[Federal Register Volume 78, Number 207 (Friday, October 25, 2013)]
[Notices]
[Pages 64038-64039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-25118]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70725; File No. SR-CME-2013-19]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Adoption of CME Rule 1001

October 21, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on October 17, 2013, 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 by CME. CME filed the proposal 
pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(4)(ii) 
thereunder,\4\ so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

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

    CME is filing proposed rules changes that are limited to its 
business as a derivatives clearing organization. The new CME rule 
simply specifies that CME will discharge any swap data reporting 
obligations it has with respect to the swaps it clears under applicable 
Commodity Futures Trading Commission (``CFTC'') by making reports to 
the CME SDR.

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

    In its filing with the Commission, the self-regulatory organization 
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 IV below. The self-regulatory organization 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 the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    CME is registered as a derivatives clearing organization (``DCO'') 
with the Commodity Futures Trading Commission and currently offers 
clearing services for swaps products. In connection with its business 
as a DCO clearing swaps, CME is required to make certain reports 
regarding the swaps it clears to a swap data repository (``SDR'') 
registered with the CFTC in accordance with applicable CFTC 
regulations.
    The rule that is the subject of this filing, CME Rule 1001, 
specifies that CME DCO will discharge any applicable swap reporting 
requirements that it has in its capacity as a DCO clearing swaps by 
making reports to the CME SDR. CME Rule 1001 was reviewed and 
affirmatively approved by the CFTC.
    The scope of CME Rule 1001 is limited to CME's business as a 
derivatives clearing organization clearing products under the exclusive 
jurisdiction of the Commodity Futures Trading Commission (``CFTC''). 
CME Rule 1001 does not materially impact CME's security-based swap 
clearing business in any way. As such, the changes will be effective 
upon filing.
    CME believes the rule that is the subject of this filing is 
consistent with the requirements of the Exchange Act including Section 
17A of the Exchange Act.\5\ The rule simply clarifies how CME will make 
required swap data reports regarding the swaps its clears in an 
operationally efficient manner and in accordance with applicable CFTC 
requirements, and as such it is designed to promote the prompt and 
accurate clearance and settlement of securities transactions and, to 
the extent applicable, derivatives agreements, contracts, and 
transactions, 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, in general, to protect investors and the public 
interest consistent with Section 17A(b)(3)(F) of the Exchange Act.\6\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Furthermore, the rule is limited in its effect to swaps offered 
under CME's authority to act as a derivatives clearing organization. 
Swaps fall under the exclusive jurisdiction of the CFTC. As such, the 
proposed CME changes are limited to CME's activities as a derivatives 
clearing organization clearing swaps that are not security-based swaps; 
CME notes that the policies of the CFTC with respect to administering 
the Commodity Exchange Act 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.
    Because the changes are limited in their effect to swaps offered 
under CME's authority to act as a derivatives clearing organization, 
the changes are properly classified as effecting a change in an 
existing service of CME that:
    (a) Primarily affects the clearing operations of CME with respect 
to products that are not securities, including futures that are not 
security futures, and swaps that are not security-based swaps or mixed 
swaps; and
    (b) does not significantly affect any securities clearing 
operations of CME or any rights or obligations of CME with respect to 
securities clearing or persons using such securities-clearing service.

As such, the changes are therefore consistent with the requirements of 
Section 17A of the Exchange Act \7\ and are properly filed under 
Section 19(b)(3)(A) \8\ and Rule 19b-4(f)(4)(ii) \9\ thereunder.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

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. As a general matter, CME 
Rule 1001 should not be seen to have any effect on competition because 
it does not act as a restraint.

[[Page 64039]]

    CME Rule 1001 simply codifies how CME's clearinghouse will 
discharge its own CFTC-required swap data reporting obligations for 
swaps cleared by CME in an operationally efficient manner. The Rule 
states that CME will discharge any DCO reporting obligations it has by 
making required swap data reports regarding CME-cleared swaps to its 
affiliated SDR. In addition, it should be noted that the Rule 
separately provides that CME will also make voluntary, supplemental 
reports regarding the same cleared swap data it reports to the CME SDR 
to any third party swap data repositories selected by any counterparty 
to a swap cleared at CME. The reporting arrangements contemplated by 
Rule 1001 regarding swaps under the exclusive jurisdiction of the CFTC 
were reviewed and approved by the CFTC.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    CME separately submitted Rule 1001 to the CFTC for affirmative 
approval pursuant to Regulation 40.5 of CFTC Regulations. This process 
involved a public comment period. A series of comment letters from 
various market participants were submitted. These letters made a 
variety of arguments alleging that CME Rule 1001 was inconsistent with 
the Commodity Exchange Act. CME submitted multiple response letters 
addressing these arguments. After a lengthy review process, the CFTC 
concluded that ``CME Rule is not inconsistent with either the 
[Commodity Exchange] Act or the regulatory structure implemented by the 
Commission to effectuate the Act.'' All of the industry comment 
letters, CME's response letters, the CFTC's approval order and separate 
CFTC Commissioners statements regarding Rule 1001 can be found at the 
following public Web site: http://www.cftc.gov/PressRoom/PressReleases/pr6525-13.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(4)(ii) \11\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

IV. 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-2013-19 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-2013-19. 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 or 
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-2013-19 
and should be submitted on or before November 15, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-25118 Filed 10-24-13; 8:45 am]
BILLING CODE 8011-01-P