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, 37371-37372 [2014-15324]

Download as PDF Federal Register / Vol. 79, No. 126 / Tuesday, July 1, 2014 / Notices unnecessary word ‘‘and’’ from the definition of ‘‘option series.’’ 18 Ongoing Analysis Regarding Margin Levels The Exchange will continue to analyze and review the appropriate minimum margin levels for volatility index option. Specifically, the Exchange will continue to review market data in order to determine whether the proposed margin levels should remain or be adjusted. Among other things, CBOE may propose an alternate methodology for determining margin levels or CBOE may subsequently change margin levels after having time to study the impact of the proposed rule change. Any such change would be accomplished by way of a rule filing with the Commission.19 emcdonald on DSK67QTVN1PROD with NOTICES Implementation Date CBOE filed Amendment No. 1 to request a 30-day implementation period for the proposed rule that would commence upon approval of the proposed rule change.20 The Exchange believes that this is an appropriate timeframe for Trading Permit Holder organizations and their customers to prepare for the proposed margin increases. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.21 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,22 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission believes that increasing the minimum margin requirements (including the portfolio margin requirements) for certain volatility index options will protect the integrity of the marketplace by setting 18 See id. id. at 27359–60. 20 See Amendment No. 1. 21 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 22 15 U.S.C. 78f(b)(5). 19 See VerDate Mar<15>2010 19:00 Jun 30, 2014 Jkt 232001 margin at a level that is appropriate for the given instrument. The proposed changes also will benefit investors and other market participants by making some clarifying changes to CBOE’s margin rules, and by making CBOE’s rules more user-friendly in that the applicable margin levels will be easier to locate in CBOE’s rulebook. Finally, the implementation date of the proposed rule change will be 30 days from the effective date of this approval order. The Commission believes that a 30-day implementation date is an appropriate timeframe for broker-dealers and their customers to prepare for the proposed margin increases. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,23 that the proposed rule change (SR–CBOE–2014– 039), as modified by Amendment No. 1, is approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15327 Filed 6–30–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72465; File No. SR–CME– 2014–26] 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 June 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 June 18, 2014, 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 primarily 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 23 15 U.S.C. 78s(b)(2). 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). 24 17 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 37371 Commission. 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 Substance of the Proposed Rule Change CME is filing the 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. 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 over-thecounter (‘‘OTC’’) Interest Rate Swaps (‘‘IRS’’) cleared at CME. The proposed fee change relates to the charges for customer back-loaded trades. The proposed change applies to the OTC IRS Customer Fee Schedule. The proposed modification would specify that certain qualifying back-loaded trades would be eligible for rebated clearing fees provided that certain conditions and criteria are met. In order to be eligible for the clearing fee rebate, the following criteria would have to be satisfied: The entire back-loaded portfolio must have an aggregate gross notional equal to or greater than $500 billion (or U.S. Dollar equivalent); the customer notifies CME at least five (5) days in advance by contacting OTCFees@cmegroup.com; the participating back-loaded trades are back-loaded within a period of twenty (20) business days or less; and, finally, E:\FR\FM\01JYN1.SGM 01JYN1 37372 Federal Register / Vol. 79, No. 126 / Tuesday, July 1, 2014 / Notices the back-loaded trades result in a net increase in customer open interest during the specified back-loading period. In addition, the proposed modification to the OTC IRS Fee Schedule also includes certain corrections to the current Fee Schedule for IRS Clearing Members dealing with end of day offsets for currencies. These corrections are intended to adjust the standard day offsets that are used to coincide more closely with market standard settlement conventions. The change that is described in this filing impacts fees that are limited to CME’s business as a derivatives clearing organization clearing products under the exclusive jurisdiction of the CFTC and does not materially impact CME’s security-based swap clearing business in any way. The fee change would become effective immediately but would be operationalized on July 1, 2014. CME notes that it has already submitted the proposed rule changes that is the subject of this filing to its primary regulator, the CFTC, in CME Submission 14–239. 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 proposed rule changes establish or change a member due, fee or other charge imposed by CME under Section 19(b)(3)(A)(ii) 6 of the Exchange Act and Rule 19b–4(f)(2) 7 thereunder. CME believes that the proposed fee change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder and, in particular, to Section 17A(b)(3)(D) of the Exchange Act,8 because the proposed fee changes apply equally to all OTC IRS customers clearing IRS 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. As such, the proposed change is appropriately filed pursuant to Section 19(b)(3)(A)9 of the Act and Rule 19b– 4(f)(2) 10 thereunder. emcdonald on DSK67QTVN1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition CME does not believe that the proposed rule change will have any 5 15 U.S.C. 78q–1. 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). 6 15 VerDate Mar<15>2010 19:00 Jun 30, 2014 impact, or impose any burden, on competition. The fee change provides a waiver of fees for certain large qualifying back-loaded IRS legacy portfolios. Back-loaded transactions are defined as where the trade date for the transaction is 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 change does not affect the security-based swap clearing activities of CME in any way and therefore does 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 upon filing pursuant to Section 19(b)(3)(A) 11 of the Act and Rule 19b– 4(f)(2) 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. IV. Solicitation of Comment 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: • 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–2014–26. 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–2014–26 and should be submitted on or before July 22, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–15324 Filed 6–30–14; 8:45 am] BILLING CODE 8011–01–P 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–2014–26 on the subject line. 11 15 12 17 Jkt 232001 Paper Comments PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00102 Fmt 4703 Sfmt 9990 13 17 E:\FR\FM\01JYN1.SGM CFR 200.30–3(a)(12). 01JYN1

