A Q&A With CCorp’s Top Execs

On Feb. 8, The Clearing Corporation (CCorp) began processing trades for Eurex U.S., the all-new electronic futures exchange based in Chicago that was launched by Eurex, the world's largest derivatives exchange.

Prior to forming the global clearing partnership with Eurex in May 2003, CCorp (formerly known as the Board of Trade Clearing Corporation) mainly processed trades for the Chicago Board of Trade. After the Chicago Board of Trade decided to shift its clearing business to the Chicago Mercantile Exchange's Clearing House Division, CCorp entered an agreement to provide clearing for Eurex U.S.

At press time, CCorp was awaiting regulatory approval from the Commodity Futures Trading Commission to implement the first phase of the Global Clearing Link. If approved, CCorp participants in the U.S. will be able to clear Eurex-traded European benchmark derivatives via the Global Clearing Link. WS&T Editor-at-Large Ivy Schmerken sat down with CCorp's Dennis Dutterer, president and CEO; Donald Sternard, VP, client and marketplace services; and Brett Paulson, EVP and CTO, to discuss how the Global Clearing Link will work and how U.S. brokerage firms will benefit.

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Dennis Dutterer, president and CEO

Q: What is the Global Clearing Link?

A: Eurex U.S. [But], when the project is fully implemented, we will clear the European trades, too.

Q:Has there been a lot of interest in Eurex U.S. so far?

A: There are three pieces we hope to do in two phases. But the first piece is what we call the EuroLink. There are European-denominated products traded in Europe. They are highly liquid - Bund, Bobl, Schatz, Dow Jones Euro-STOXX 50, DAX. A subset [of those products] had been approved by the CFTC to be distributed in the United States. The ones I mentioned are the ones ... that the CFTC has said it's OK for Eurex to bring the terminal into the U.S. and allow these to be traded from U.S. soil. So the idea is to allow our clearing participants to clear those [products] through us. So rather than them having to become a clearing member of Eurex to clear those products, they can simply be a member of us.

Q: What are the benefits of the Global Link?

A: They should have to put less collateral up, so in that sense, yes, it should be cheaper.

Q: How would Eurex customers clear the dollar products through your system?

A: The idea is to still use the Eurex system to clear all that because it knows how to do all the variation payments and so forth. At that phase, they can simply interface with us and not directly with Eurex.

Q: Will you provide an interface to Eurex Clearing?

A: Maybe third quarter, maybe early fourth quarter. That's the target. All of it is subject to regulatory approval.

Q: Did the CFTC approve the cross-listing?

A: Absolutely. It is our main project right now, and just getting ready for Eurex U.S. was a substantial opportunity. Right now, we're ready for phase one. We're in simulation testing with the Eurex U.S. simulation environment and also with the Eurex simulation environment, and then whenever it is deemed appropriate and approved, we're ready to go. Phase two is scheduled for simulation testing in July, and it coincides with a big release of the new Eurex trading engine. When the new Eurex trading engine is coming, it will have all the functionality required for phase two of the link.

Q: You said just getting ready for Eurex was a substantial opportunity. What did you have to do?

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio