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CME Hosted Automatic Credit Check Model - Trade Cleared

Trade Submitted Using MQ 

In this scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. Both the clearing members have setup risk limits in CME. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The steps are:

• CME ClearPort does the credit check for both sides and the trade is successfully cleared.

• CME ClearPort sends a clear trade confirm to the submitters.

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Trade Submitted Using HTTP 

In this scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using HTTP as a transport. Both the clearing members have setup risk limits in CME. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The steps are:

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

• The trade is sent to Clearing.

• Each submitter will have to do a trade status request.

• CME ClearPort notifies the platform of the current status of the trade in response to the trade status request.

Open

Trade Submitted with Allocations

In this scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. In this model, where ClearPort performs the credit check, all the allocation accounts must validate and pass the credit check or the entire trade is rejected. 

CME Hosted / Explicit Claim Model - 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 scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The trade goes into the clearing member claim workflow.

• One of the clearing firm claims: Claim notification is sent to the submitter of the trade side.

• An opposite claim notification is sent to the other side to provide visibility into the claim 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 scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The trade goes into the clearing member claim workflow.

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

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

• CME ClearPort notifies the submitters 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 scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The clearing firms are notified of the alleged trade. The trade is credit checked at CME.

• 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.

• An opposite claim notification is sent to the other side to provide visibility into the claim process.

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

CME Hosted Check by One Side and Explicit Claim by Other

 In this use case, 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 scenario, two single sided trades have been submitted into CME ClearPort from two different submitters for matching and clearing using MQ as a transport. Once the trade is matched in CME ClearPort, both the platforms are notified of the trades which are in pending clearing state. The clearing firms are notified of the alleged trade. 

• CME ClearPort sends a pending clearing notification after the trade match.

• Credit check is done for the side that has their risk limits set at CME.

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

• An opposite claim notification is sent to the other side to provide visibility into the claim process.

• When the clearing member claims, the submitter receives a claim notification only if the other side is not already auto claimed.  

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

Trade Submitted with Allocations - All Allocations Cleared

In this scenario, The Client and Executing Broker (EB) have agreed to a deal, and each submits a single-sided trade to CME ClearPort from its respective system. The submitters use MQ as a transport to submit trades. The EB submits its side of the deal. The Client then submits its side which includes two customer allocations, Alloc1 for 60MM and Alloc2 for 40MM. When both sides of the trade are received, CME ClearPort matches the trade and sends match notifications with a trade status of Pending clear to both submitters. The respective clearing firms are notified. The steps are:

• Claim notifications and opposite claim notifications are sent to the each submitter as clearing firms claim, providing visibility into the clearing process.

• The submitters are notified of the cleared trades as clearing firms on both sides claim the trade.

• In the diagram below, Alloc2 for 40MM is the first to clear, followed by Alloc1 for 60MM.