Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Modifications to the OTC IRS Fee Schedule and Changes to the IRS Manual of Operations, 77512-77514 [2013-30438]
Download as PDF
<![CDATA[
77512
Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
for forward margin and clearing fund
calculations.
• Modification of the security
database in order for it to work in
conjunction with the floating rate, reset
date, reset rate basis, and spread.
• Modifications to member output
formats for both messaging and end of
day machine readable output in order to
accommodate the additional fields.
GSD will test FICC’s enhanced
systems with its membership before the
launch of the Floating Rate Notes. This
will ensure that members can properly
submit and receive transaction data in
connection with the Floating Rate
Notes. GSD has issued several Important
Notices to members about GSD’s
proposed processing of the Floating Rate
Notes and will continue to do so prior
to making Floating Rate Notes eligible
for processing.6
tkelley on DSK3SPTVN1PROD with NOTICES
Section 19(b)(2)(C) of the Act 7 directs
the Commission to approve a selfregulatory organization’s proposed rule
change if the Commission finds that
such proposed rule change is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to such organization. Section
17A(b)(3)(F) of the Act 8 requires, among
other things, that the rules of a clearing
agency registered with the Commission
be designed to promote the prompt and
accurate clearance and settlement of
securities transactions and protect
investors and the public interest.
The Commission finds that the
proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act 9 because
it allows FICC to provide clearance and
settlement services for Floating Rate
Notes, as newly issued government
securities, which should in turn reduce
the risks associated with the trading,
clearing, and settling of such securities
by FICC members. In so doing, FICC
should facilitate the prompt and
accurate clearance and settlement of
securities transactions in Floating Rate
Notes. Moreover, FICC’s rule change
should help protect investors and the
public interest by allowing the market to
benefit from the risk reducing measures
provided by clearing and settling
Floating Rate Notes at FICC.
6 GSD issued Important Notice GOV012.13 on
February 23, 2013 and Important Notice GOV056.13
on August 19, 2013. Both Important Notices provide
members with data output guidelines and trade
messaging changes. The notices are available at
www.dtcc.com.
7 15 U.S.C. 78s(b)(2)(C).
8 15 U.S.C. 78q–1(b)(3)(F).
9 Id.
18:12 Dec 20, 2013
On the basis of the foregoing, the
Commission concludes that the
proposal is consistent with the
requirements of the Act, particularly the
requirements of Section 17A of the
Act,10 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (File No. SR–
FICC–2013–09) be and hereby is
approved.12
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–30442 Filed 12–20–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
III. Discussion
VerDate Mar<15>2010
IV. Conclusion
Jkt 232001
[Release No. 34–71088; File No. SR–CME–
2013–32]
Self-Regulatory Organizations;
Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Regarding Modifications to the
OTC IRS Fee Schedule and Changes to
the IRS Manual of Operations
December 17, 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 December 5, 2013, 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 prepared primarily by CME. CME
filed the proposal pursuant to Section
19(b)(3)(A) of the Act,3 and Rules 19b–
4(f)(2) and 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.
10 15
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
12 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
13 17 CFR 200.30–3(a)(12).
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) and 17 CFR 240.19b–
4(f)(4)(ii).
11 15
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CME is filing a proposed rule change
that is limited to its business as a
derivatives clearing organization. More
specifically, the proposed rule change
would modify the fee schedule
applicable to its over-the-counter
(‘‘OTC’’) interest rate swap (‘‘IRS’’)
clearing offering and also make separate
changes to the Manual of Operations for
CME Cleared Interest Rate Swaps (‘‘IRS
Manual’’).
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 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 over-the-counter (‘‘OTC’’)
Interest Rate Swaps (‘‘IRS’’) cleared at
CME. The fees for clearing members
clearing IRS are being modified to a
$250 per ticket fee. In addition, the
volume discounts and alternative fee
schedules that are included in the
current OTC IRS fee schedule are being
deleted. CME will also waive the
clearing member fee for back-loaded
trades and trades associated with
customer terminations as defined in the
fee schedule. Finally, the alternate
customer fee schedule is being revised
to remove maintenance fees and a nonsubstantive change is being made to
simplify the fee table from a matrix
specifying each currency to a single
table referring to the transaction
currency.
