Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to CME Rules 818, 8G01 and 8H01, 73120-73122 [2014-28769]

Download as PDF 73120 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / Notices III. Date of Effectiveness of the Advance Notice and Timing for Commission Action The designated clearing agency may implement this change if it has not received an objection to the proposed change within 60 days of the later of (i) the date that the Commission receives the notice of proposed change, or (ii) the date the Commission receives any further information it requests for consideration of the notice. The designated clearing agency shall not implement this change if the Commission has an objection. The Commission may, during the 60day review period, extend the review period for an additional 60 days for proposed changes that raise novel or complex issues, subject to the Commission providing the designated clearing agency with prompt written notice of the extension. The designated clearing agency may implement a change in less than 60 days from the date of receipt of the notice of proposed change by the Commission, or the date the Commission receives any further information it requested, if the Commission notifies the designated clearing agency in writing that it does not object to the proposed change and authorizes the designated clearing agency to implement the change on an earlier date, subject to any conditions imposed by the Commission. The designated clearing agency shall post notice on its Web site of proposed changes that are implemented. The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed. 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 advance notice that are filed with the Commission, and all written communications relating to the advance notice 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 the filing also will be available for inspection and copying at the principal office of OCC and on OCC’s Web site at https://www.theocc.com/components/ docs/legal/rules_and_bylaws/sr_occ_14_ 809.pdf. 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–OCC–2014–809 and should be submitted on or before December 30, 2014. By the Commission. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–28767 Filed 12–8–14; 8:45 am] BILLING CODE 8011–01–P IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION Electronic Comments Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to CME Rules 818, 8G01 and 8H01 • 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 Number SR– OCC–2014–809 on the subject line. rljohnson on DSK3VPTVN1PROD with NOTICES 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–OCC–2014–809. This file number should be included on the subject line if email is used. To help the VerDate Sep<11>2014 14:48 Dec 08, 2014 Jkt 235001 [Release No. 34–73728; File No. SR–CME– 2014–52] December 3, 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 November 24, 2014, Chicago Mercantile Exchange Inc. (‘‘CME’’) filed with the Securities and 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00095 Fmt 4703 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. 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 (‘‘DCO’’). More specifically, the proposed rule change contains amendments to clarify that netting will occur separately for each of the proprietary accounts, futures customer accounts, and clearing swap customer accounts of each Clearing Member at the time of close-out. 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 DCO with the Commodity Futures Trading Commission (‘‘CFTC’’) and offers clearing services for many different futures and swaps products. The proposed rule changes that are the subject of this filing are limited to CME’s business as a DCO offering clearing services for CFTC-regulated swaps products. More specifically, the proposed rule change would adopt amendments to CME Rule 818.C (Netting and Offset) and CME Rules 8G01 and 8H01 to clarify that netting will occur separately for each of the proprietary accounts, futures customer accounts, and clearing swap customer 3 15 4 17 Sfmt 4703 E:\FR\FM\09DEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(4)(ii). 09DEN1 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / Notices rljohnson on DSK3VPTVN1PROD with NOTICES accounts of each Clearing Member at the time of close-out. CME Rule 818.C provides for the master netting agreement that applies in the event of a CME Bankruptcy Event (as defined in Rule 818) or default (as described in Rule 818). The proposed amendments clarify that netting will occur separately for each of the proprietary accounts, futures customer accounts, and clearing swap customer accounts of each Clearing Member at the time of close-out. The proposed amendments add sub-clauses to clarify that the relevant account classes will be closed out separately consistent with applicable CFTC Regulations and § 4d of the Commodity Exchange Act (‘‘CEA’’). Clearing Member’s proprietary, futures customer, and cleared swaps customer account classes will be closed out separately from one another, and cleared swaps customers will be closed out on an individual customer basis. Further, the proposed amendments add a provision clarifying that in the event of a Bankruptcy Event that is preceded by (or occurs simultaneously with) a limited recourse event in Interest Rate Swaps (‘‘IRS’’) and Credit Default Swaps (‘‘CDS’’), the amount of any variation margin haircut that is applied as a result of the limited recourse Rules (CME Rule 8G802.B for IRS and CME Rule 8H802.B for CDS) will not be available for netting with losses from products subject to other financial safeguards under Rule 818.C. CME is also amending Rules 8G01 and 8H01 to further clarify that Rule 818 (Close-Out Netting) will apply for all products in the event of a CME Bankruptcy Event or default and will not be superseded by the conflict of rules provisions of Rules 8G01 and 8H01, respectively. 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 CME has made a decision not to clear security-based swaps.5 The changes will be effective on filing. CME notes that it has also certified the proposed rule changes that are the subject of this filing to its primary regulator, the CFTC, in a separate filing, CME Submission No. 14–477. The text of the CME proposed rule amendments is attached, with 5 See Securities Exchange Act Release No. 34– 73615 (Nov. 17, 2014), 79 FR 69545 (Nov. 21, 2014) (SR–CME–2014–49). Pursuant to a teleconference with CME’s in-house counsel on December 1, 2014, staff in the Division of Trading and Markets has edited this sentence to clarify CME’s intentions not to clear security-based swaps except for a very limited set of circumstances described in the abovereferenced proposed rule change. VerDate Sep<11>2014 14:48 Dec 08, 2014 Jkt 235001 additions underlined and deletions in strikethrough. CME believes the proposed rule changes are consistent with the requirements of the Exchange Act including Section 17A of the Exchange Act.6 CME is proposing the amendments to clarify that netting will occur separately for each of the proprietary accounts, futures customer accounts, and clearing swap customer accounts of each Clearing Member at the time of close-out. These proposed amendments will solidify CME’s legal netting procedures framework (which applies in the event of a CME insolvency) which should be seen to be in accordance with the objective of promoting 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.7 Furthermore, the proposed changes are limited in their effect to products offered under CME’s authority to act as a DCO. The products that are the subject of this filing 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, futures that are not security futures and forwards that are not security forwards. 