Derivatives marketplace CME Group has expanded the collateral CME Clearing accepts to include short-term US Treasury ETFs.
The addition will provide clearing members and their clients with greater flexibility and increased efficiency in managing collateral costs. CME notes that ETFs pay a dividend, which is more operationally efficient and mitigates the needs for clients to re-invest maturity proceeds for individual US Treasury securities.
“We are very pleased to provide our market participants with additional capital efficiencies by continuing to expand the types of collateral we accept,” said Suzanne Sprague, senior managing director and global head of clearing and post-trade services. “We’ve worked closely with ETF sponsors to ensure that this new collateral both meets our rigorous risk management standards and offers a broader range of collateral choices for clearing members.”
Mike Crinieri, global head of ETFs at Goldman Sachs Asset Management, added: “Treasury ETFs such as the Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) are a useful form of collateral that may benefit clients who have challenges managing the roll of a US Treasury Bill portfolio, or who simply wish to outsource treasury management. We are excited to work with CME Clearing to deliver the operational efficiency of the ETF wrapper for collateral purposes.”
The short-term ETFs invest in US Treasury securities with less than one-year to maturity and are portable instruments held at the Depository Trust Company.