[Federal Register Volume 79, Number 61 (Monday, March 31, 2014)]
[Notices]
[Pages 18107-18108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07042]



[[Page 18107]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71799; File No. SR-CME-2014-09]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Acceptance of a New Series of Credit Default Swap Index 
Product

March 25, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on March 14, 2014, Chicago Mercantile Exchange 
Inc. (``CME'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes described in Items I and II 
below, which Items have been primarily prepared by CME. CME filed the 
proposal pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(4)(ii) \4\ thereunder so that the proposal was effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule changes from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Changes

    CME is filing proposed rule changes that are limited to its 
business as a derivatives clearing organization. More specifically, the 
proposed rule changes involve CME's acceptance of a new credit default 
swap index product series.

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

    In its filing with the Commission, CME included statements 
concerning the purpose and basis for the proposed rule changes and 
discussed any comments it received on the proposed rule changes. The 
text of these statements may be examined at the places specified in 
Item IV 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 the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    CME is registered as a DCO with the Commodity Futures Trading 
Commission and offers clearing services for many different futures and 
swaps products, including certain credit default swap index products. 
Currently, CME offers clearing of the Markit CDX North American 
Investment Grade Index Series 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 
19, 20 and 21. CME also offers clearing of the Markit CDX North 
American High Yield Index Series 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 
and 21.
    The proposed rule changes would expand CME's Markit CDX North 
American Investment Grade (``CDX IG'') Index and Markit CDX North 
American High Yield (``CDX HY'') Index product offerings by 
incorporating the upcoming Series 22 for both sets of index products.
    In addition to the changes to expand CME's CDX offering, CME also 
proposes to remove from the current list of accepted CDX indices 
certain products whose termination dates have passed. These products 
are set forth in the following table:

------------------------------------------------------------------------
                                                    Termination date
          CDX Index                 Series       (scheduled termination
                                                          date)
------------------------------------------------------------------------
CDX North American Investment              11   20 Dec 2013.
 Grade (CDX.NA.IG).
CDX North American Investment              15   20 Dec 2013.
 Grade (CDX.NA.IG).
CDX North American High Yield              11   20 Dec 2013.
 (CDX.NA.HY).
------------------------------------------------------------------------

    Although these changes will be effective on filing, CME plans to 
operationalize the proposed changes as follows: CDX IG 22 will become 
available for clearing on March 20, 2014; CDX HY 22 will become 
available for clearing on March 27, 2014; the product deletions will be 
effective immediately.
    The changes that are described in this filing are limited to CME's 
business as a DCO clearing products under the exclusive jurisdiction of 
the CFTC and do not materially impact CME's security-based swap 
clearing business in any way. CME notes that it has also certified the 
proposed rule changes that are the subject of this filing to its 
primary regulator, the Commodity Futures Trading Commission (``CFTC''), 
in a separate filing, CME Submission 14-066.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\5\ The proposed rule changes would expand CME's CDX IG and CDX HY 
product offerings by incorporating the upcoming Series 22 for both sets 
of index products and would therefore provide investors with an 
expanded range of derivatives products for clearing (and would also 
remove certain products whose termination dates have passed). As such, 
the proposed changes are 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\
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    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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    Furthermore, the proposed changes are limited in their effect to 
swaps products offered under CME's authority to act as a DCO. These 
products are under the exclusive jurisdiction of the CFTC. As such, the 
proposed CME changes are limited to CME's activities as a DCO 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 proposed changes are limited in their effect to swaps 
products

[[Page 18108]]

offered under CME's authority to act as a DCO, the proposed 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.
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    \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).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CME does not believe that the proposed rule changes will have any 
impact, or impose any burden, on competition. The rule changes simply 
facilitate the offering of two new series of credit default swap index 
products.

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

    CME has not solicited, and does not intend to solicit, comments 
regarding the proposed rule changes. CME has not received any 
unsolicited written comments from interested parties.

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

    The foregoing rule changes has become effective 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 changes, 
the Commission summarily may temporarily suspend such rule changes 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(4)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
changes are 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 No. SR-CME-2014-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CME-2014-09. 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 changes that are 
filed with the Commission, and all written communications relating to 
the proposed rule changes 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-2014-09 and 
should be submitted on or before April 21, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07042 Filed 3-28-14; 8:45 am]
BILLING CODE 8011-01-P