Two U.S. futures exchange clearinghouses plan Y2K margin facilitygreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Wednesday November 24, 4:38 pm Eastern Time
Two U.S. clearinghouses plan Y2K margin facility
CHICAGO, Nov 24 (Reuters) - Two U.S. futures exchange clearinghouses announced plans on Wednesday to form a temporary joint margin facility to ward off any potential glitches associated with the Year 2000 date changeover.
The Board of Trade Clearing Corp. and the New York Clearing Corp., which clear trades for the Chicago Board of Trade and the New York Board of Trade respectively, will form the facility with effect from January 3, 2000, the first day of trading in the new year.
The clearinghouses are working together to provide legal protection to member firms if Y2K problems prevent them from covering original margin requirements. Member firms of both clearinghouses will be able to commit excess original margins in cash or securities from one clearinghouse to another if they have technical or Y2K-related problems.
The clearinghouses said they are both prepared for the date change and do not anticipate problems.
Other U.S. clearinghouses have been invited to join in the arrangement, which is scheduled to last from January 3 through January 15.
-- (email@example.com), November 26, 1999
Hmmm, the bank(s)offering this credit-line thinks they have a "no-lose" situation.
The bank will receive a huge fee for the facility and if it turns out to be a BITR, facility won't be used. If financial gridlock occurs, no funds can be wired thru the fedwires (but the bank still keeps the fees).
Of course, the banks know what the outcome will be ahead of time so that gives them another edge.
-- Sandwich (firstname.lastname@example.org), November 26, 1999.