Trade Management

Trade management consists of the following:

Execution

Execution is where the actual OTC derivative contract agreement occurs between parties. These agreements can occur via phone or on an OTC electronic trading platform. These contracts may exist between two parties (one-to-one); one on the sell side and the other on the buy side, or may have one party to multiple parties (one-to-many). 

• Trading parties agree to trading terms of the derivative contract.

Submission and Affirmation 

Affirmation is the operation by which the details of the derivative contract trade agreements from the Execution are recorded. Some of the details recorded include the exchange and clearing member organization, the trade type, product information, contract terms, pricing, allocations, and other trade information. Affirmation is a service offered on the CME ClearPort platform.

The Affirmation process is as follows:

• The Executing Trading Firm submits one side of the contract to the Affirmation Platform.

• The Executing Broker submits the other side of the contract to the Affirmation Platform.

• The Affirmation Platform validates these entries for party, clearing member, account, product and credit limits and acknowledges the submitter. If a match occurs, both submitters receive a notification and the trade status updated to reflect the match. If there is no match, the derivative contract remains in an "Unmatched" state until the contract expires. 

In addition to CME ClearPort, CME Group offers CME Direct, which provides a GUI interface and API for these services. Also, CME Group supports trade reporting affirmed by many OTC electronic trading platforms.

The Executing Trading Firm or Executing Broker submits a dual-sided "matched" trade, affirmed by the OTC electronic trading platform where the execution took place, to CME Clearport. 

CME ClearPort submits the matched trade for credit risk approval.

Clearing

Once approved for credit risk, the trade is sent to CME Clearing, which provides processing for real-time clearing and trade confirmations.