CME Group Launches Sustainable Derivatives Clearing Service

    Stockholm (NordSIP) – CME Group, the world’s largest financial derivatives exchange, announced it will launch the derivatives industry’s first-ever Sustainable clearing service on September 27, to help market participants track and report on how their hedging activities are advancing their sustainability goals.

    Sustainable derivatives encompass both the trading of products such as carbon offsets, battery metals and bioenergy as well as interest rate and foreign exchange futures hedging activity that is carried out to support a sustainable business. The new service hopes to provide clearing firms and clients the ability to demonstrate support of ESG objectives and green hedging activities through clearing

    “Sustainability continues to be an increasing priority for our global clients as they significantly expand both the risk management that they provide to green businesses and environmental projects,” said Julie Winkler, Chief Commercial Officer, CME Group. “This new framework for clearing sustainable derivatives will make it easier for our clients to measure the impact of their support for sustainable activities and can be part of the solution to encourage further growth in this key sector as the economy transitions to net-zero emissions.”

    The product will allow traders to tag their trades as sustainable according to eligibility criteria aligned to external standards, such as the International Capital Markets Association (ICMA) Social & Green Bond Principles. CME Group will be ‘criteria neutral’ to ensure that only independent third-party standards are applied.

    “This innovative clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows,” said Sunil Cutinho, President, CME Clearing. “Our solution ensures that all sustainable trades continue to benefit from our established risk management approach, including full margin offsets where applicable, which creates efficiencies for clients and end users.”

    “As the bank for a changing world, we consider it our duty to assist our clients in reaching their sustainable related goals through the Sustainable Clearing service,” said Raphael Masgnaux, Global Head of Prime Solutions and Financing and G10 Rates, BNP Paribas.

    “As a firm believer in how finance can catalyse a positive impact on our environment, Standard Chartered is delighted to have contributed to CME’s Sustainable Clearing solution and support the sustainable agenda of market participants,” said Mick Hill, Global Product Owner, Exchange Traded Derivatives, Standard Chartered Bank.

    The criteria and governance of Sustainable Clearing will be administered by CME Benchmark Administration Limited, an independent legal entity within CME Group, that manages and operates the company’s benchmarks and indices. A robust governance framework and an inclusive criteria committee based on ICMA principles will ensure that Sustainable Clearing operates with integrity and transparency, staying close to relevant standards in the industry as they evolve and mature.

    Image by Scharment via Twenty20 (edited)

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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