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 overthe-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 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, swaps that are not securitybased swaps or mixed swaps; and forwards that are not security forwards; and (b) does not significantly affect any securities clearing operations of CME or 6 15 7 15 PO 00000 U.S.C. 78q–1. U.S.C. 78q–1(b)(3)(F). Frm 00096 Fmt 4703 Sfmt 4703 73121 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 8 and are properly filed under Section 19(b)(3)(A) 9 and Rule 19b–4(f)(4)(ii) 10 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 proposed amendments simply clarify and solidify CME’s legal netting procedures framework. Further, the changes are limited to CME’s derivatives clearing business and CME has made a decision not to clear security-based swaps and therefore would not impose any burden on competition that is inappropriate in furtherance of the purposes of the Act.11 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) 12 of the Act and Rule 19b– 4(f)(4)(ii) 13 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 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: 8 15 U.S.C. 78q–1. U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(4)(ii). 11 See supra note 5. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b–4(f)(4)(ii). 9 15 E:\FR\FM\09DEN1.SGM 09DEN1 73122 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / 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–2014–52 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. rljohnson on DSK3VPTVN1PROD with NOTICES All submissions should refer to File Number SR–CME–2014–52. 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–2014–52 and should be submitted on or before December 30, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–28769 Filed 12–8–14; 8:45 am] BILLING CODE 8011–01–P 14 17 14:48 Dec 08, 2014 and C below, of the most significant aspects of such statements. [Release No. 34–73729; File No. SR–CME– 2014–13] 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 operates a substantial business clearing futures and swaps contracts subject to the jurisdiction of the CFTC. CME is proposing new rules to specify the allocation of excess collateral of a defaulted clearing member to losses relating to products in other financial safeguards at CME pro rata based on the remaining loss in each of such product classes. Additionally, CME is proposing to amend CME Rule 802.A to harmonize the member collateral definition across the default rules. CME notes that it has also made a corresponding filing with the CFTC, in Submission No. 14–097R, regarding the proposed changes. The proposed changes to CME Rules 802.D, 8G802.D and 8H802.D would specify the allocation of excess collateral of a defaulted clearing member for a particular financial safeguard package to losses relating to product classes subject to other financial safeguards at CME. CME employs three financial safeguard packages (i.e. waterfalls) for each of the following product classes: interest rate swap products (‘‘IRS’’); credit default swap products (‘‘CDS’’); and Base products (which are all products other than IRS and CDS). The default rules for each respective waterfall contain the ability, once the loss of the clearing member for that waterfall is entirely satisfied, to use excess house assets of the clearing member towards satisfying uncovered losses of such clearing member for products in other waterfalls. For example, if a member was clearing IRS and Base products and excess Base collateral remained after completely satisfying all losses for Base Products, the rules provide that such excess may be used towards any uncovered losses of that clearing member for IRS products. CME rules are currently silent on the allocation mechanism of such excess funds to unresolved losses in other product classes where losses remain in both of the other product classes. The proposed new CME Rules 802.D.1, 8G802.D.1, and 8H802.D.1 would specify that any such excess is allocated to the other safeguard packages pro rata based on the remaining loss in each of such product classes. Additionally, CME is proposing to amend CME Rule 802.A.2 to harmonize Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Application of Excess Defaulting Clearing Member Assets in Crossover Default Scenarios and the Harmonization of Defaulted Base Clearing Member Collateral Definitions December 3, 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 November 26, 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. 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 changes would make amendments to CME Rules relating to the application of excess defaulting clearing member assets in crossover default scenarios and the harmonization of Defaulted Base Clearing Member Collateral definitions. 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, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b4(f)(4)(ii). 2 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 SECURITIES AND EXCHANGE COMMISSION Jkt 235001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\09DEN1.SGM 09DEN1

Agencies

[Federal Register Volume 79, Number 236 (Tuesday, December 9, 2014)]
[Notices]
[Pages 73120-73122]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28769]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73728; File No. SR-CME-2014-52]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to CME Rules 818, 8G01 and 8H01

December 3, 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 November 24, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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 (``DCO''). More 
specifically, the proposed rule change contains amendments to clarify 
that netting will occur separately for each of the proprietary 
accounts, futures customer accounts, and clearing swap customer 
accounts of each Clearing Member at the time of close-out.