Agencies

[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Notices]
[Pages 37371-37372]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15324]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72465; File No. SR-CME-2014-26]


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

June 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 June 18, 2014, 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 primarily 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.
---------------------------------------------------------------------------

    \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 the 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.

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 over-the-counter (``OTC'') Interest Rate 
Swaps (``IRS'') cleared at CME.
    The proposed fee change relates to the charges for customer back-
loaded trades. The proposed change applies to the OTC IRS Customer Fee 
Schedule. The proposed modification would specify that certain 
qualifying back-loaded trades would be eligible for rebated clearing 
fees provided that certain conditions and criteria are met. In order to 
be eligible for the clearing fee rebate, the following criteria would 
have to be satisfied: The entire back-loaded portfolio must have an 
aggregate gross notional equal to or greater than $500 billion (or U.S. 
Dollar equivalent); the customer notifies CME at least five (5) days in 
advance by contacting OTCFees@cmegroup.com; the participating back-
loaded trades are back-loaded within a period of twenty (20) business 
days or less; and, finally,

[[Page 37372]]

the back-loaded trades result in a net increase in customer open 
interest during the specified back-loading period.
    In addition, the proposed modification to the OTC IRS Fee Schedule 
also includes certain corrections to the current Fee Schedule for IRS 
Clearing Members dealing with end of day offsets for currencies. These 
corrections are intended to adjust the standard day offsets that are 
used to coincide more closely with market standard settlement 
conventions.
    The change that is described in this filing impacts fees that are 
limited to CME's business as a derivatives clearing organization 
clearing products under the exclusive jurisdiction of the CFTC and does 
not materially impact CME's security-based swap clearing business in 
any way. The fee change would become effective immediately but would be 
operationalized on July 1, 2014. CME notes that it has already 
submitted the proposed rule changes that is the subject of this filing 
to its primary regulator, the CFTC, in CME Submission 14-239.
    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 proposed rule changes establish or 
change a member due, fee or other charge imposed by CME under Section 
19(b)(3)(A)(ii) \6\ of the Exchange Act and Rule 19b-4(f)(2) \7\ 
thereunder. CME believes that the proposed fee change is consistent 
with the requirements of the Exchange Act and the rules and regulations 
thereunder and, in particular, to Section 17A(b)(3)(D) of the Exchange 
Act,\8\ because the proposed fee changes apply equally to all OTC IRS 
customers clearing IRS 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. As such, the proposed change is 
appropriately filed pursuant to Section 19(b)(3)(A)\9\ of the Act and 
Rule 19b-4(f)(2) \10\ thereunder.
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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 fee change provides a 
waiver of fees for certain large qualifying back-loaded IRS legacy 
portfolios. Back-loaded transactions are defined as where the trade 
date for the transaction is 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 change does not affect the security-based swap 
clearing activities of CME in any way and therefore does 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 upon filing pursuant 
to Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(2) \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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comment

    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 (https://www.sec.gov/rules/sro.shtml), or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-CME-2014-26 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-2014-26. 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-2014-26 and 
should be submitted on or before July 22, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-15324 Filed 6-30-14; 8:45 am]
BILLING CODE 8011-01-P
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