[Federal Register Volume 79, Number 15 (Thursday, January 23, 2014)]
[Notices]
[Pages 3906-3907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-01247]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71325; File No. SR-CME-2014-01]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Modifications to CME Rule 8G802.B.2
January 16, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on January 8, 2014, Chicago Mercantile Exchange
Inc. (``CME'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change 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) of the Act,\3\ and Rule
19b-4(f)(4)(ii) \4\ thereunder 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).
\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 a proposed rule change that is limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule change would make amendments to CME Rule 8G802.B.2 (``IRS
Product Limited Recourse'') to clarify that a CME Bankruptcy Event is
also a Termination Event for IRS.
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 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. CME 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. The purpose of
this proposed rule change is to make amendments to CME IRS rules that
will clarify and harmonize CME rules across its IRS and CDS offerings.
This filing does not involve any proposed changes to CME CDS rules.
Although these changes will be effective on filing, CME plans to
operationalize the proposed changes on January 16, 2014.
Currently, CME's Chapter 8H rules, providing for limited recourse
for CDS, provide that a CME Bankruptcy Event (as defined in the Rules)
is also a CDS Termination Event (as defined in CME Rule 8H802.B.2).
CME's Chapter 8G rules, providing for limited recourse for IRS,
inadvertently do not similarly include a CME Bankruptcy Event as an IRS
Termination Event (as defined in CME Rule 8H802.B.2). The intent under
both rule chapters is for the limited recourse provisions to work
similarly in the event of a CME Bankruptcy Event. In order to harmonize
the provisions, CME is proposing a clarifying amendment to CME Rule
8G802.B.2.
The changes that are described in this filing 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 change that is the subject of this filing to its
primary regulator, the CFTC, in CME Submission 13-590.
CME believes the proposed rule change is consistent with the
requirements of the Exchange Act including Section 17A of the Exchange
Act.\5\ The proposed rule change clarifies that a CME Bankruptcy Event
is also a Termination Event for purposes of CME's IRS clearing
offering. The purpose of the proposed changes is to clarify the limited
recourse nature of CME's clearing offering and to harmonize CME's IRS
rules with its CDS rules; these purposes 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 or mixed 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
[[Page 3907]]
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 proposed rule change
merely makes clarifying amendments for the purpose of harmonizing CME's
IRS rules with its CDS rules.
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 upon filing 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. \12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(4)(ii).
\12\ 15 U.S.C. 78s(b)(3)(C).
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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-2014-01 on the subject line.
Paper Comments
Send paper comments 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-2014-01. 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-2014-01
and should be submitted on or before February 13, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01247 Filed 1-22-14; 8:45 am]
BILLING CODE 8011-01-P