[Federal Register Volume 77, Number 204 (Monday, October 22, 2012)]
[Notices]
[Pages 64569-64571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25864]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68055; File No. SR-CME-2012-39]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Amend CME Rule 971 To Require FCM Clearing Members To 
Provide Certain View-Only Access

October 16, 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 October 4, 2012, 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 substantially by CME. The Commission is publishing 
this notice 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 the Terms of Substance 
of the Proposed Rule Change

    CME proposes to make amendments to CME Rule 971 as part of an 
industry wide initiative that is designed to further safeguard customer 
funds held at the futures commission merchant (``FCM'') level.

[[Page 64570]]

II. Self-Regulatory Organizations 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 III below. CME has prepared summaries, set forth in sections A, B 
and C below, of the most significant aspects of such statements.\3\
---------------------------------------------------------------------------

    \3\ The Commission has modified the text of the summaries 
prepared by CME.
---------------------------------------------------------------------------

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

    CME is registered as a derivatives clearing organization with the 
Commodity Futures Trading Commission (``CFTC'') and operates a 
substantial business clearing futures and swaps contracts subject to 
the jurisdiction of the CFTC. CME proposes to make rule changes to CME 
Rule 971 in coordination with the implementation by the National 
Futures Association (``NFA'') of parallel revisions to NFA rules. The 
proposed rule changes are part of a continuing effort to enhance the 
protection of customer funds held at the FCM level.
    Under revised CME 971.C, FCM clearing members would be required to 
provide the CME Audit Department with view-only full access of 
segregated, secured, and Cleared Swaps Customer accounts at a bank or 
trust company. Amended CME Rule 971.C would provide the CME Audit 
Department with enhanced capabilities to review FCM funds at a bank or 
trust company for verification on a real-time and surprise basis, 
without seeking further authorization from FCM clearing members.
    The proposed effective date for these revisions is after November 
5, 2012 and will be coordinated with implementation by the National 
Futures Association (``NFA'') of parallel revisions to NFA rules. The 
proposed changes to CME Rule 971 are attached as Exhibit 5 to the Form 
19b-4 that was filed with the Commission in connection with this 
proposed rule change.\4\ CME also made a filing, CME Submission 12-282, 
with the CFTC, with respect to the proposed changes.
---------------------------------------------------------------------------

    \4\ On November 5, 2012, in connection with implementation of 
the CFTC's Part 22 Regulations, references to ``sequestered'' 
accounts in CME Rule 971 will be changed to Cleared Swaps Customer 
accounts, and references to CME rules for sequestered accounts will 
be deleted. These changes were the subject of a separate CME filing 
with the Commission, SR-CME-2012-30. The text of the proposed 
changes associated with this filing contains the current 
``sequestered'' terminology.
---------------------------------------------------------------------------

    CME believes the proposed changes are consistent with the 
requirements of the Exchange Act. First, CME, a derivatives clearing 
organization, is implementing the proposed changes in furtherance with 
applicable CFTC regulations and the Commodity Exchange Act (``CEA''), 
which contains a number of provisions that are comparable to the 
policies underlying the Act, including, for example, promoting market 
transparency for derivatives markets, promoting the prompt and accurate 
clearance of transactions, and protecting investors and the public 
interest.\5\ Second, CME believes the proposed changes are specifically 
designed to protect investors and the public interest because the 
requirements help safeguard customer funds held at the FCM level.
---------------------------------------------------------------------------

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

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

     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-2012-39 on the subject line.

Paper Comments

     Send paper comments 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-2012-39. 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 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-2012-39 
and should be submitted on or before November 13, 2012.

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

    Section 19(b) of the Act \6\ 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.\7\ 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 
registered

[[Page 64571]]

clearing agency be designed 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 to protect investors and the public 
interest.\8\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b).
    \7\ 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).
    \8\ 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 
because the proposed changes are part of an industry wide initiative 
that is specifically designed to protect investors and the public 
interest through adoption of requirements that help safeguard customer 
funds held at the FCM level.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\9\ for approving the proposed rule change prior to the 30th 
day after the date of publication of notice in the Federal Register 
because, as a registered derivatives clearing organization, CME must 
make the rule changes discussed above as part of an industry wide 
initiative that is specifically designed to protect investors and the 
public interest through adoption of requirements that help safeguard 
customer funds held at the FCM level.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-CME-2012-39) be, and hereby is, 
approved on an accelerated basis.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25864 Filed 10-19-12; 8:45 am]
BILLING CODE 8011-01-P