CME expands collateral eligibility of COMEX gold warrants
Effective April 28, 2021, pending regulatory approval, CME Clearing will permit clearing members to deposit COMEX gold warrants as collateral to meet Base and IRS performance bond requirements in the Customer Segregated and Customer OTC origins.
To support this initiative, CME is making enhancements to its Clearing 21 (Banking and Collateral Management) and Deliveries Plus (Deliveries and Inventory Management) systems. These enhancements include a requirement that clearing members ensure an account number is provided in Deliveries Plus before depositing gold warrants as collateral in the Customer origins.
The system enhancements will be available for clearing member and depository testing beginning March 18, 2021.
At present, CME accepts London gold bullion and gold warrants as collateral to meet Base and IRS performance bond requirements in the House origin with an aggregate limit of $750 million per clearing member (and affiliates). There are no changes to this limit with the expansion of acceptability to the Customer origins. Additionally, the current haircut applied to London gold bullion and gold warrants will remain 15%.
Per current practice, CME does not accept gold warrants representing Elemetal (ELEM) and Al Ethiad (ALET) brand gold bars as performance bond. These brands were previously suspended from registration by the Exchang1. Specific brands can be identified by clearing members in Deliveries Plus.
Additionally, CME’s committed credit facility arrangements require a UCC-1 to be filed in the relevant jurisdiction(s) which identifies the clearing member as the debtor before the clearing member may post gold warrants as collateral to CME.
Lastly, CME will segregate gold warrants deposited as performance bond on its own books and records. Customer assets are segregated by origin to ensure customer property is accounted for separately.
There are no changes to collateral fees or the storage fee process for gold warrants.