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SmarterMarkets™
Days of Futures Past Episode 6 | Dan McElduff and Joe Raia, Abaxx Exchange
Jun 17, 2023
42:36
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Quick takeaways
- The launch of Clearport at the NYMEX in 2002 addressed the commercial need for clearing and risk management tools in the OTC energy markets, providing standardized futures contracts cleared through a clearinghouse and mitigating credit and delivery risks.
- The clearing house plays a crucial role in the market by creating a level playing field, mitigating counterparty risk, ensuring efficient price discovery, and serving as a market of last resort, instilling confidence in buyers and sellers.
Deep dives
Launch of Clearport and meeting a commercial need
The launch of Clearport at the NIMEX in 2002 addressed the commercial need for clearing and risk management tools in the OTC energy markets. The default of Enron had caused a crisis of liquidity and counterparty risk, leaving market participants unable to transact bilaterally. Clearport provided a solution by introducing standardized futures contracts cleared through a clearinghouse, mitigating credit and delivery risks. The launch of Clearport filled a critical commercial need and offered benefits such as reduced trade financing costs and improved liquidity.
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