[Federal Register Volume 60, Number 204 (Monday, October 23, 1995)]
[Notices]
[Pages 54339-54340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26150]



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COMMODITY FUTURES TRADING COMMISSION


Chicago Mercantile Exchange Proposal To Revise Member Margin 
Requirements

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed contract market rule changes.

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SUMMARY: The Chicago Mercantile Exchange (``CME'') has submitted 
proposed rule amendments which would revise margin requirements for 
certain CME members. Acting pursuant to the authority delegated by 
Commission Regulation 140.96, the Division of Trading and Markets has 
determined to publish the CME proposal for public comment. The Division 
believes that publication of the CME proposal is in the public interest 
and will assist the Commission in considering the views of interested 
persons.

DATES: Comments must be received on or before November 22, 1995.

FOR FURTHER INFORMATION CONTACT: Clarence Sanders, Attorney, Division 
of Trading and Markets, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581. Telephone: 
(202) 418-5484.

SUPPLEMENTARY INFORMATION:

I. Description of Proposed Rule Amendments

    By a letter dated August 11, 1995, the CME submitted proposed rule 
amendments pursuant to Section 5a(a)(12)(A) of the Commodity Exchange 
Act (``Act'') and Commission Regulation 1.41(c) to revise margin 
requirements for certain CME members.
    Under existing CME Rule 827.C., CME clearing members are prohibited 
from accepting a customer's order (whether for a CME member or 
nonmember) unless the performance bond margin held for the customer's 
pre-existing open positions meets or exceeds CME maintenance 
requirements, or is forthcoming within a reasonable time. The proposal 
would establish an exception to the provisions of Rule 827.C. and 
thereby permit a qualifying clearing member to accept orders from a CME 
equity member whose performance bond margin is less than applicable CME 
requirements or whose account is in debit, if the performance bond 
margin deficiency or debit amount is less than the lesser of (i) 
$100,000 or (ii) 50 percent of the market value (current bid) of the 
member's membership interest.\1\ Under the proposal, however, the 
exception would not apply in those cases where the member's membership 
interest is assigned to the qualifying clearing member for clearing 
privileges pursuant to CME Rule 902 or is used as a guarantee for a CME 
Rule 106.D. transferee (lessee) or trading permit holder, or where the 
qualifying clearing member is guaranteeing a loan to the CME member for 
the purchase of the membership.

    \1\ A CME qualifying clearing member is a member of the CME 
clearing house who has qualified a CME floor member to execute CME 
futures or spot call commodity contracts. A CME qualifying clearing 
member agrees to guarantee and assume complete responsibility for 
(i) all trades executed or directed to be executed by the qualified 
member and (ii) all orders that the qualified member negligently 
executes or fails to execute. See CME Rule 924.
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    The proposal would not afford beneficial treatment for net capital 
purposes when computing current receivables or capital charges for 
undermargined accounts. When computing current receivables or 
undermargined account capital charges, memberships would continue to be 
non-allowable assets.

II. Request for Comments

    The Commission requests comments on any aspect of the CME's 
proposed rule amendments that members of the public believe may raise 
issues under the Act or Commission regulations. In particular, the 
Commission requests comments regarding the liquidity of the market for 
CME memberships, including discussion of the market's ability to 
provide transactional immediacy and efficient pricing.
    Copies of the proposed rule amendments and related materials are 
available for inspection at the Office of the Secretariat, Commodity 
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street 
NW, Washington, DC 20581. Copies also may be obtained through the 
Office of the Secretariat at the above address or by 

[[Page 54340]]
telephoning (202) 418-5100. Some materials may be subject to 
confidential treatment pursuant to 17 CFR 145.5 or 145.9.
    Any person interested in submitting written data, views, or 
arguments on the proposed amended rule should send such comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581, by the 
specified date.

    Issued in Washington, DC, on October 18, 1995.
Alan L. Seifert,
Deputy Director.
[FR Doc. 95-26150 Filed 10-20-95; 8:45 am]
BILLING CODE 6351-01-P