CME announces partnership to lower costs and reduce transfer times for clients
CME Group has partnered with payment provider Dwolla to build an infrastructure to handle real-time payments for maintaining margin requirements among its members. CME has said that using Dwolla's system will allow it to reduce transfer times and lower costs, providing immediate value to its clients.

The CME Group has announced that they have signed an agreement with payment provider Dwolla, to create real-time architecture for on-demand payment capabilities of clearing and settlement, as well as streamlined payment operations for CME Clearing members and clients. Through the plan, the CME is aiming to build infrastructure to handle real-time Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term for maintaining margin requirements among its members.

Faster, cheaper payments

The first CME Group divisions that will adopt Dwolla’s infrastructure are its Brokers Payment Systems (BPS) unit, and the Give-Up Payment System (GPS). The BPS deals with automated payments from members to the brokerages they use. The new service will reduce transfer times and lower costs, CME Group said in a press release. The GPS provides clearing services between clearing houses, offering real-time fee calculation and processing of orders.

Sunil Cutinho, the president of CME Clearing, said: “With its established customers and proven real-time systems, Dwolla's technology provides CME Group with an innovative platform to deliver secure and sophisticated payment services to our Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term member firms,” adding that the partnership will result in immediate value for CME’s clients.

Deal seen to bring immediate value to clients

Dwolla offers banks and consumers an online network that enables real-time payments and transfers, including bank-to-bank transfers, consumer-to-bank transactions and consumer-to-consumer transfers across the US. This is the company’s entry into the derivatives market. Its product includes a real-time ledger, a directory and a settlement infrastructure that uses its proprietary FiSync payment processing system. Dwolla’s service is also available on channels such as automated clearing house (ACH) networks and wire.

Strategic investor

The deal comes after CME Group became a strategic investor in the digital payments solution provider, leading a funding round that generated $9.7 million in fresh funds for the Iowa-based startup. Total funds raised since the company’s inception stand at $30 million to date, supplied by Andreessen Horowitz, Union Square Ventures, Thrive Capital, and Village Ventures. The funding is through the CME's investment arm, CME Ventures. Along with researching potential investments on their future growth, CME Ventures also analyzes the benefits of strategic partnerships that can be created. Secure messaging provider Wickr is another company that the portfolio company both provided investment to, and collaborating with on strategic opportunities with. Wickr launched a financial services division after receiving investment from CME Ventures in 2014.