Chapter 8-G
Interest Rate Derivative Clearing
8G01.

SCOPE OF CHAPTER
This chapter sets forth the rules governing clearing and settlement of all IRS Products. In the event
there is a conflict between a rule in this Chapter 8G and another rule in the Rulebooks, the Rule inthis Chapter 8G shall supersede the conflicting rule with respect to IRS Contracts. Rulebook
Chapter 8-F and Rules 802, 813, 816, 913, 930 and 975 shall not apply to IRS Contracts, except
for Rule 818 which shall supersede the rules in this chapter 8G. Chapter 6 shall be modified for IRS
Contracts as set forth below.

8G02.

DEFINITIONSAFFILIATE
With respect to an IRS Clearing Member, any person or entity is an Affiliate of such IRS Clearing
Member if such person or entity directly or indirectly, through one or more intermediaries, controls,
owns, is controlled by or is under common control with such IRS Clearing Member.
IRS ADVISORY COMMITTEEThe IRS Advisory Committee shall be a committee having the powers set forth in Rule 8G26.
IRS DEFAULT MANAGEMENT COMMITTEEThe Default Management Committee shall be a committee having the powers set forth in Rule
8G25.
IRS PRODUCT CATEGORY
Each category and sub-category of IRS as determined by the Clearing House for default
management purposes.
IRS RISK COMMITTEEThe IRS Risk Committee shall be a committee having the powers set forth in Rule 8G27.

8G03.

CLASSIFICATION OF POSITIONSIRS Contracts submitted for clearing by an IRS Clearing Member for its proprietary account shall beassigned to and held in a proprietary account of such IRS Clearing Member. All collateral depositedas performance bond to support positions in the proprietary account of an IRS Clearing Member
shall be deemed the property of the IRS Clearing Member and shall be subject to the Exchange’s
lien and security rights as described in Rule 8G08.
IRS Contracts submitted for clearing for the account of an IRS Clearing Member’s Cleared Swaps
Customers shall be assigned and held in a Cleared Swaps Customer Account of such IRS Clearing
Member. All IRS Clearing Members must comply with the requirements set forth in CME Rule 971
for such Cleared Swaps Customer Accounts.
Notwithstanding the foregoing, if the CFTC issues an order permitting IRS Clearing Members tocommingle customer funds used to margin particular IRS Contracts that are cleared by the Clearing
House with other funds held in CEA Section 4d(a)(2) customer segregated accounts, such
positions may be held in the customer segregated accounts of an IRS Clearing Member and, if soheld, all collateral deposited as performance bond to support such positions and all settlement
variation payments made to such accounts shall be commingled with similar property of regulated
customers. All IRS Clearing Members must comply with the requirements set forth in CME Rule971 for such customer segregated accounts.

8G04.

