[Federal Register Volume 79, Number 61 (Monday, March 31, 2014)]
[Notices]
[Pages 18107-18108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07042]
[[Page 18107]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71799; File No. SR-CME-2014-09]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Acceptance of a New Series of Credit Default Swap Index
Product
March 25, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 14, 2014, Chicago Mercantile Exchange
Inc. (``CME'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule changes described in Items I and II
below, which Items have been primarily prepared by CME. CME filed the
proposal pursuant to Section 19(b)(3)(A)(iii) 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 changes from interested persons.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Changes
CME is filing proposed rule changes that are limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule changes involve CME's acceptance of a new credit default
swap index product series.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
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 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 Changes
CME is registered as a DCO with the Commodity Futures Trading
Commission and offers clearing services for many different futures and
swaps products, including certain credit default swap index products.
Currently, CME offers clearing of the Markit CDX North American
Investment Grade Index Series 9, 10, 11, 12, 13, 14, 15, 16, 17, 18,
19, 20 and 21. CME also offers clearing of the Markit CDX North
American High Yield Index Series 11, 12, 13, 14, 15, 16, 17, 18, 19, 20
and 21.
The proposed rule changes would expand CME's Markit CDX North
American Investment Grade (``CDX IG'') Index and Markit CDX North
American High Yield (``CDX HY'') Index product offerings by
incorporating the upcoming Series 22 for both sets of index products.
In addition to the changes to expand CME's CDX offering, CME also
proposes to remove from the current list of accepted CDX indices
certain products whose termination dates have passed. These products
are set forth in the following table:
------------------------------------------------------------------------
Termination date
CDX Index Series (scheduled termination
date)
------------------------------------------------------------------------
CDX North American Investment 11 20 Dec 2013.
Grade (CDX.NA.IG).
CDX North American Investment 15 20 Dec 2013.
Grade (CDX.NA.IG).
CDX North American High Yield 11 20 Dec 2013.
(CDX.NA.HY).
------------------------------------------------------------------------
Although these changes will be effective on filing, CME plans to
operationalize the proposed changes as follows: CDX IG 22 will become
available for clearing on March 20, 2014; CDX HY 22 will become
available for clearing on March 27, 2014; the product deletions will be
effective immediately.
The changes that are described in this filing are limited to CME's
business as a DCO clearing products under the exclusive jurisdiction of
the CFTC and do not materially impact CME's security-based swap
clearing business in any way. CME notes that it has also certified the
proposed rule changes that are the subject of this filing to its
primary regulator, the Commodity Futures Trading Commission (``CFTC''),
in a separate filing, CME Submission 14-066.
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 would expand CME's CDX IG and CDX HY
product offerings by incorporating the upcoming Series 22 for both sets
of index products and would therefore provide investors with an
expanded range of derivatives products for clearing (and would also
remove certain products whose termination dates have passed). As such,
the proposed changes 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\
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1.
\6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Furthermore, the proposed changes are limited in their effect to
swaps products offered under CME's authority to act as a DCO. These
products are under the exclusive jurisdiction of the CFTC. As such, the
proposed CME changes are limited to CME's activities as a DCO 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
[[Page 18108]]
offered under CME's authority to act as a DCO, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
CME does not believe that the proposed rule changes will have any
impact, or impose any burden, on competition. The rule changes simply
facilitate the offering of two new series of credit default swap index
products.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Changes Received From Members, Participants, or Others
CME has not solicited, and does not intend to solicit, comments
regarding the proposed rule changes. CME has not received any
unsolicited written comments from interested parties.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
The foregoing rule changes has become effective pursuant to Section
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(4)(ii) \11\ thereunder.
At any time within 60 days of the filing of the proposed rule changes,
the Commission summarily may temporarily suspend such rule changes 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
changes are 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-2014-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CME-2014-09. 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 changes that are
filed with the Commission, and all written communications relating to
the proposed rule changes 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 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-2014-09 and
should be submitted on or before April 21, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07042 Filed 3-28-14; 8:45 am]
BILLING CODE 8011-01-P