[Federal Register Volume 77, Number 150 (Friday, August 3, 2012)]
[Notices]
[Pages 46533-46535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18970]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67533; File No. SR-CME-2012-31]
Self-Regulatory Organizations; Chicago Mercantile Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change To Make Clarifying Changes to CME Rule 819 and Certain
Chapter 8F Rules
July 30, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 25, 2012, the Chicago Mercantile Exchange, Inc. (``CME'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change described in Items I and II below, which items
have been prepared primarily by CME. The Commission is publishing this
Notice and Order to solicit comments on the proposed rule change from
interested persons and to approve the proposed rule change on an
accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CME proposes to make clarifying changes to CME Rule 819 and certain
Chapter 8F Rules. The text of the proposed rule change is available at
the CME's Web site at http://www.cmegroup.com, at the principal office
of CME, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, CME included statements
concerning the purpose and basis for the proposed rule changes and
discussed any comments it received on the proposed rule changes. The
text of these statements and comments may be examined at the places
specified in Item III below. CME has prepared summaries, set forth in
sections A, B and C below, of the most significant aspects of these
statements.\3\
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\3\ The Commission has modified the text of the summaries
prepared by CME.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
CME proposes to make certain clarifying changes to CME Rule 819,
8F002, 8F004 and 8F008. The proposed changes do not affect CME's credit
default swap clearing (``CDS'') offering. The proposed effective date
for the revisions is August 1, 2012.
In order to clarify that the lien on collateral held by the CME
clearing house includes both property of clearing members and customer
performance bond, CME proposes to change language in both CME Rule 819
and Rule 8F008. The clarifying language is intended to align CME Rules
819 and 8F008 with current CME Rule 8H008, which governs CDS clearing
and states, in pertinent part: ``Each CDS Clearing Member hereby grants
to the Clearing House a first priority and unencumbered lien to secure
all obligations of such CDS Clearing Member to the Clearing House
against any property and collateral deposited with the Clearing House
by the CDS Clearing Member.''
In addition, CME proposes to revise CME Rule 8F004 in order to: (a)
Clarify that the minimum capital requirements for firms that clear
credit default swaps and/or interest rate swaps are not governed by
Rule 8F004 but rather by current Rules 8G004 and 8H004; and (b)
[[Page 46534]]
make the minimum capital requirement $5 million for OTC Clearing
Members that only clear agricultural swaps (and not other OTC
Derivatives).
Finally, CME proposes a technical amendment to the definition of
``OTC Derivatives'' in CME Rule 8F002 to reflect that section 2(h) of
the Commodity Exchange Act (``CEA'') no longer provides exemptive
relief.
CME notes that it has already certified the proposed changes that
are the subject of this filing to its primary regulator, the Commodity
Futures Trading Commission (``CFTC''), in CME Submission 12-241.
CME believes the proposed changes are consistent with the
requirements of the Exchange Act including Section 17A in that they
make clarifying changes that will facilitate the prompt and accurate
clearance and settlement of securities transactions and derivatives
agreements, contracts and transactions and will help assure the
safeguarding of securities and funds which are in the custody or
control of the clearing agency and, in general, help to protect
investors and the public interest.
CME further notes that the proposed changes are limited to its
business as a derivatives clearing organization under the CEA and
therefore do not significantly affect any securities clearing
operations of the clearing agency or any related rights or obligations
of the clearing agency or persons using such service. CME notes that
the policies of the CEA with respect to clearing are comparable to a
number of the policies underlying the Exchange Act, such as promoting
market transparency for over-the-counter derivatives markets, promoting
the prompt and accurate clearance of transactions and protecting
investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
CME does not believe that the proposed rule change will have any
impact, or impose any burden, on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
CME has not solicited, and does not intend to solicit, comments
regarding this proposed rule change. CME has not received any
unsolicited written comments from interested parties.
III. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic comments may be submitted by using the
Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml), or send an email to [email protected]. Please include
File No. SR-CME-2012-31 on the subject line.
Paper comments should be sent in triplicate to Elizabeth
M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC, 20549-1090.
All submissions should refer to File Number SR-CME-2012-31. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of CME. All comments received will
be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.
All submissions should refer to File Number SR-CME-2012-31 and
should be submitted on or before August 24, 2012.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
Section 19(b) of the Act \4\ directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization. In particular, Section 17A(b)(3)(F) \5\ of the Act
requires, among other things, that the rules of a clearing agency be
designed to promote the prompt and accurate clearance and settlement of
securities transactions, assure the safeguarding of securities and
funds that are in the custody or control of the clearing agency, or for
which it is responsible, and protect investors and the public interest.
The Commission finds that the proposed clarifications are consistent
with the requirements of Section 17A(b)(3)(F) of the Act because the
clarifications should allow CME's Members to better monitor their
financial status and risk-management procedures. This, in turn, should
enhance CME's ability to safeguard the securities and funds in its
custody or control, or for which it is responsible.\6\
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\4\ 15 U.S.C. 78s(b).
\5\ 15 U.S.C. 78q-1(b)(3)(F).
\6\ See 15 U.S.C. 78q-1. In approving these proposed rule
changes, the Commission has considered the proposed rule changes'
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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In its filing, CME requested that the Commission approve these
proposed rule changes prior to the thirtieth day after the date of
publication of the notice of the filing. CME has articulated three
reasons for so granting approval. First, CME notes that the products
covered by this filing, and the CME's operations as a derivatives
clearing organization for such products, are regulated by the CFTC
under the CEA. Second, the proposed rule changes affect the futures and
swaps that CME clears and therefore relate solely to its futures and
swaps clearing activities and do not significantly relate to the CME's
functions as a clearing agency for security-based swaps. Third, the
clarifying changes will help promote the prompt and accurate clearance
of transactions and therefore are designed to protect investors and the
public interest.
The Commission finds good cause for granting approval of the
proposed rule changes prior to the thirtieth day after publication of
the notice of filing because: (i) The proposed rule changes do not
significantly affect any of CME's securities clearing operations or any
related rights or obligations of CME or persons using such service;
(ii) CME has indicated that not providing accelerated approval would
have a significant impact on its business as a designated clearing
organization; and (iii) the activity relating to CME's non-security
clearing operations for which CME is seeking approval is subject to
regulation by another federal regulator.
[[Page 46535]]
V. Conclusion
It is therefore ordered pursuant to Section 19(b)(2) of the Act
that the proposed rule change (SR-CME-2012-31) be, and hereby is,
approved on an accelerated basis.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18970 Filed 8-2-12; 8:45 am]
BILLING CODE 8011-01-P