CME gets go-ahead for OTC FX options clearing

The Commodity Futures Trading Commission approves CME’s application to clear OTC FX options.

CME Group has received regulatory approval to provide clearing services for over-the-counter (OTC) FX options.

The Commodity Futures Trading Commission (CFTC) officially approved the move which the exchange operator described as a ‘significant milestone’.

The launch will include cash-settled OTC FX options with up to a two-year expiration in seven major currency pairs including AUD/USD EUR/USD, GBP/USD, USD/CAD, USD/CHF, USD/JPY, and EUR/GBP.

Paul Houston, global head of FX products at CME, explained the approval means the exchange will be able to provide its FX clients with the “broadest and most capital efficient FX clearing solution in the market”.

He added the Group plans to establish clearing for its G7 FX options later this year, having already gone live with clearing NDFs and cash settled forwards.

The additional launch will mean clients will have a more ‘holistic’ FX clearing service with portfolio margining between cleared FX products and its exchange listed FX futures and options.