Precious metals investor’s desire to mitigate counterpart credit risks has led CME Group to offer itself as a clearinghouse for London over-the-counter futures contracts. The exchange is hoping to shore up its precious metals operations, as forward contract volumes have dropped more than forty percent this year. The Chicago-based CME Group will launch the clearing service beginning August 5, 2012, for August 6 trading, provided regulatory approval is forthcoming.
CME Group has commanded the third largest contract in silver futures volume. Gold and copper futures, respectively its first and second most active metals products contracts, have both risen in the first half of 2012.
Scandal associated with the collapse of MF Global Holdings after misallocation of supposedly segregated investor monies has led to the company’s need for more competitive products. Fraud at other futures brokerages and increased Asian investment interest are other factors creating turmoil at CME.
Silver, although dropping sharply from its record highs in 2011, still maintains a return greater than four-hundred percent from its lows ten years ago.