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 DCO with the Commodity Futures Trading 
Commission (``CFTC'') and offers clearing services for many different 
futures and swaps products. The proposed rule changes that are the 
subject of this filing are limited to CME's business as a DCO offering 
clearing services for CFTC-regulated swaps products. More specifically, 
the proposed rule change would adopt amendments to CME Rule 818.C 
(Netting and Offset) and CME Rules 8G01 and 8H01 to clarify that 
netting will occur separately for each of the proprietary accounts, 
futures customer accounts, and clearing swap customer

[[Page 73121]]

accounts of each Clearing Member at the time of close-out.
    CME Rule 818.C provides for the master netting agreement that 
applies in the event of a CME Bankruptcy Event (as defined in Rule 818) 
or default (as described in Rule 818). The proposed amendments clarify 
that netting will occur separately for each of the proprietary 
accounts, futures customer accounts, and clearing swap customer 
accounts of each Clearing Member at the time of close-out. The proposed 
amendments add sub-clauses to clarify that the relevant account classes 
will be closed out separately consistent with applicable CFTC 
Regulations and Sec.  4d of the Commodity Exchange Act (``CEA''). 
Clearing Member's proprietary, futures customer, and cleared swaps 
customer account classes will be closed out separately from one 
another, and cleared swaps customers will be closed out on an 
individual customer basis. Further, the proposed amendments add a 
provision clarifying that in the event of a Bankruptcy Event that is 
preceded by (or occurs simultaneously with) a limited recourse event in 
Interest Rate Swaps (``IRS'') and Credit Default Swaps (``CDS''), the 
amount of any variation margin haircut that is applied as a result of 
the limited recourse Rules (CME Rule 8G802.B for IRS and CME Rule 
8H802.B for CDS) will not be available for netting with losses from 
products subject to other financial safeguards under Rule 818.C.
    CME is also amending Rules 8G01 and 8H01 to further clarify that 
Rule 818 (Close-Out Netting) will apply for all products in the event 
of a CME Bankruptcy Event or default and will not be superseded by the 
conflict of rules provisions of Rules 8G01 and 8H01, respectively.
    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 CME has made a decision not to clear security-based 
swaps.\5\ The changes will be effective on filing. CME notes that it 
has also certified the proposed rule changes that are the subject of 
this filing to its primary regulator, the CFTC, in a separate filing, 
CME Submission No. 14-477. The text of the CME proposed rule amendments 
is attached, with additions underlined and deletions in strikethrough.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 34-73615 (Nov. 17, 
2014), 79 FR 69545 (Nov. 21, 2014) (SR-CME-2014-49). Pursuant to a 
teleconference with CME's in-house counsel on December 1, 2014, 
staff in the Division of Trading and Markets has edited this 
sentence to clarify CME's intentions not to clear security-based 
swaps except for a very limited set of circumstances described in 
the above-referenced proposed rule change.
---------------------------------------------------------------------------

    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\6\ CME is proposing the amendments to clarify that netting will 
occur separately for each of the proprietary accounts, futures customer 
accounts, and clearing swap customer accounts of each Clearing Member 
at the time of close-out. These proposed amendments will solidify CME's 
legal netting procedures framework (which applies in the event of a CME 
insolvency) which should be seen to be in accordance with the objective 
of promoting 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.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Furthermore, the proposed changes are limited in their effect to 
products offered under CME's authority to act as a DCO. The products 
that are the subject of this filing 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, futures that are not security futures and forwards that are not 
security forwards. 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 
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, swaps that are not security-based swaps or mixed 
swaps; and forwards that are not security forwards; 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 \8\ and are properly filed under 
Section 19(b)(3)(A) \9\ and Rule 19b-4(f)(4)(ii) \10\ thereunder.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 proposed amendments 
simply clarify and solidify CME's legal netting procedures framework. 
Further, the changes are limited to CME's derivatives clearing business 
and CME has made a decision not to clear security-based swaps and 
therefore would not impose any burden on competition that is 
inappropriate in furtherance of the purposes of the Act.\11\
---------------------------------------------------------------------------

    \11\ See supra note 5.
---------------------------------------------------------------------------

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) \12\ of the Act and Rule 19b-4(f)(4)(ii) \13\ 
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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

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 73122]]

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-2014-52 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-2014-52. 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-2014-52 and 
should be submitted on or before December 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28769 Filed 12-8-14; 8:45 am]
BILLING CODE 8011-01-P
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