[Federal Register Volume 79, Number 193 (Monday, October 6, 2014)]
[Notices]
[Pages 60221-60223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23699]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73258; File No. SR-CME-2014-38]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Settlement Procedures Regarding a CME Cleared OTC FX Spot, Forward and
Swap Contract
September 30, 2014.
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 September 22, 2014, 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) 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 proposed rule changes that are limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule change
[[Page 60222]]
contains amendments to certain aspects of CME's settlement procedures
for one of CME's Cleared Over-the-Counter Foreign Exchange Spot,
Forward and Swap Contracts.
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 of 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 these statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
CME is registered as a DCO with the Commodity Futures Trading
Commission and offers clearing services for many different futures and
swaps products. The proposed rule change that is the subject of this
filing is limited to CME's business as a DCO offering clearing services
for CFTC-regulated swaps products. CME currently offers clearing
services for cleared-only OTC FX contracts on a number of different
currency pairs. These CME Cleared OTC FX Spot, Forward and Swap
Contracts are non-deliverable foreign currency forward contracts and,
as such, are considered to be ``swaps'' under applicable regulatory
definitions.\5\ CME proposes to make amendments to one of these
contracts.
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\5\ See Commodity Futures Trading Commission and Securities and
Exchange Commission Joint Final Rule Defining ``Swap,'' ``Security-
Based Swap,'' and ``Security-Based Swap Agreement;'' Mixed Swaps;
Security-Based Swap Agreement Recordkeeping; Final Rule, 77 FR
48207, 48255 (Aug. 13, 2012).
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The proposed amendments would affect CME Rule 279H.02.A (``Day of
Cash Settlement'') of Chapter 279H--Cleared OTC U.S. Dollar/Indian
Rupee (USD/INR) Spot, Forwards and Swaps (Commodity Code: USDINR). More
specifically, CME is proposing to update Rule 279H.02.A with this
filing to reflect the amended time that the Reserve Bank of India will
publish the spot exchange rate. There is currently no open interest in
this contract.
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. The changes will be effective on filing.
CME notes that it has also certified the proposed rule change that is
the subject of this filing to its primary regulator, the Commodity
Futures Trading Commission (``CFTC''), in a separate filing, CME
Submission No. 14-388. The text of the CME proposed rule amendments is
attached, with additions underlined and deletions in brackets.
CME believes the proposed rule change is consistent with the
requirements of the Exchange Act including Section 17A of the Exchange
Act.\6\ CME is updating its rules to reflect new practices by the
Reserve Bank of India, that is, changes to when the relevant spot
exchange rate is published. Conforming to these changes will benefit
market participants clearing OTC FX swaps contracts with CME and, as
such, should be seen to be 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.\7\
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\6\ 15 U.S.C. 78q-1.
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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Furthermore, the proposed changes are limited in their effect to
products offered under CME's authority to act as a DCO. The products
that are the subject of this filing 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, futures that are not security futures and forwards that are not
security forwards. 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 OTC FX
products 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, swaps that are not security-based swaps or mixed
swaps, and forwards that are not security forwards; 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 \8\ and are properly filed under
Section 19(b)(3)(A) \9\ and Rule 19b-4(f)(4)(ii) \10\ thereunder.
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\8\ 15 U.S.C. 78q-1.
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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 amendments would
update CME rules to reflect the amended time when the Reserve Bank of
India publishes the relevant spot exchange rate. Therefore, the changes
merely conform CME's contracts and practices to relevant international
standards. Further, the changes are limited to CME's derivatives
clearing business and, as such, do not affect the security-based swap
clearing activities of CME in any way and therefore would not impose
any burden on competition that is inappropriate in furtherance of the
purposes of the Act.
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) \11\ of the Act and Rule 19b-4(f)(4)(ii) \12\
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,
[[Page 60223]]
or otherwise in furtherance of the purposes of the Act.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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 Number SR-CME-2014-38 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-2014-38. 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 of
10:00 a.m. and 3:00 p.m. Copies of such filings will also 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-2014-38
and should be submitted on or before October 27, 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).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23699 Filed 10-3-14; 8:45 am]
BILLING CODE 8011-01-P