The CME Group offers a wide range of benchmark futures and options products available on any exchange, covering all major asset classes.
Tully discussed the role of the CME Group as a central clearinghouse and how it serves REITs as well as other companies in the United States.
“We built our service with equal input from both the buy side and the sell side,” he said. “We are highly customer-focused, we offer a wide range of products and we have got deep capabilities in terms of our interest-rate offering.”
Additionally, he said the incorporation of the CME Group’s central clearinghouse works to control systemic and counterparty risk, which Tully said creates an advantage for the customer.
“Basically, it levels the playing field and eliminates what we saw through the crisis and was incredibly important, counterparty credit risk. So essentially, in place of what was previously a credit risk to your counterparty, you now have variation margin and initial margin. Those are the backbone of the safety that’s created in the new marketplace,” he said.
While asset managers have been some of the early adapters of the new CME interest-rate swap futures, Tully discussed how this could apply to real estate financing and other sectors.
“The asset managers, for the most part, are not required to clear yet under Dodd-Frank. For most of them, they're not going to be required to clear until June, but we’ve already cleared around $2 trillion worth of swaps.”