1. OTC Clearing Special Event
November 2010

2. Highly Efficient Markets
CME Group Overview
Global Leader
Seasoned leadership
Customer focused and global partner of choice
AA Rating placing it in top 15 of S&P 500
Financial Security of
CME Clearing
Leading risk management practices
Separate Default Fund for OTC instruments
Portfolio margining
OTC Clearing Services
Multi-asset class product line
Same FCM relationship as Listed Futures
Same legal and operational infrastructure
Highly Efficient Markets
Diverse customer base
Point of trade clearing
Operational and cost efficiency

3. Bilateral Market vs. Central Counterparty Clearing
Bilateral Market without Central Clearing Counterparty
Market with a Central Clearing Counterparty
Buyer
Seller
CME
Clearing
Buyer
Seller
Multiple bilateral relationships where buyers and sellers face each other as counterparties
Sellers must accept each buyer’s credit
Buyers send payment directly to each seller
Buyers must accept each seller’s ability to perform on the contract
Pricing is differentiated by quality of counterparty
If either party wants to close out a deal prior to expiry, they must negotiate terms
CME Clearing faces each counterparty directly, becoming the seller to the buyer and buyer to the seller through novation
Buyer and seller are guaranteed performance by CME Clearing
Buyer and seller no longer have credit exposure to one another
Parties closeout transactions with whomever provides the best price

4. CME Group Portability of Customer Accounts
Portability of Customer Positions & Margin in the Event of a Clearing Member Default
Customer Protection Standards
The same customer protection standards apply to cleared OTC derivatives as to exchange-traded futures
Clearing Member Firms are monitored and audited for risk, capital adequacy and compliance with customer protection rules and regulations
Default Management
Client positions and margin held at CME Clearing may be ported to a non-defaulting clearing member firm
Positions of the defaulting firm may be auctioned and/or liquidated in accordance with CME rules
Portability
Clients can transfer positions and associated margin to another clearing firm upon request
CME Rule 853 (“Transfers of Trades”) covers CME’s terms under which trades may be transferred
CME Clearing
Defaulting Clearing Member
Non-Defaulting Clearing Member
Buy-side Firm

5. CME Group Customer Protection Mechanism
Any bankruptcy of a FCM Clearing Member would be governed by U.S. Bankruptcy Code and CFTC regulatory framework (Part 190 Bankruptcy Rules)
Mandated separation of customer positions and property from the positions and property of the clearing firm per CFTC account class
Customers funds and positions in defined account classes are not property of the debtor’s estate in a FCM bankruptcy
Recently, the CFTC amended its Part 190 bankruptcy rules to create a new customer account class for “cleared OTC derivatives”
New CFTC Part 190 Rules provide customer protection parallel to the existing 4d/futures account class
CME adopted new rules for the OTC account class which mirror CFTC regulations for the 4d/futures account class, including but not limited to rules regarding separation of customer and FCM assets and investment of customer funds
In early October 2010, CME implemented new rules with substantive requirements for the treatment of customer “cleared OTC derivatives” that are cleared by CME
* See the New OTC Derivatives Account Class Q&A document on the CME Group website for more information.

6. CME Group OTC Initiatives
Working in close collaboration with premier swap dealers, clearing firms, and buy- side market participants to create a best in class clearing solution for OTC derivatives
Builds on the strength of CME Group’s core business
Maintains current execution processes, affirmation platforms, and product economics of bilateral OTC contracts
Protects customers through legal safeguards of U.S. bankruptcy law and CFTC Part 190 Bankruptcy Regulations
Provides operational flexibility and efficiencies of an integrated, multi asset class solution
Point of trade clearing
Cash flow netting
Streamlined legal documentation
For OTC IRS, seeking CFTC permission to allow customer capital efficiencies via cross margining of OTC products with benchmark Treasury and Eurodollar futures
CME Group
OTC Initiatives
Energy & Ags
CDS
IRS FX

7. Cleared OTC IRS Product Scope
Existing Product Scope
Currency
USD
Notional
Non-amortizing
Effective Dates
Spot, seasoned, or forward starting
Maturity Dates
Out to 31 years from cleared date
Business Day Adjustment
Modified following
Fixed Leg
Flexible coupons
Semi-annual payments
30/360 day count
Adjusted and unadjusted accruals
NY and LON business days
Floating Leg
3M LIBOR index
Quarterly payments or semi-annual payments with quarterly compounding
Act/360 day count
Adjusted accruals
NY and LON business days
Future Enhancements
Q1 2011
Flexible payment frequencies, day counts, and business days
Stub periods
EUR Vanilla IRS
Q2 2011
1M LIBOR index
3M/1M basis swaps
Spreads over/under LIBOR
GBP Vanilla IRS
JPY Vanilla IRS
Other Future Enhancements
Caps, floors, and swaptions
Additional currencies

8. CME OTC Cleared Trade Submission Model Other 3rd Party Platforms
CME Cleared OTC Open Access Platform
Clearing OTC trades real-time throughout the day, every day, providing immediate cleared trade confirmation, significantly reducing counterparty credit exposure
CME OTC Cleared Trade Submission Model
MarkitServ
Bloomberg
TradeWeb
Other 3rd Party Platforms
ClearPort
CME Clearing
IRS Clearing Member
(FCM)
IRS Clearing Member
(FCM)
CDS Clearing Member
(FCM)
CDS Clearing Member
(FCM)
CME Cleared OTC Cross-Asset Class Benefits
Negotiate, execute, and submit trades through multiple venues to CME Clearing
Straight through processing and T+0 confirmation
Full life cycle trade management by CME Clearing
More than 100 years of experience in clearing, settlement and risk management
Compression capabilities that reduce systemic risk (currently available for CDS and planned for IRS)

9. Cleared OTC IRS: Trade Workflow Mechanics
Client EB
Affirmation Platform
CME Clearing House 1 2 3 4 5
Clearing Member (Client)
Clearing Member (EB)
Product 
Account 
Credit 
1 – Client executes swap with Executing Broker (EB)
2 – EB alleges swap to Client
3 – Client selects Clearing Member and affirms swap
4 – Affirmation Platform sends matched trade to CME for Clearing
5 – After validating product, account and applying credit limits set by Clearing member(s), CME accepts swap for clearing
5 – CME sends “Cleared” notification to Affirmation Platform which displays trade status to principals
5 – CME sends a Clearing Confirmation to Clearing Member(s) 
Validations, notifications and confirmations are real-time and allow Straight Through Processing

10. Cleared OTC IRS: Next Steps and Contact Us
Getting Started
Establish a relationship with a participating CME IRS Clearing Member
Discuss and agree on trade capture options and trade flow
Complete required Clearing Member Customer Documentation
Work with Clearing Member throughout testing cycles
Begin clearing trades
For more information, please contact:
North America
Jack Callahan (312)
Steve Dayon (312)
Europe
Robert Hammond
Asia
Way Yee Bay