IRS CLEARING MEMBER OBLIGATIONS AND QUALIFICATIONSIRS Clearing Members shall be subject to the requirements for IRS Clearing Members set forth in
Chapter 8G, all CME Rules applicable to IRS Products, and the Clearing House Manual ofOperations unless an exemption has been granted by the Clearing House Risk Committee or the
IRS Risk Committee, as applicable. In addition, IRS Clearing Members are subject to all CME,
CBOT and NYMEX Rules, as applicable, when clearing products traded on, or subject to the rules
of, CME, CBOT or NYMEX. IRS Clearing Members must execute all agreements and documents
required by the Clearing House.
An IRS Clearing Member must satisfy the requirements set forth below:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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1. An IRS Clearing Member must be in compliance with all applicable regulatory capitalrequirements and it must maintain minimum capital (as defined in CFTC Regulation 39.12(a) (2)) of$50 million. For an IRS Clearing Member that is a bank, “capital” shall mean Tier 1 Capital (asdefined in accordance with regulation applicable to the relevant bank and acceptable to theClearing House or, in the absence of any such regulation, as defined by the Basel Committee on
Banking Supervision of the Bank for International Settlements).
2. The capital requirement with respect to the participation of an IRS Clearing Member in the
Clearing House shall be scalable to the risks posed by such IRS Clearing Member. Accordingly, an
IRS Clearing Member must maintain capital (as defined in 8G04.1 above) at least equal to 20% of
the aggregate performance bond requirement for its proprietary and customer IRS Contracts.
3. An IRS Clearing Member and any applicant for IRS clearing membership shall be engaged in ordemonstrate immediate capacity to engage in the conduct of the business of a IRS Clearing
Member and to perform all other obligations of a IRS Clearing Member as described or referenced
in these Rules, including the ability to properly risk manage IRS Products, monitor IRS Productexposures and comply with default management obligations. In the event that a IRS Clearing
Member does not have the capabilities to perform such responsibilities or obligations, such IRS
Clearing Member may contract with a third party (including an Affiliate) to fulfill certain operationalor risk requirements; provided that all agreements relating to such service shall be subject to theprior review and approval by the Clearing House staff and consultation with the IRS Risk
Committee. The Clearing House may impose limitations on IRS Clearing Member utilization ofservice providers, including limitations on the number of IRS Clearing Members to which a service
provider may provide services. Notwithstanding the above, each IRS Clearing Member remains
liable to the Clearing House for failure to comply with the obligations of an IRS Clearing Member.
4. Upon Clearing House request, each IRS Clearing Member shall submit nominations for an
Independent Member of the IRS Risk Committee.
5. When required by the rotation established by the Clearing House, each IRS Clearing Member
shall make at least one trader per IRS Product Category available to the Clearing House toparticipate in the IRS Default Management Committee immediately upon notice from the Clearing
House that it is convening the IRS Default Management Committee for (i) a potential or actual
default of an IRS Clearing Member or (ii) for IRS default drill exercises.
Upon acceptance as an IRS Clearing Member and upon any update request by the Clearing
House, each IRS Clearing Member shall provide a list of traders (at least one primary and one
backup per IRS Product Category) that the IRS Clearing Member nominates for the IRS Default
Management Committee. Any such trader shall have a title at the level of Vice President (orequivalent title) or above and/or shall have the minimum level of experience the Clearing Housedeems necessary for the relevant IRS Product Category. IRS Clearing Members shall make tradersavailable for each IRS Product Category as requested by the Clearing House until the later of (i)the end of the relevant default management process or drill or (ii) the end of such traders’ rotation.
6. Each IRS Clearing Member shall bid in each hedging or liquidation auction conducted by the
Clearing House for part or all of a defaulted IRS Clearing Member’s IRS Contracts (each a “Default
Management Auction”), as required by the Clearing House. Each IRS Clearing Member shallparticipate in IRS default drill exercises as prescribed by the Clearing House. Each IRS Clearing
Member shall have the ability to provide quotations to CME for hedging transactions for the IRS
portfolio of a defaulted IRS Clearing Member.
7. Each IRS Clearing Member shall participate in each IRS Liquidity Poll (“Poll”) for each IRS
Product currency in which the IRS Clearing Member has open interest, unless exempted by the
Clearing House for that currency. A Clearing Member’s failure to provide required Pollsubmissions by the deadline established by the Clearing House may result in the IRS Clearing
Member being assessed a monetary penalty up to $50,000 and/or referred to the Chief
Regulatory Officer for potential disciplinary action, in accordance with established CME Clearing
procedures. Assessed penalties shall be added to the CME IRS Contribution within the IRS
Priority of Payments as outlined at CME Rule 8G802.B.
8. Each IRS Clearing Member shall use systems and appropriate procedures to track accurately,
and to provide to the Clearing House accurately, the IRS positions and collateral of each of its
cleared swaps customers.
9. An IRS Clearing Member must comply with the financial requirements set forth in CME Rule970. However, if the IRS Clearing Member is regulated by another regulatory authority, then it
shall submit to CME annual audited financial statements as well as all unaudited financial© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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statements provided to its primary regulator within five days after such statements are provided to
its regulator. All financial statements shall be in the English language.
10. The books and records of an IRS Clearing Member regarding IRS Contracts cleared by the
Clearing House shall be made promptly available for inspection upon request by CME and suchbooks and records shall be subject to reasonable standards of confidentiality.
11. Each IRS Clearing Member that is a Futures Commission Merchant shall keep the types of
information and records that are described in Section 4g of the Commodity Exchange Act and
CFTC regulations thereunder including, but not limited to, Regulation 1.35, with respect to all IRS
Contracts submitted for clearing.

