Reuters reported that CME Group Inc will offer clearing services for over-the-counter London silver forward contracts, it said in a note to members recently as the US exchange aims to bolster its precious metals operations.

The exchange launched a similar service with clearing, settlement and delivery for OTC London gold forwards in February due to demand from customers to manage counterparty credit risk. The exchange plans to launch the new product on August 5 for trade date August 6, pending regulatory approval.

The move in silver comes as trading volumes on the Chicago-based exchange third largest metals futures contract by volume have fallen sharply this year.

According to CME data in the first six months of the year, silver futures volumes dropped some 41% to 7.09 million contracts. That contrasts with a 2.5% rise in gold futures, its largest metals product by volume and a 50% rise in copper futures, its second most-active metals contract.

The exchange is launching the new service at a tough time for global commodities exchanges.

Competition in the Chicago based exchange key agricultural, metals and energy markets have intensified particularly with the emergence of an active investor base in Asia. Furthermore confidence among traditional users such as wheat farmers and speculators has been hurt by the collapse last November of MF Global Holdings amid the scandal over the misuse of customers' segregated funds.

Source - Reuters

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