The Clearing Corporation Charitable Foundation, a not-for-profit corporation and charitable arm of the Clearing Corporation (TCC), on Monday announced a $2,000,000 grant to the University of Illinois College of Agricultural, Consumer and Environmental Sciences (ACES) that will establish The Clearing Corporation Foundation Endowed Chair in Derivatives Trading.
“Given the importance of The Clearing Corporation to [the futures] industry, we are pleased to be able to recognize and honor it through the named chair,” said Dr. Robert J. Hauser, head of the Department, in a press release.
The release noted that a spokesman for The Clearing Corporation Charitable Foundation indicated that the grant will serve, in part, to recognize TCC’s history and longstanding reputation within the financial services industry.
TCC (the former Board of trade Clearing Corp. or BOTCC) has suffered a bit of an identity crisis throughout its history. Many people had assumed throughout its 78-year affiliation with the Chicago Board of Trade (CBOT) that the two entities were related but BOTCC/TCC has always been independent. In the late 1990s and early 2000’s BOTCC sought to expand its business from simply clearing CBOT business. With the passage of the Commodity Futures Modernization Act of 2000, BOTCC saw opportunities in providing clearing services to new micro exchanges and perhaps prove a clearing capability for over-the-counter (OTC) products.
This was OK for the most part with its main customer, CBOT, but when BOTCC began talking with Eurex — who at the time was preparing to challenge the CBOT’s Treasury complex — about providing clearing services for the United States Futures Exchange (Eurex US) the CBOT took issue. And the dispute between the two longtime partners culminated in the CBOT moving its clearing business to the Chicago Mercantile Exchange clearinghouse.
Since the break-up TCC has streamlined and survived, providing clearing services to numerous smaller entities and has been active of late with clearing arrangements and word is they plan on making a larger move into the cleared OTC space.
TCC is owned by the large futures commission merchants who make up the majority of the Futures clearing business. The large FCMs were not happy with the CBOT/CME merger and had, earlier in the decade, along with the Futures Industry Association (the two boards of which have been nearly identical over the years) pushed for a regulatory mandate to allow FCMs to move their clearing business to a clearinghouse of their choosing. It did not succeed in its efforts.
The break-up of the former BOTCC and CBOT and failure of Eurex US to take hold was a huge loss for the owners of TTC but apparently was not the end. TCC has been around for a longtime and has well-financed owners. They plan to be around a lot longer and bear watching.