8G05.

SUBSTITUTION AND TIMEFRAME OF ACCEPTANCE FOR CLEARING
If an IRS Product or a portfolio of IRS Products (i) is submitted by IRS Clearing Members who arein good standing, (ii) was executed and submitted in accordance with the rules governing such IRS
Product and (iii) does not exceed the credit limits established by the Clearing House for the IRS
Clearing Member submitting such IRS Product or portfolio of IRS Products, then the Clearing
House shall substitute itself as the counterparty to each party of each original transaction and there
shall be two equal and offsetting contracts for each original transaction as follows: one between theoriginal buyer and the Clearing House, as seller and one between the original seller and theClearing House, as buyer.
An existing IRS Product or portfolio of IRS Products (i.e., a backloaded trade) submitted to theClearing House for clearing, shall be guaranteed by the Clearing House at the time payment ofinitial settlement of mark to market, performance bond and any other applicable initial OTC cash
flows for such IRS Product or portfolio of IRS Products, in accordance with the procedures set forthin Rule 814, is confirmed by the appropriate settlement bank for both IRS Clearing Members. The
Clearing House shall substitute itself as the counterparty to each party to the original transaction at
the time of guarantee.
With regard to an IRS Product submitted for clearing that is executed on or subject to the rules of a
Designated Contract Market or a Swap Execution Facility, the Clearing House shall accept or rejectsuch OTC Derivative for clearing in accordance with the time frames required under CFTC
Regulation 39.12(b)(7)(B)(ii). Except with respect to a backloaded trade, an IRS Product submitted
for clearing that is not executed on or subject to the rules of a Designated Contract Market or a
Swap Execution Facility, or that is executed noncompetitively on or subject to the rules of a
Designated Contract Market or a Swap Execution Facility, shall be accepted or rejected for clearing
in accordance with the time frames required under CFTC Regulation 39.12(b)(7)(B)(iii).The IRS
Clearing Member shall be deemed the principal to the IRS Contract when cleared by such IRS
Clearing Member for its own proprietary account and shall be deemed a guarantor and agent of the
IRS Contract when cleared by such IRS Clearing Member for the account of an affiliate or customerof such IRS Clearing Member.

8G06.

[RESERVED]

8G07.

IRS FINANCIAL SAFEGUARDS AND GUARANTY FUND DEPOSIT
1.

(i)

The Clearing House shall establish a financial safeguards package to support IRS
clearing, and each IRS Clearing Member shall make an IRS Guaranty Fund deposit with
the Clearing House. An IRS Clearing Member’s deposit to the IRS Guaranty Fund andassessments against it pursuant to these Rules may be used to cover losses incurred by
the Clearing House if a defaulted IRS Clearing Member’s assets, including amounts
available pursuant to any guarantee from an Affiliate of an IRS Clearing Member,available to the Clearing House are insufficient to cover such loss, regardless of the causeof default. The Clearing House shall calculate the requirements for the IRS financial
safeguards package, which shall be composed of:(a)a funded portion, determined by the Clearing House using stress test
methodology equal to the theoretical two largest IRS Clearing Member losses
produced by such stress test or such other methodology determined by the IRS Risk
Committee (such amount, the “IRS Guaranty Fund”), where the risk of each IRS
Clearing Member and its Affiliate(s) are taken into account in calculations sizing the
IRS Guaranty Fund; and(b)an unfunded portion, determined by the Clearing House using stress test

