[Federal Register Volume 79, Number 193 (Monday, October 6, 2014)]
[Notices]
[Pages 60211-60212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23700]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73259; File No. SR-CME-2014-37]


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

September 30, 2014.
    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 19, 2014, Chicago Mercantile Exchange Inc. (``CME'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared primarily by CME. CME filed the proposal 
pursuant to Section 19(b)(3)(A) 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 change 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).
    \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 Change

    CME is filing proposed rules changes that are limited to its 
business as a derivatives clearing organization. More specifically, the 
proposed rule change involves 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 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 IV below. CME has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of these statements.

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

    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, 21 and 22. CME also offers clearing of the Markit CDX North 
American High Yield Index Series 11, 12, 13, 14, 15, 16, 17, 18, 19, 
20, 21 and 22.
    The proposed rule change 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 23 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                         8  20 Jun 2014.
 Investment Grade
 (CDX.NA.IG).
CDX North American                        12  20 Jun 2014.
 Investment Grade
 (CDX.NA.IG).
CDX North American                        16  20 Jun 2014.
 Investment Grade
 (CDX.NA.IG).
CDX North American High                   12  20 Jun 2014.
 Yield (CDX.NA.HY).
------------------------------------------------------------------------

    Although these changes will be effective on filing, CME plans to 
operationalize the proposed changes as follows: CDX IG 23 will become 
available for clearing on September 22, 2014 and CDX HY 23 will become 
available for clearing on September 29, 2014; provided that CME expects 
market participants to begin clearing CDX IG 23 and CDX HY beginning 
October 6, 2014 consistent with the ISDA protocol adopting the 2014 
Credit Derivatives Definitions. The product deletions would 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 change that is the subject of this filing to its primary 
regulator, the Commodity Futures Trading Commission (``CFTC''), in a 
separate filing, CME Submission 14-405. The text of the CME proposed 
rule amendments is attached, with additions underlined and deletions in 
brackets.
    CME believes the proposed rule change is consistent with the 
requirements of the Exchange Act, including Section 17A of the Exchange 
Act.\5\ The proposed rule change would expand CME's CDX IG and CDX HY 
product offerings by incorporating the upcoming Series 23 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

[[Page 60212]]

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 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 change will have any 
impact, or impose any burden, on competition. The rule change simply 
facilitates the offering of two new series of credit default swap index 
products.

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. 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.
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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 
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-2014-37 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-2014-37. 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 filings will also 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-2014-37 
and should be submitted on or before October 27, 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. 2014-23700 Filed 10-3-14; 8:45 am]
BILLING CODE 8011-01-P