CME Group Increases Credit Facility to $7 Billion in the Event that a COMEX Member Defaults

The coronavirus pandemic has some markets preparing for the worst. CME Group, which owns Comex, the largest futures market in the world, recently amended its 364-day credit facility increasing the limit from $5 billion to $7 billion. According to CME’s regulatory filing, the credit line also has the option to increase to $10 billion, and would be used to offset liquidity deprivation in the event that COMEX clearing members were to default.

Specifically, the filing states that the credit facility is “intended to provide temporary liquidity to CME in the event of a clearing member default, a liquidity constraint or depositary default, or in the event of a delay in the payment systems utilized by CME.”

Since CME Group provides clearing services for clients trading on derivative markets such as COMEX, the amended credit facility increase could be a sign of what’s to come. It could very well be that CME Group is anticipating a COMEX member to default, meaning that they would not be able to deliver the physical version of paper gold. In the event that there is a discrepancy between paper gold and the actual amount of physical gold available for delivery, then the gold market better fasten its seatbelt.

Information for this briefing was found via Bloomberg, Market Watch, and Zero Hedge. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

3 Responses

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

Giant Mining Encounters Native Copper As Hole MHB-34 Hits 563 Metres Depth

Verses Hits Commercialization Stage With Genius AI Platform

Related News

India’s Pre-Diwali Gold Rush Drives Global Metal Prices to Record Highs

As millions of Indians welcome the festival of lights, an unprecedented surge in precious metals...

Wednesday, October 30, 2024, 12:51:30 PM

Mako Mining Reports 96.3% Gold Recovery Rate At San Albino, Announces Commercial Production

Mako Mining Corp. (TSXV: MKO) reported this morning the pre-commercial production results from its San...

Tuesday, July 13, 2021, 10:01:00 AM

Silver’s New Floor, With John Feneck

In this interview, John Feneck, CEO of Feneck Consulting, offers a comprehensive analysis of the...

Sunday, August 18, 2024, 09:42:50 AM

Stone Gold Closes $500,000 Flow Through Financing

Stone Gold Inc (TSXV: STG) has closed a non-brokered private placement. The financing, which was...

Thursday, December 31, 2020, 08:26:28 AM

Rick Rule: Gold Market Leadership Starts At The Top – The Daily Dive

Starting off the trading week on the Daily Dive is that of Rick Rule, senior...

Tuesday, February 16, 2021, 01:30:00 PM