21 September 2021

SSE Initiative: Exchange in Focus: CME Group Launches First-Ever Sustainable Derivatives Clearing Service

Companies are increasing their sustainable hedging activity, defined as both the trading of exchange-traded derivatives such as carbon offsets, battery metals, and bioenergy, as well as hedging activity with interest rate and foreign exchange futures to support ESG initiatives.

 Following the needs of the market, CME Group has announced the launch of the derivatives industry’s first-ever Sustainable Clearing service to help market participants track and report on how their hedging activities are advancing their sustainability goals.  “Sustainability continues to be an increasing priority for our global clients as they significantly expand both the risk management that they provide to green businesses and environmental projects,” said Julie Winkler, Chief Commercial Officer, CME Group. “This new framework for clearing sustainable derivatives will make it easier for our clients to measure the impact of their support for sustainable activities and can be part of the solution to encourage further growth in this key sector as the economy transitions to net-zero emissions.” 

How Sustainable Clearing works All participants will be provided with Sustainable Clearing eligibility criteria to identify and tag a sustainable trade. The eligibility criteria will be aligned to external standards already published, such as ICMA's Social & Green Bond Principles. CME Group will be criteria neutral to ensure only independent third-party standards are applied.

Types of Sustainable Clearing transactions “This innovative clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows,” said Sunil Cutinho, President, CME Clearing.  “Our solution ensures that all sustainable trades continue to benefit from our established risk management approach, including full margin offsets where applicable, which creates efficiencies for clients and end users.”

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