Separately, CME is also proposing
certain conforming changes to its IRS
Manual. The IRS Manual changes can be
summarized as follows:
E:\FR\FM\23DEN1.SGM
23DEN1
tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
• Chapter 3 (The Clearing System;
Getting Started)—Changed reference of
‘‘platforms’’ to ‘‘SEFs’’ throughout.
• Chapter 4 (Trade Entry, Messaging,
and Management)—Added requirement
that IRS Clearing Members pre-approve
any trades submitted to clearing from a
swap execution facility consistent with
the CFTC’s September 26, 2013 Division
of Clearing and Risk and the Division of
Market Oversight staff guidance on
swaps straight-through processing. CME
will also require that trades submitted
from a platform must be explicitly
accepted or pass credit limits at CME for
each account. Additionally, CME is
enabling functionality for transfers for
IRS Clearing Members to initiate
transfers directly through the clearing
system and is making conforming
changes deeming a member that
initiates a transfer to have consented to
such transfer.
• Chapter 6 (Account Configuration,
Money Calculations and Collateral)—
Added ISDA ACT/ACT(ISMA) as an
eligible day count fraction.
CME plans to operationalize the
proposed fee changes on December 1,
2013. The IRS Manual changes will
become effective immediately upon
filing.
The changes that are described in this
filing impact fees and make certain
other adjustments to CME’s IRS Manual
(as described above) that are limited to
CME’s business as a derivatives clearing
organization clearing products under
the exclusive jurisdiction of the
Commodity Futures Trading
Commission (‘‘CFTC’’) and do not
materially impact CME’s security-based
swap clearing business in any way. CME
notes that it has already submitted the
proposed rule change that is the subject
of this filing to its primary regulator, the
CFTC, in CME Submissions 13–495, 13–
520 and 13–520S (which included a
supplemental, confidential attachment
related to filing 13–520).
CME believes the proposed rule
change is consistent with the
requirements of the Exchange Act
including Section 17A of the Exchange
Act.5 More specifically, the first aspect
of the proposed rule change establishes
or changes a member due, fee or other
charge 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
U.S.C. 78q–1.
U.S.C. 78s(b)(3)(A)(ii).
7 17 CFR 240.19b–4(f)(2).
particular, to 17A(b)(3)(D),8 in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among participants. The proposed
changes apply equally to market
participants clearing IRS at CME. CME
notes that it operates in a highly
competitive market in which market
participants can readily direct business
to competing venues.
Second, the proposed rule change also
includes additional conforming changes
to CME’s IRS Manual to facilitate its IRS
clearing offering. The changes conform
certain definitions and are also designed
to be in accordance with recent CFTC
guidance regarding straight through
processing of swaps and therefore are
designed to promote central clearing of
swaps under the CFTC’s jurisdiction. As
such, CME believes the 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.9 Furthermore, the
proposed changes are limited in their
effect to swaps products offered under
CME’s authority to act as a derivatives
clearing organization. These products
are 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 securitybased 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 derivatives clearing organization, the
proposed changes are also 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 securitybased swaps or mixed swaps; and
5 15
6 15
VerDate Mar<15>2010
18:12 Dec 20, 2013
8 15
9 15
Jkt 232001
PO 00000
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1(b)(3)(F).
Frm 00097
Fmt 4703
Sfmt 4703
77513
(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 10 and
are properly filed under Section
19(b)(3)(A) 11 and Rule 19b–4(f)(4)(ii) 12
thereunder.
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 changes simply
modify CME’s current IRS fee schedule
and make conforming changes to CME’s
IRS Manual that correspond to CFTC
guidance on straight through processing
of swaps.
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) 13 of the Act and paragraphs
(f)(2) and (f)(4)(ii) of Rule 19b–4 14
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.15
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:
10 15
U.S.C. 78q–1.
U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(4)(ii).
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(2) and 17 CFR 240.19b–
4(f)(4)(ii).
15 15 U.S.C. 78s(b)(3)(C).
11 15
E:\FR\FM\23DEN1.SGM
23DEN1
77514
Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml), or
• Send an email to rule-comments@
sec.gov. Please include File No.
