[Federal Register Volume 77, Number 185 (Monday, September 24, 2012)]
[Notices]
[Pages 58899-58900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23440]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67885; File No. SR-CME-2012-35]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Regarding Acceptance of Additional Interest Rate Swaps for 
Clearing

September 18, 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 September 5, 2012, Chicago Mercantile Exchange Inc. (``CME'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of Terms of Substance of 
the Proposed Rule Change

    CME proposes to amend rules related to its business as a 
derivatives clearing organization offering interest rate swap (``IRS'') 
clearing services. More specifically, CME proposes to accept the 
following swaps for clearing beginning September 17, 2012:
     Zero Coupon Swaps denominated in United States Dollars 
(``USD''), Euros (``EUR'') and British Pound Sterling (``GBP'') with 
Termination Dates up to 50 years;
     Overnight Index Swaps (``OIS'') denominated in USD, EUR, 
GBP and Japanese Yen (``JPY'') with Termination Dates up to 30 years; 
and
     An extension of the latest Termination Date for swaps 
denominated in USD, EUR and GBP to 51 years and 10 days.
    The text of proposed rule changes to CME Rule 90002.L, relating to 
the extension of termination dates, is available at CME's Web site at 
http://www.cmegroup.com/market-regulation/files/SEC_19B-4_12-35.pdf.

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 derivatives clearing organization with the 
Commodity Futures Trading Commission and currently offers clearing 
services for IRS. With this filing, CME proposes to accept the 
following swaps for clearing beginning September 17, 2012:
     Zero Coupon Swaps denominated in United States Dollars 
(``USD'') Euros (``EUR'') and British Pound Sterling (``GBP'') with 
Termination Dates up to 50 years;
     Overnight Index Swaps (``OIS'') denominated in USD, EUR, 
GBP and Japanese Yen (``JPY'') with Termination Dates up to 30 years; 
and
     An extension of the latest Termination Date for swaps 
denominated in USD, EUR and GBP to 51 years and 10 days.
    The Manual of Operations for CME Cleared Interest Rate Swaps (the 
``IRS Manual'') is also being updated in connection with these proposed 
changes to reflect the acceptance of the above interest rate swaps and 
to make certain other operational updates and typographical and 
grammatical corrections. The IRS Manual changes will be effective on 
September 17, 2012.
    CME notes that it has also submitted the proposed rule changes that 
are the subject of this filing to the Commodity Futures Trading 
Commission (``CFTC''), in CME Submission 12-275.
    CME believes the proposed rule change is consistent with the 
requirements of the Act and particularly with Section 17A of the Act 
because it involves clearing of swaps and futures contracts and thus 
relate solely to CME's swaps and futures clearing activities pursuant 
to its registration as a derivatives clearing organization under the 
Commodity Exchange Act (``CEA'') and does 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 Act, 
such as promoting market transparency for over-the-counter derivatives 
and futures 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 
enhancements in relation to CME's IRS product offering.

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-2012-35 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-2012-35. 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

[[Page 58900]]

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 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-2012-35 and should be 
submitted on or before October 15, 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 with the 
requirements of Section 17A of the Act,\4\ 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 assure the safeguarding of 
securities and funds which are in the possession or control of the 
clearing agency or for which it is responsible and to protect investors 
and the public interest because it should allow CME to enhance its 
clearing activities related to IRS products.\5\
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    \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).
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    In its filing CME requested that the Commission approve this 
proposed rule change prior to the thirtieth day after the date of 
publication of the notice of the filing. CME has articulated three 
reasons for so granting approval. One, the products covered by this 
filing and CME's operations as a derivatives clearing organization for 
such products are regulated by the CFTC under the CEA. Two, the 
proposed rule change relates solely to IRS products and therefore 
relate solely to CME's swaps clearing activities and do not 
significantly relate to CME's functions as a clearing agency for 
security-based swaps. Three, not approving this request on an 
accelerated basis will have a significant impact on the swap clearing 
business of CME as a designated clearing organization.
    The Commission finds good cause for granting approval of the 
proposed rule change prior to the thirtieth day after publication of 
the notice of its filing 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) the clearing agency has indicated that not providing 
accelerated approval would have a significant impact on its IRS 
clearing business 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 federal regulator.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-CME-2012-35) is approved on an 
accelerated basis.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23440 Filed 9-21-12; 8:45 am]
BILLING CODE 8011-01-P