[Federal Register Volume 78, Number 177 (Thursday, September 12, 2013)]
[Notices]
[Pages 56261-56263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22164]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70336; File No. SR-CME-2013-13)
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Enhancements to CME's Price Quality Auction Process for CDS
Index Products
September 6, 2013.
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 August 23, 2013, Chicago Mercantile Exchange Inc. (``CME'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared primarily by CME. CME filed the proposal
pursuant to Section 19(b)(3)(A)(iii) \3\ of the Act, and Rule 19b-
4(f)(4)(ii) thereunder,\4\ so that the proposal was effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CME is filing proposed rules changes that are limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule changes would make amendments to its rules
[[Page 56262]]
regarding CME's current Price Quality Auction settlement process for
CDS index products.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose and basis for the proposed
rule change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The self-regulatory organization has
prepared summaries, set forth in sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
CME is registered as a derivatives clearing organization with the
Commodity Futures Trading Commission and currently offers clearing
services for many different futures and swaps products. With this
filing, CME proposes to make amendments that will affect its Price
Quality Auction (``PQA'') settlement process for Credit Default Swaps
(``CDS'') index products. Although these changes will be effective on
filing, CME plans to operationalize the proposed changes on September
9, 2013.
The proposed change would be reflected in CME's Manual of
Operations for CME Credit Default Swaps (``CDS Manual''). The change
would allow CME to set the bid/ask spread for PQA submissions to a
configurable level based on historical price analysis. The change is
designed to make the configurable level more consistent with existing
market conditions by reducing the acceptable range, which will in turn
help ensure that settlement prices are not impacted by off market
submissions. This change should help enhance the quality of the PQA
process for determining settlement prices for CDS index products. The
proposed parameter changes do not otherwise materially affect the PQA
process.
The changes that are described in this filing will only impact
CME's processes for clearing CDS index products. Thus, these changes
are limited to CME's business as a derivatives clearing organization
clearing products under the exclusive jurisdiction of the Commodity
Futures Trading Commission (``CFTC'') and do not materially impact
CME's security-based swap clearing business in any way. CME notes that
it has already submitted the proposed rule changes that are the subject
of this filing to its primary regulator, the CFTC, in CME Submission
13-295.
CME believes the proposed rule changes are consistent with the
requirements of the Exchange Act including Section 17A of the Exchange
Act.\5\ The proposed rule changes are designed to enhance the quality
of CME's PQA process for determining settlement prices for CDS index
products and as such are designed to promote the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivatives agreements, contracts, and transactions, to
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible, and, in general, to protect investors and the public
interest consistent with Section 17A(b)(3)(F) of the Exchange Act.\6\
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\5\ 15 U.S.C. 78q-1.
\6\ 15 U.S.C. 78q-1(b)(3)(F).
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Furthermore, the proposed changes are limited in their effect to
swaps products offered under CME's authority to act as a derivatives
clearing organization. These products are under the exclusive
jurisdiction of the CFTC. As such, the proposed CME changes are limited
to CME's activities as a derivatives clearing organization clearing
swaps that are not security-based swaps; CME notes that the policies of
the CFTC with respect to administering the Commodity Exchange Act 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.
Because the proposed changes are limited in their effect to swaps
products offered under CME's authority to act as a derivatives clearing
organization, the proposed changes are properly classified as effecting
a change in an existing service of CME that:
(a) Primarily affects the clearing operations of CME with respect
to products that are not securities, including futures that are not
security futures, and swaps that are not security-based swaps or mixed
swaps; and
(b) does not significantly affect any securities clearing
operations of CME or any rights or obligations of CME with respect to
securities clearing or persons using such securities-clearing service.
As such, the changes are therefore consistent with the requirements
of Section 17A of the Exchange Act \7\ and are properly filed under
Section 19(b)(3)(A) \8\ and Rule 19b-4(f)(4)(ii) \9\ thereunder.
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\7\ 15 U.S.C. 78q-1.
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(4)(ii).
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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. The rule changes simply
makes enhancements to CME's process for determining settlement prices
for CDS index products.
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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \10\ of the Act and paragraph (f)(4)(ii) of Rule 19b-4 \11\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(4)(ii).
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IV. 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
Use 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-2013-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 56263]]
Securities and Exchange Commission, 100 F Street NE., Washington, DC,
20549-1090.
All submissions should refer to File Number SR-CME-2013-13. This file
number should be included on the subject line if email is used. 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 or
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 and on CME's
Web site at http://www.cmegroup.com/market-regulation/rule-filings.html.
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-2013-13
and should be submitted on or before October 3, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22164 Filed 9-11-13; 8:45 am]
BILLING CODE 8011-01-P