[Federal Register Volume 79, Number 193 (Monday, October 6, 2014)]
[Notices]
[Pages 60211-60212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23700]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73259; File No. SR-CME-2014-37]
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
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 19, 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 rules changes that are limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule change involves 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 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, 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, 21 and 22. CME also offers clearing of the Markit CDX North
American High Yield Index Series 11, 12, 13, 14, 15, 16, 17, 18, 19,
20, 21 and 22.
The proposed rule change 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 23 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)
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CDX North American 8 20 Jun 2014.
Investment Grade
(CDX.NA.IG).
CDX North American 12 20 Jun 2014.
Investment Grade
(CDX.NA.IG).
CDX North American 16 20 Jun 2014.
Investment Grade
(CDX.NA.IG).
CDX North American High 12 20 Jun 2014.
Yield (CDX.NA.HY).
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Although these changes will be effective on filing, CME plans to
operationalize the proposed changes as follows: CDX IG 23 will become
available for clearing on September 22, 2014 and CDX HY 23 will become
available for clearing on September 29, 2014; provided that CME expects
market participants to begin clearing CDX IG 23 and CDX HY beginning
October 6, 2014 consistent with the ISDA protocol adopting the 2014
Credit Derivatives Definitions. The product deletions would 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 change that is the subject of this filing to its primary
regulator, the Commodity Futures Trading Commission (``CFTC''), in a
separate filing, CME Submission 14-405. 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.\5\ The proposed rule change would expand CME's CDX IG and CDX HY
product offerings by incorporating the upcoming Series 23 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\
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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 DCO. These
products are under the exclusive jurisdiction of the
[[Page 60212]]
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 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.
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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 change simply
facilitates the offering of two new series of credit default swap 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 upon filing 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 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 Number SR-CME-2014-37 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-2014-37. 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-2014-37
and should be submitted on or before October 27, 2014.
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. 2014-23700 Filed 10-3-14; 8:45 am]
BILLING CODE 8011-01-P