[Federal Register Volume 79, Number 213 (Tuesday, November 4, 2014)]
[Notices]
[Pages 65463-65464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26126]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73465; File No. SR-CME-2014-44]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Modifications to Its OTC IRS Fee Schedule

October 29, 2014.
    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 20, 2014, Chicago Mercantile Exchange 
Inc. (``CME'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change described in Items I, II and 
III below, which Items have been primarily prepared by CME. CME filed 
the proposal pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule 
19b-4(f)(2) \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)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CME is filing proposed rule changes that are limited to its 
business as a derivatives clearing organization. More specifically, the 
proposed rule changes would modify the fee schedule applicable to its 
over-the-counter (``OTC'') interest rate swap (``IRS'') clearing 
offering.

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 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 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 with the 
Commodity Futures Trading Commission (``CFTC'') and currently offers 
clearing services for many different futures and swaps products. With 
this filing, CME proposes to modify the fee schedule (the ``Fee 
Schedule'') that applies to OTC IRS cleared at CME.
    The propose fee changes relate to back-loaded trades submitted by 
IRS Clearing Members. The proposed changes are limited to the current 
CME OTC Interest Rate Swaps IRS Clearing Member Fee Schedule and would 
not impact the corresponding OTC IRS Customer Fee Schedule. The 
proposed modifications would simply make amendments to certain 
exceptions that apply to the basic transaction fee charged to IRS 
Clearing Members for OTC IRS. Currently, transaction fees are eligible 
for waiver on all back-loaded trades, which are defined as trades 
``where the Trade Date is prior to the Cleared Date''--the amendments 
would change this definition so that backloaded trades for these 
purposes would instead be defined as trades where the Trade Date is at 
least five days prior to the Cleared Date. In addition, the amendments 
would make clear that transaction fees will be waived on all trades 
executed to facilitate client terminations, defined as where the 
Effective Date is no more than the Standard Day Offset for that 
currency denomination after the Trade Date, rather than Cleared Date.
    The changes that are described in this filing impact fees that are 
limited to CME's business as a derivatives clearing organization 
clearing products under the exclusive jurisdiction of the CFTC and do 
not materially impact CME's security-based swap clearing business in 
any way. The fee changes would become effective immediately but would 
be operationalized on November 1, 2014. CME notes that it has already 
submitted the proposed rule changes that are the subject of this filing 
to its primary regulator, the CFTC, in CME Submission 14-442.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\5\ More specifically, the proposed rule changes establish or 
change a member due, fee or other charge

[[Page 65464]]

imposed by CME under Section 19(b)(3)(A)(ii) \6\ of the Securities 
Exchange Act of 1934 and Rule 19b-4(f)(2) \7\ thereunder. CME believes 
that the proposed fee change is consistent with the requirements of the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder and, in particular, to 17A(b)(3)(D),\8\ because the proposed 
fee changes apply equally to all OTC IRS Clearing Members at CME and 
therefore the proposed changes provide for the equitable allocation of 
reasonable dues, fees and other charges among participants. CME also 
notes that it operates in a highly competitive market in which market 
participants can readily direct business to competing venues. For these 
reasons, the proposed changes are appropriately filed pursuant to 
Section 19(b)(3)(A) \9\ of the Act and paragraph (f)(2) of Rule 19b-4 
thereunder.\10\
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    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
    \8\ 15 U.S.C. 78q-1(b)(3)(D).
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
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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 proposed change to 
the definition of a back-loaded trade for purposes of establishing a 
fee waiver that applies equally to all IRS Clearing Members at CME. 
Back-loaded transactions will now be defined as where the trade date 
for the transaction is at least five days prior to the cleared date 
and, thus, by definition, are transactions which have already occurred 
well before clearing. Back-loaded transactions promote the general goal 
of increasing central clearing of OTC derivatives products. Further, 
OTC IRS are swaps under the exclusive jurisdiction of the CFTC, and, as 
such, these proposed fee changes do not affect the security-based swap 
clearing activities of CME in any way and therefore do not impose any 
burden on competition that is inappropriate in furtherance of the 
purposes of the Act.

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 pursuant to Section 
19(b)(3)(A) \11\ of the Act and paragraph (f)(2) of Rule 19b-4 \12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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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 No. SR-CME-2014-44 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-2014-44. 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-2014-44 and 
should be submitted on or before November 25, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26126 Filed 11-3-14; 8:45 am]
BILLING CODE 8011-01-P