SR–CME–2013–32 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.
tkelley on DSK3SPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–CME–2013–32. 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 (https://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
https://www.cmegroup.com/marketregulation/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–2013–32 and should
be submitted on or before January 13,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–30438 Filed 12–20–13; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71108; File No. SR–Phlx–
2013–121]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Two
Features Relating to Complex Orders
December 17, 2013.
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 December
9, 2013, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend two
features of the Exchange’s Complex
Orders functionality, as described
below.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
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
Exchange 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. The
Exchange 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
1. Purpose
The purpose of the proposal is to
enhance the Exchange’s complex order
BILLING CODE 8011–01–P
1 15
16 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
18:12 Dec 20, 2013
2 17
Jkt 232001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00098
Fmt 4703
Sfmt 4703
functionality by enhancing two of the
protections offered to complex order
executions, as well as to correct
Exchange rules in two areas to reflect
the operation of the Exchange’s system.
First, the Exchange proposes to
amend the Phlx XL Strategy Price
Protection (‘‘SPP’’) in Rule 1080.08(g).
SPP is a feature of Phlx XL that prevents
certain Complex Order Strategies from
trading at prices outside of pre-set
standard limits. SPP applies only to
Vertical Spreads 3 and Time Spreads.4
Currently, Rule 1080.08(g)(iii) provides
that if the execution of a Vertical Spread
or a Time Spread would violate the SPP
limits, the System would place the order
on the CBOOK.
Today, the System cancels a Vertical
Spread or a Time Spread rather than
placing it on the CBOOK where a sell
(buy) order would execute at a price
outside of the SPP limit on the sell (buy)
side. The Exchange proposes to correct
this language in the rule text. The
Exchange believes that it is appropriate
to cancel the order rather than place it
on the CBOOK, because the order is
priced such that it will never be
executable. This is because, regardless
of changes in the market for the
components of the Complex Order, the
SPP will always result in the same
calculation and thereby prevent an
execution.
In addition, the Exchange proposes to
add rule text to provide that the order
will be cancelled even if it violates the
SPP limit on the other side of the market
from the order. Today, the System
cancels a sell order that would execute
at a price outside of the SPP limit on the
offer side, and similarly cancels a buy
order that would execute at a price
outside of the SPP limit on the bid side.
Under this proposal, the System would
cancel a sell (buy) order from execution
at a price outside of the SPP limit on the
bid (offer) side as well. The purpose of
this change is to offer additional
protection to certain Complex Orders
due to a price far away from existing
markets on both sides of the market.
For example, where there is a
Complex Order to sell (A–B),5 the
following would occur:
PBBO
A Dec
50 $12.20–$14.90
3 A Vertical Spread is a Complex Order Strategy
consisting of the purchase of one call (put) option
and the sale of another call (put) option overlying
the same security that have the same expiration but
different strike prices. See Rule 1080.08(g)(i).
4 A Time Spread is a Complex Order Strategy
consisting of the purchase of one call (put) option
and the sale of another call (put) option overlying
the same security that have different expirations but
the same strike price. See Rule 1080.08(g)(ii).
5 Assume it is a vertical spread.
E:\FR\FM\23DEN1.SGM
23DEN1
]]>Agencies
[Federal Register Volume 78, Number 246 (Monday, December 23, 2013)]
[Notices]
[Pages 77512-77514]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30438]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71088; File No. SR-CME-2013-32]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Modifications to the OTC IRS Fee Schedule and Changes to the
IRS Manual of Operations
December 17, 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 December 5, 2013, 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 prepared primarily by CME. CME filed
the proposal pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rules
19b-4(f)(2) and 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.
---------------------------------------------------------------------------
\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) and 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 a proposed rule change that is limited to its
business as a derivatives clearing organization. More specifically, the
proposed rule change would modify the fee schedule applicable to its
over-the-counter (``OTC'') interest rate swap (``IRS'') clearing
offering and also make separate changes to the Manual of Operations for
CME Cleared Interest Rate Swaps (``IRS Manual'').
