[Federal Register Volume 76, Number 169 (Wednesday, August 31, 2011)]
[Notices]
[Pages 54270-54271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22258]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65202; File No. SR-CME-2011-05]


Self-Regulatory Organizations; Chicago Mercantile Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Amend Certain Rules To Facilitate Clearing of Additional 
Interest Rate Swap Products

August 25, 2011.
    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 August 24, 2011, the Chicago Mercantile Exchange Inc. (``CME'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change described in Items I and II below, which items 
have been prepared primarily by CME.\3\ The Commission is publishing 
this Notice and Order to solicit comments on the proposed rule change 
from interested persons and to approve the proposed rule change on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In its submission, CME incorrectly labeled the file number 
as CMECH-2011-04.
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I. Self-Regulatory Organization's Statement of Terms of Substance of 
the Proposed Rule Change

    The text of the proposed rule change is below. Italicized text 
indicates additions; bracketed text indicates deletions.
* * * * *
    Rule 100--90002.E--No Change.
    CME Rule 90002.F. Contract Elections.
    With respect to an IRS Contract, each of the following elections 
made by an IRS Participant for such IRS Contract: the: Effective Date, 
Notional Amount and currency, Termination Date and any Business Day 
Convention adjustment, Fixed Rate Payer Payment Dates, Fixed Rate, 
Floating Rate Payer Payment Dates, Floating Rate Option, Designated 
Maturity, Spread, Floating Rate for Initial Floating Rate Payer 
Calculation Period, initial payment amount (if any), initial amount 
payer (if any) and whether the IRS Clearing Participant is acting as a 
Floating Rate Payer or a Fixed Rate Payer and whether the Clearing 
House is acting as a Floating Rate Payer or a Fixed Rate Payer.
    [CME Rule 90102.D. Calculation Period].
    [For any USD IRS Contract submitted to the Clearing House for 
clearing, if the elections made by the relevant IRS Clearing Members 
for such USD IRS Contract include ``Compounding'', then the Floating 
Rate Calculation Period of such USD IRS Contract shall be 6 months and 
shall entail a Compounding Period equal to 3 months.].
    [If such elections do not include ``Compounding'', then the 
Floating Rate Calculation Period of such USD IRS Contract shall equal 3 
months.].
    [The Fixed Rate Calculation Period of such USD IRS Contract shall 
equal 6 months.].
    [CME Rule 90102.G. Designated Maturity].
    [With respect to an USD IRS Contract, Designated Maturity shall be 
3 months.]

II. Self-Regulatory Organization's Statement of Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CME included statements 
concerning the purpose 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 III 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 Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    CME currently offers clearing services for certain interest rate 
swap products. These proposed rule changes are intended to expand CME's 
existing US dollar interest rate swap product offerings by adding the 
following additional contract elections: One month and six month 
designated maturities; +/- Spreads; and matching on the Floating Amount 
for the initial Floating Rate Payer Calculation Period.
    CME notes that it has also submitted the proposed rule changes that 
are the subject of this filing to its primary regulator, the Commodity 
Futures Trading Commission (``CFTC''). The text of the CME rule 
proposed amendments is in Section I of this notice, with additions 
underlined and deletions in brackets.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act because they involve clearing of swaps and thus relate solely to 
CME's swaps clearing activities pursuant to its registration as a 
derivatives clearing organization under the Commodity Exchange Act 
(``CEA'') and do not significantly affect any securities clearing 
operations of the clearing agency or any related rights or obligations 
of the clearing agency or persons using such service. CME further notes 
that the policies of the CEA with respect to clearing 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. The proposed rule changes accomplish 
those objectives by offering investors clearing for an expanded range 
of interest rate swap products.

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.

[[Page 54271]]

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. 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 may be submitted by using the 
Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml), or send an e-mail to [email protected] Please include 
File No. SR-CME-2011-05 on the subject line.
     Paper comments should be sent in triplicate to Elizabeth 
M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CME-2011-05. This file 
number should be included on the subject line if e-mail 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. Copies of such filing also will be available for 
inspection and copying at the principal office of CME. 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-2011-05 and should be 
submitted on or before September 21, 2011.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    Section 19(b) of the Act \4\ directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization. The Commission finds that the proposed rule change is 
consistent with the requirements of the Act, in particular the 
requirements of Section 17A of the Act,\5\ and the rules and 
regulations thereunder applicable to CME. Specifically, the Commission 
finds that the proposed rule change is consistent with Section 
17A(b)(3)(F) of the Act which requires, among other things, that the 
rules of a clearing agency be designed to promote the prompt and 
accurate clearance and settlement of derivative agreements, contracts, 
and transactions because it should allow CME to enhance its services in 
clearing interest rate swaps, thereby promoting the prompt and accurate 
clearance and settlement of derivative agreements, contracts, and 
transactions.\6\
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    \4\ 15 U.S.C. 78s(b).
    \5\ 15 U.S.C. 78q-1. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds good cause for accelerating approval because: 
(i) The proposed rule change does not significantly affect any 
securities clearing operations of the clearing agency (whether in 
existence or contemplated by its rules) or any related rights or 
obligations of the clearing agency or persons using such service; (ii) 
CME has indicated that not providing accelerated approval would have a 
significant impact on the swap clearing business of CME as a designated 
clearing organization; and (iii) the activity relating to the non-
security clearing operations of the clearing agency for which the 
clearing agency is seeking approval is subject to regulation by another 
regulator.

V. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) \7\ of the 
Act, that the proposed rule change (SR-CME-2011-05) is approved on an 
accelerated basis.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22258 Filed 8-30-11; 8:45 am]
BILLING CODE 8011-01-P