ICE Clear Credit

CDS Clearing

Clearing Overview

Portfolio Margining

ICE Clear Credit offers portfolio margining relief with respect to clearing member house/proprietary transactions. Pursuant to CFTC and SEC Orders, ICE Clear Credit provides similar relief for broker dealer/FCMs that maintain clearing accounts for customer-related transactions.

By requiring CDS to be centrally cleared, Congress called for a significant change to the risk management of the swaps marketplace.

Portfolio margining allows market participants to save capital by clearing index and single name CDS in a single segregated CFTC customer account. Previously, a client would have been required to post full margin on a single-name position held in an SEC account as well as full margin on an index position held in a CFTC account even if the two positions offset each other from a risk perspective. By combining the positions in one CFTC account and applying ICE Clear Credit’s portfolio margining methodology, the clearing house provides capital efficiencies while maintaining strong risk management practices. In addition, clients will get the same bankruptcy treatment and protection of customer collateral under the CFTC’s Legally Segregated Operationally Commingled (LSOC) regime for all cleared CDS positions.

ICE Clear Credit’s portfolio margined customer account:

  • Allows broker dealer/FCM clearing members to hold customer-related positions in CDS that include both broad-based index CDS that are regulated by the CFTC as commodity swaps, and single-name CDS that are regulated by the SEC as security-based swaps, in a 4d(f) customer omnibus commodity account at ICE Clear Credit
  • Calculates margin for the customer account pursuant to a portfolio margining program approved by the CFTC and SEC

ICE Clear Credit legally segregates customer collateral from clearing participant house or proprietary collateral at all times. As a matter of law, customer collateral cannot be used for obligations related to a clearing participant's proprietary trading activities. It is a violation of ICE rules and CFTC and SEC regulations to commingle customer collateral within proprietary accounts.

Regulatory Approvals