearPort notifies the submitter of the partially cleared trade. The corresponding quantity buckets update to reflect the partial clear.

• Each allocation clears independent of the other. When the clearing firm of Alloc1 claims, CME ClearPort sends the final clear trade notification. 

Trade Submission with Allocations - Post-Clear 

Step 1

This scenario illustrates submitting a dual-sided trade into CME ClearPort with a Client on one side and an executing broker (EB) on the other side using MQ as a transport. This work flow is the same as the trade submission workflow. This example illustrates it with an explicit claim workflow. The steps include:

• CME ClearPort receives a dual-sided trade: It acknowledges the receipt of the trade back to the submitter if the trade is valid and notifies the clearing firms of the pending clear trade.

• One of the clearing firm claims: The submitter receives a claim notification that provides the submitter, visibility into the clearing process.  

• When the second clearing firm claims, the trade is considered cleared and CME ClearPort sends a cleared trade notification to the submitter.

Step 2

Once the trade is cleared, the client allocates the trade from the holding account to two client  accounts. The allocations  are Alloc1 for 60MM and Alloc2 for 40MM.  The trade is now between the Client and the Client accounts. This workflow uses explicit claim by the all the clearing members. The steps include:

• CME ClearPort receives the dual-sided trade, acknowledges the submitter, and then notifies the corresponding clearing firms.

• When the clearing firm of the 40MM allocation explicitly claims, CME ClearPort sends a claim notification to the submitter.

• The submitter receives claim notices for both the trades of the Client (60MM and 400MM) when the clearing firm of Client claims the trades.

• In this scenario, the 40MM allocation is the first to clear. CME ClearPort notifies the submitter of the partially cleared trade. The corresponding quantity buckets update to reflect the partial clear.

• Each allocation clears independent of the other. When the clearing firm of the  60MM allocation claims, CME ClearPort sends the final clear trade notification.