[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Notices]
[Pages 69166-69168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27452]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73607; File No. SR-CME-2014-43]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change in
Connection With the Acceptance of USD Malaysian Palm Olein Calendar
(Cleared Only) Contracts for Clearing
November 14, 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 November 6, 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 proposing rule changes that are limited to its business as a
derivatives clearing organization (``DCO''). More specifically, the
proposed rule change would add rules related to the acceptance of the
USD Malaysian Palm Olein Calendar (Cleared Only) Contract for clearing.
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 (``CFTC'') 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. More specifically,
the proposed rule change is related to CME's initial listing of the USD
Malaysian Palm Olein Calendar Swap (Cleared Only) for clearing.
[[Page 69167]]
The USD Malaysian Palm Olein Calendar Swaps would fit within a
subset of one or more groups, categories, types, or classes of CFTC-
regulated swaps that CME already accepts for clearing. For example, CME
currently accepts for clearing physical-commodity calendar swaps that
financially-settle to a commercially-acceptable, publicly-accessible
and timely disseminated price series including the following: CME USD
Malaysian Crude Palm Oil Calendar Swap (CPC); CBOT Wheat Calendar Swap
(WCS); CBOT Corn Calendar Swap (CCS); CBOT Soybean Calendar Swap (SNS);
and the CBOT KC HRW Wheat Calendar Swap (KWS).
The proposed new rules include a new product Chapter 204B in the
CME rulebook. New rule 204B00 would specify that the USD Malaysian Palm
Olein Calendar Swaps listed by CME would be for clearing-only, would be
available only to ``eligible contract participants'' as defined in
Section 1a(18) of the Commodity Exchange Act, and would be subject to
the applicable provisions of the CME rulebook. New Rule 204B01 would
lay out the various contract specifications of the USD Malaysian Palm
Olein Calendar Swaps including, the unit of clearing, hours for
clearing entry, minimum price increments, months cleared, position
limits, last day of clearing, and liquidation during the delivery
month. The proposed contracts would be liquidated by cash settlement as
set forth in proposed Rule 204B02. Clearing members holding open
positions in USD Malaysian Palm Olein Calendar Swaps at the time of
termination of clearing would be required to make payment to and
receive payment through CME in accordance with normal variation
settlement procedures based on a settlement price equal to the final
settlement price (as described in Rule 204B03.). As specified in
proposed Rule 204B03, the final settlement price for the contracts
would be determined through use of a third party service provider,
i.e., the cumulative average of each Thomson Reuters ``Malaysia RBD
Palm Olein'' third forward month closing time assessment for each
business day of the contract month. Rule 204B04 specifies that daily
settlement prices shall be generated each business day the CME is open
using the most recent available Thomson Reuters values. Under proposed
rule 204B05, the final settlement day for the proposed contracts would
be on the last CME business day of the swap contract month. Under
proposed rule 204B06, all disputes between interested parties may be
settled by CME arbitration. Finally, proposed new rule 204B07 sets out
CME's disclaimer regarding limitations of liability.
The changes that are described in this filing are limited to
listing the new USD Malaysian Palm Olein Calendar Swaps. The proposed
changes are therefore limited to CME's business as a DCO clearing
products under the exclusive jurisdiction of the CFTC and do not 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. 14-254. 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 Act including Section 17A of the Act.\5\ CME is
proposing the amendments to facilitate the listing of a new clearing-
only physical-commodity calendar swap that financially-settles to a
commercially-acceptable, publicly-accessible and timely disseminated
price series. The addition of this new derivative product is 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 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
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 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
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 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 amendments
CME would simply facilitate the listing of a new clearing-only
physical-commodity calendar swap. 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) \10\ of the Act and Rule 19b-4(f)(4)(ii) \11\
thereunder. At any time within 60 days of the filing of the
[[Page 69168]]
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-2014-43 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-2014-43. 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 filing 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-2014-43
and should be submitted on or before December 11, 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. 2014-27452 Filed 11-19-14; 8:45 am]
BILLING CODE 8011-01-P