Dec 5 CME Group Inc, the biggest operator of U.S. futures exchanges, boosted its available credit lines by 68 percent to $1.75 billion to meet stricter regulatory standards set forth in the Dodd-Frank Wall Street reform act.
The increase in its senior credit facility, to $1.5 billion from $1.04 billion, and the addition of a $250 million letter of credit, are designed "to meet increasing regulatory liquidity and capital requirements," a CME spokeswoman said.
Federal authorities earlier this year designated CME's clearinghouse as systemically important, and the Commodity Futures Trading Commission has signaled that such clearinghouses will be required to be able to withstand the simultaneous failure of more than one clearing member.
Regulators are also forcing more over-the-counter swaps to be cleared, and as CME takes on more of that business, its exposure to potentially outsized risks increases, boosting the need for a bigger financial backstop.
The maturity for all but $95 million of the senior credit facility was extended by two years, to Jan. 12, 2016, CME said in a regulatory filing on Wednesday.
The senior credit facility comes from a consortium of banks and can be increased to $2.25 billion if the lenders agree, the filing said. Terms for both the credit facility and the letter of credit came into effect on Nov. 30.
In November, the CME increased financing available to its clearinghouse, to $5 billion from $3 billion, in case one of its members defaults or there is a problem with money transfers. (Reporting by Ann Saphir; editing by John Wallace)