In yet another a sign that the turmoil in financial markets is putting extreme stress on some firms, one of the CME Group’s direct clearing firms was unable to meet its capital requirements, according to sources.
The move forced the exchange to step in and invoke its emergency protocols to auction off the portfolios. Ronin Capital, based in Chicago, was confirmed to be the firm in question, according to sources.
Terry Duffy, the CME Group’s chairman and CEO, told CNBC the auction process was completed Friday morning, but said the group doesn’t disclose who assumed the portfolios in the auction.
Duffy also said that under its clearing agreement, Ronin isn’t allowed to have outside clients so there were no customers harmed in the process.
In general, clearing firms like Ronin, are responsible for trades made on the exchange.
Additional sources said Ronin’s problems stemmed from positions in futures tied to the CBOE Volatility Index, or the security that tracks market volatility.
The Depository Trust and Clearing Corporation, or DTCC, helped coordinate the auction, later saying it had ceased to act for Ronin Capital, LLC.
SOURCE : https://www.cnbc.com/2020/03/20/clearing-firm-ronin-capital-unable-to-meet-capital-requirements-at-cme-sources.html