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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methodology equal to the theoretical third and fourth largest IRS Clearing Member
losses produced by such stress test (and assuming for purposes of the model that
already-defaulted IRS Clearing Members will fail to contribute) or such othermethodology determined by the IRS Risk Committee. Upon a default, after
application of the IRS Guaranty Fund, each IRS Clearing Member (excluding any
insolvent or defaulted IRS Clearing Member) shall be subject to assessment of its
previously-assigned proportionate share of such amount (collectively the “IRS
Assessments”).
(ii) Each IRS Clearing Member’s minimum contribution to the IRS Guaranty Fund shall be thegreater of:(a)such IRS Clearing Member's proportionate share of the IRS Guaranty Fund
based on the 30-day trailing average of its potential residual loss (“PRL”) and the 30day trailing average gross notional open interest outstanding at the Clearing House(or in either case, such other shorter time interval determined by the IRS Risk
Committee); or(b)$15,000,000.
(iii) Notwithstanding CME Rule 8G802.H, any IRS Clearing Member whose trader fails toattend during an Active IRS Default Management Committee related to a potential or actual
default will have its IRS Guaranty Fund contribution requirement increased by the Specified
Attendance Failure Amount for the 12-month period commencing the date upon which thetrader was originally expected to attend the Active IRS Default Management Committee.
Such increased amount will be available to be used pursuant to CME Rule 8G802 for any
IRS Losses occurring during such 12-month period (including any IRS Losses related to thedefault for which the relevant Active IRS Default Management Committee was convened).
In addition, the IRS Clearing Member may be referred to the Chief Regulatory Officer for
potential issuance of charges and further disciplinary action in accordance with Chapter 4of this Rulebook. Clearing House staff may grant an exception to the increase of an IRS
Clearing Member’s IRS Guaranty Fund contribution provided by this Rule 8G07.1(iii) forgood cause shown by the affected IRS Clearing Member.
“Specified Attendance Failure Amount” means, for an IRS Clearing Member whose trader
fails to attend an Active IRS Default Management Committee, an amount equal to the
product of (i) the aggregate Specified Attendance Failure Percentages for such IRS
Clearing Member and (ii) such IRS Clearing Member’s contribution to the IRS Guaranty
Fund at the beginning of the IRS Cooling-off Period during which the relevant Active IRS
Default Management Committee was convened, subject to:(x)a minimum amount equal to 50% of the amount specified in Rule
8G07.1(ii)(b); and(y)a maximum amount equal to the lesser of (i) 10% of the IRS Guaranty Fundat the beginning of the IRS Cooling-off Period during which the relevant Active IRS
Default Management Committee was convened and (ii) such IRS Clearing Member’s
contribution to the IRS Guaranty Fund at the beginning of the IRS Cooling-off Period
during which the relevant Active IRS Default Management Committee was convened.
For the avoidance of doubt, in the event the minimum amount calculated under (x) exceeds the
maximum amount calculated under (y), the maximum amount as calculated under (y) shall beapplied.
“Specified Attendance Failure Percentage” means:(x)
50%, for each failure of a swaptions trader required to attend or for eachfailure of a trader for interest rate swaps denominated in USD, EUR or GBP required toattend, or(y)25%, for each failure of any non-swaptions trader for interest rate swaps
denominated in a currency other than USD, EUR or GBP required to attend.
2. The Clearing House shall calculate the aggregate required IRS Guaranty Fund and IRS
Assessments on at least a monthly basis, as well as each IRS Clearing Member’s required
contribution to the Guaranty Fund and its maximum IRS Assessment.
Following any recalculation the Clearing House shall provide a report to each IRS Clearing Member
showing the detail of its required deposit to the IRS Guaranty Fund and its maximum IRS© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Assessment. The notice shall specify the amount of any required additional deposit or any excess
in the then-existing deposit amount. In the event that an interim report is issued within five businessdays prior to the regularly scheduled monthly report, the Clearing House may opt to forego theissuance of an additional month-end report, provided that the amount of resources required has notchanged substantially during this period. An IRS Clearing Member shall make any required
additional deposit within two business days after delivery of such report and any reported excess
may be withdrawn.
3. If the Clearing House determines that an additional deposit to the IRS Guaranty Fund is required
from an IRS Clearing Member due to a material change in the business of such IRS Clearing
Member (for example, but without limitation, changes pursuant to a merger or a bulk transfer ofcustomer positions), where such change produces an increase in such IRS Clearing Member’s
aggregate performance bond requirements of 10% or greater, the Clearing House shall notify such
IRS Clearing Member of the additional requirement and the IRS Clearing Member shall make any
required deposit no later than the second business day following delivery of such notice.
4. Any changes to the methodology for calculating the IRS Guaranty Fund and IRS Assessments
as described in this Rule 8G07.1 or 8G07.2 that results in a 15% increase to the IRS Guaranty
Fund and IRS Assessments over a 30 day period shall be effective on the earlier to occur of (i) the
20th Business Day following the date the Clearing House provides notice to IRS Clearing Membersof such change and (ii) the date reasonably determined by the IRS Risk Committee (which shall be
no less than two Business Days following notice of such change to the IRS Clearing Members) if
such increase is due to applicable law, regulation or regulatory request. IRS Clearing Members
shall make any required additional deposit on or prior to the date such change is effective.
Upon receipt of notice of a 15% increase to the IRS Guaranty Fund and IRS Assessments pursuant
to the preceding paragraph, an IRS Clearing Member may immediately notify the Clearing Houseand such IRS Clearing Member’s customers of its intent to withdraw from status as an IRS Clearing
Member. The notice shall specify that customers must close out or transfer to another IRS
Clearing Member their affected open positions, and that the withdrawing IRS Clearing Member
shall have the right to liquidate any customer positions that remain open on its books after 10
business days have passed from the customers’ receipt of such notice. If any customer fails toclose out or transfer to another IRS Clearing Member during such 10 business day period, the IRS
Clearing Member shall have the right to liquidate any such customer position that remains open on
its books.
For the avoidance of doubt, nothing in this Rule 8G07.4 shall apply to any increase to the IRS
Guaranty Fund and IRS Assessments resulting from periodic calculations of the IRS Guaranty
Fund and IRS Assessments pursuant to Rule 8G07.2 or any additional deposit to the IRS Guaranty
Fund required by an individual IRS Clearing Members pursuant to Rule 8G07.3.

