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JPMorgan Spars With CME Over $375 Million 

November 7, 2014
Matthew Leising, Bloomberg

JPMorgan Chase & Co. is locked in a debate with CME Group Inc. over whether the owner of the world’s biggest futures market is setting aside enough money to safeguard trades.

The dispute, highlighted this week at the Futures Industry Association conference in Chicago, is over the $375 million of its own money that CME has pledged in case a member defaults. If JPMorgan, one of the largest derivatives dealers in the world, had its way, CME’s “skin in the game” would almost double to $687 million.

Clearinghouses such as CME’s serve as an antidote to panic in derivatives markets, holding money that can fulfill a failed trading firm’s obligations. Although most of the funds they hold comes from tariffs imposed on trades, they also pledge some of their own money. The importance of ensuring they are adequately funded was emphasized in the aftermath of the 2008 financial crisis, the intensity of which was blamed in part on a lack of clearinghouses in the over-the-counter derivatives market.

Read more: Bloomberg

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