The Chicago Mercantile Exchange has restructured its CDS clearing venture in the US after market participants indicated a preference to continue trading over-the-counter.
When CME Group set out its plans for CDS clearing in October last year, the exchange said it would launch the “first electronic trading platform that is fully integrated with a central counterparty clearing facility for CDS”.
However, the firm says it will offer a clearing-only service, removing the trading element from its platform.
The CMDX platform, a joint venture between CME Group and Chicago-based hedge fund Citadel, would have allowed trades to be executed on an electronic trading platform before being processed straight through to clearing on CME Clearing.
However, the “existing structure has not attracted the interest we hoped”, a CME official admits.
The joint venture completed the regulatory review process on March 13, but failed to attract any business.
The exchange plans to launch a pilot programme in the next few weeks, but the CME official would not reveal when the service would be fully rolled out.
CME Group also plans to clear CDS transactions in Europe, but is awaiting approval from the UK Financial Services Authority for its CDS venture, CME Clearing Europe.