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 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 over-the-counter (``OTC'') Interest Rate Swaps
(``IRS'') cleared at CME. The fees for clearing members clearing IRS
are being modified to a $250 per ticket fee. In addition, the volume
discounts and alternative fee schedules that are included in the
current OTC IRS fee schedule are being deleted. CME will also waive the
clearing member fee for back-loaded trades and trades associated with
customer terminations as defined in the fee schedule. Finally, the
alternate customer fee schedule is being revised to remove maintenance
fees and a non-substantive change is being made to simplify the fee
table from a matrix specifying each currency to a single table
referring to the transaction currency.
Separately, CME is also proposing certain conforming changes to its
IRS Manual. The IRS Manual changes can be summarized as follows:
[[Page 77513]]
Chapter 3 (The Clearing System; Getting Started)--Changed
reference of ``platforms'' to ``SEFs'' throughout.
Chapter 4 (Trade Entry, Messaging, and Management)--Added
requirement that IRS Clearing Members pre-approve any trades submitted
to clearing from a swap execution facility consistent with the CFTC's
September 26, 2013 Division of Clearing and Risk and the Division of
Market Oversight staff guidance on swaps straight-through processing.
CME will also require that trades submitted from a platform must be
explicitly accepted or pass credit limits at CME for each account.
Additionally, CME is enabling functionality for transfers for IRS
Clearing Members to initiate transfers directly through the clearing
system and is making conforming changes deeming a member that initiates
a transfer to have consented to such transfer.
Chapter 6 (Account Configuration, Money Calculations and
Collateral)--Added ISDA ACT/ACT(ISMA) as an eligible day count
fraction.
CME plans to operationalize the proposed fee changes on December 1,
2013. The IRS Manual changes will become effective immediately upon
filing.
The changes that are described in this filing impact fees and make
certain other adjustments to CME's IRS Manual (as described above) that
are limited to CME's business as a derivatives clearing organization
clearing products under the exclusive jurisdiction of the Commodity
Futures Trading Commission (``CFTC'') and do not materially impact
CME's security-based swap clearing business in any way. CME notes that
it has already submitted the proposed rule change that is the subject
of this filing to its primary regulator, the CFTC, in CME Submissions
13-495, 13-520 and 13-520S (which included a supplemental, confidential
attachment related to filing 13-520).
CME believes the proposed rule change is consistent with the
requirements of the Exchange Act including Section 17A of the Exchange
Act.\5\ More specifically, the first aspect of the proposed rule change
establishes or changes a member due, fee or other charge 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\ in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among participants. The proposed changes apply equally to market
participants clearing IRS at CME. CME notes that it operates in a
highly competitive market in which market participants can readily
direct business to competing venues.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
Second, the proposed rule change also includes additional
conforming changes to CME's IRS Manual to facilitate its IRS clearing
offering. The changes conform certain definitions and are also designed
to be in accordance with recent CFTC guidance regarding straight
through processing of swaps and therefore are designed to promote
central clearing of swaps under the CFTC's jurisdiction. As such, CME
believes the 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.\9\
Furthermore, the proposed changes are limited in their effect to swaps
products offered under CME's authority to act as a derivatives clearing
organization. These products are 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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Because the proposed changes are limited in their effect to swaps
products offered under CME's authority to act as a derivatives clearing
organization, the proposed changes are also 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 \10\ and are properly filed under
Section 19(b)(3)(A) \11\ and Rule 19b-4(f)(4)(ii) \12\ thereunder.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1.
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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. The rule changes simply
modify CME's current IRS fee schedule and make conforming changes to
CME's IRS Manual that correspond to CFTC guidance on straight through
processing of swaps.
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) \13\ of the Act and paragraphs (f)(2) and
(f)(4)(ii) of Rule 19b-4 \14\ 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.\15\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2) and 17 CFR 240.19b-4(f)(4)(ii).
\15\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
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:
[[Page 77514]]
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml), or
Send an email to rule-comments@sec.gov. Please include
File No. SR-CME-2013-32 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-2013-32. 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 (https://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 https://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-2013-32
and should be submitted on or before January 13, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30438 Filed 12-20-13; 8:45 am]
BILLING CODE 8011-01-P
