[Federal Register Volume 77, Number 72 (Friday, April 13, 2012)]
[Notices]
[Pages 22372-22374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8879]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66773; File No. SR-CME-2012-09]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Comply With Revisions to CFTC Regulations Governing 
Derivatives Clearing Organizations

April 9, 2012.
    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 March 29, 2012, 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. 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of Terms of Substance of 
the Proposed Rule Change

    CME proposes to amend certain of its rules to comply with pending 
revisions to Commodity Futures Trading Commission (``CFTC'') 
Regulations governing derivatives clearing organizations (``DCOs''). 
The text of the proposed rule change is available at the CME's Web site 
at http://www.cmegroup.com/market-regulation/rule-filings.html.

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 is registered as a DCO with the CFTC and operates a substantial 
business clearing futures and swaps contracts subject to the 
jurisdiction of the CFTC. CME proposes to amend certain of its rules to 
comply with pending changes to CFTC Regulations that require DCOs to 
make corresponding rule changes. The changes that are the subject of 
this filing will become effective on May 7, 2012.
1. Amendments To Comply With CFTC Regulations 39.12(a)(5)(B)
    The CFTC adopted a number of new regulations designed to implement 
the core principles for DCOs in the Commodity Exchange Act (``CEA''), 
as amended by the Dodd-Frank Act. Certain of these new DCO regulations 
become effective on May 7, 2012, including CFTC Regulation 
39.12(a)(5)(B), which provides that: ``(B) A derivatives clearing 
organization shall require clearing members that are not

[[Page 22373]]

futures commission merchants to make the periodic financial reports 
provided pursuant to paragraph (a)(5)(i) of this section available to 
the Commission [CFTC] upon the Commission's [CFTC's] request or, in 
lieu of imposing this requirement, a derivatives clearing organization 
may provide such financial reports directly to the Commission [CFTC] 
upon the Commission's [CFTC's] request.''
    In order to comply with CFTC Regulation 39.12(a)(5)(B), CME 
proposes to amend CME Rule 970.B by adding new language that makes 
clear that non-FCM clearing members are required to make available to 
the CFTC upon request copies of financial reports required to be 
submitted to the CME audit department.
2. Amendments To Comply With CFTC Regulations 39.13(h)(5)(B)-(C)
    New CFTC Regulations effective on May 7, 2012, also include CFTC 
Regulation 39.13(h)(5), which requires each DCO to adopt rules that: 
``(B) Ensure that it has the authority to request and obtain 
information and documents from its clearing members regarding their 
risk management policies, procedures, and practices, including, but not 
limited to, information and documents relating to the liquidity of 
their financial resources and their settlement procedures; and (C) 
Require its clearing members to make information and documents 
regarding their risk management policies, procedures, and practices 
available to the Commission [CFTC] upon the Commission's [CFTC's] 
request.''
    In order to comply with Regulation 39.13(h)(5), CME proposes to 
amend CME Rule 982 and CME Rule 8F010 to make clear that clearing 
members will be required upon request to make appropriate information 
available regarding risk management policies, procedures, and 
practices.
3. Amendments To Comply With CFTC Regulation 39.12(a)(2)(iii)
    New CFTC Regulations effective May 7, 2012, also include CFTC 
Regulation 39.12(a)(2)(iii) which provides that a DCO ``shall not set 
minimum capital requirements of more than $50 million for any person 
that seeks to become a clearing member in order to clear swaps.'' In 
order to comply with this Regulation, CME proposes to amend CME Rule 
8F04 to conform it to the new standard described above. Note that CME 
plans to make additional changes in the near future to the relevant 
chapters in its rulebook governing interest rate swap and credit 
default swap clearing member obligations and qualifications.
    CME also made two separate filings, CME Submissions 12-067 and 12-
097, with its primary regulator, the CFTC, with respect to the proposed 
rule changes.
    CME believes the proposed changes are consistent with the 
requirements of the Act. CME, a DCO, is required to implement the 
proposed changes to comply with recent changes to CFTC regulations. CME 
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 derivatives markets, 
promoting the prompt and accurate clearance of transactions, and 
protecting investors and the public interest.

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.

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 email to [email protected]. Please include 
File No. SR-CME-2012-09 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-2012-09. 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 
a.m. and 3 p.m. 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-2012-09 and should be 
submitted on or before May 4, 2012.

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

    Section 19(b) of the Act \3\ 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, and the rules and regulations 
thereunder applicable to CME.\4\ 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 assure the safeguarding of securities 
and funds which are in the custody and control of the clearing agency 
because the proposed rule change should allow CME to better monitor the 
financial status and risk management procedures of its clearing 
members.\5\
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b).
    \4\ 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).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    In its filing, CME requested that the Commission approve this 
proposed rule change on an accelerated basis for good cause shown. CME 
cites as the reason for this request CME's operation as a

[[Page 22374]]

DCO, which is subject to regulation by the CFTC under the CEA. This 
rule change is being made according to regulations promulgated by the 
CFTC, which were previously subject to notice and comment. Not 
approving this request on an accelerated basis would have a significant 
impact on CME's operations as a DCO.
    The Commission finds good cause for approving the proposed rule 
change prior to the 30th day after the date of publication of notice in 
the Federal Register because the proposed rule change allows CME to 
implement the regulations of another federal regulatory agency, the 
CFTC, in accordance with those regulations' effective date.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-CME-2012-09) is approved on an 
accelerated basis.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-8879 Filed 4-12-12; 8:45 am]
BILLING CODE 8011-01-P