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CME Group's Duffy to Appear Before House Financial Services Subcommittees to Discuss Impact of Proposed Rules to Implement Basel III Capital Standards

CHICAGO, Nov. 28, 2012 /PRNewswire/ -- CME Group Executive Chairman and President Terry Duffy will appear before the House Financial Services Subcommittees on Financial Institutions and Consumer Credit, and Insurance, Housing and Community Opportunity, Thursday, November 29, to discuss "Examining the Impact of the Proposed Rules to Implement Basel III Capital Standards."

"CME Group's concern is that Basel III's 'one size fits all' rules for capital charges based on the risk of cleared derivatives is at odds with the objectives of Dodd-Frank and the G-20 mandates, which aim to reduce systemic risk and increase transparency," said Duffy in prepared testimony before the House subcommittees.  "If clearing houses properly set margins for liquid derivatives to cover one or two day risk while banking regulators impose a capital charge based on five days, banks and ultimately their customers will be burdened with increased costs from unwarranted capital requirements.  This may eliminate an incentive to trade liquid exchange-traded derivatives instead of other derivatives products with higher risk profiles."

"The capital rules should be replaced with an approach consistent with standards recognizing that margin levels will differ based on the liquidity, transparency and other risk-reducing characteristics of each product," Duffy added. 

CME Group also joined the World Federation of Exchanges (WFE) and 11 other exchanges in submitting letters to international regulators calling for them to modify capital standards for exchange traded derivatives to appropriately reflect the liquidity and efficiency of exchange traded derivative markets. In the letters the exchanges said that the BCBS Interim Capital Framework should be amended to modify the 5-day capital charge for clearing members using exchange-traded derivatives and replace it with a standard consistent with IOSCO's Principles for Financial Market Infrastructures (PFMI) which are based on the risk profile, transparency and other characteristics of the product.  Any alternative could result in inconsistent national outcomes and work against the G-20 objectives to promote adherence to international accords and further international harmonization.

The House Financial Services joint subcommittee hearing is scheduled for 10 a.m. Eastern time in the Rayburn House Office Building.  Duffy's written testimony is available on www.cmegroup.com.  

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk.  CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.  CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago.  CME Group also operates CME Clearing, one of the world's leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc.  CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc.  All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

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SOURCE CME Group


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  • CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of five Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX, COMEX and KCBT.