8G08.

LIEN ON COLLATERAL
Each IRS Clearing Member hereby grants to the Clearing House to secure obligations of such IRS
Clearing Member to the Clearing House a first priority and unencumbered security interest and lien
against any property, cash, securities or collateral deposited with, transferred or pledged to, or
otherwise where control is given to the Clearing House by the IRS Clearing Member. IRS Clearing
Members shall take any action that may be required by the Clearing House to create, preserve, perfect,
validate or enforce any such security interest.

8G09.

CUSTOMER REGISTRATIONAll IRS Contracts including, but not limited to, give-ups or transfers that are cleared at CME shall beidentified with an account number which identifies the originator of that transaction, specifying whether
the transaction was executed as a proprietary transaction of the IRS Clearing Member or arises from atransaction by a customer. IRS Clearing Members shall register, on CME-approved forms, all of the“ultimate” (or end) customer.

8G10

RISK MANAGEMENTIRS Clearing Members will be subject to risk management and monitoring practices by CME relating totransactions submitted to the Clearing House. IRS Clearing Members shall promptly provide all
information requested by Clearing House staff, including, without limitation, information respecting risk,
settlement, liquidity, and operational issues. IRS Clearing Members shall make information and© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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documents regarding their risk management policies, procedures and practices available to the CFTC
upon the CFTC’s request.
In limited circumstances, the Clearing House may decline to accept certain IRS Product trades or
migration positions if the Clearing House determines in good faith that, based on the exercise of prudent
risk management standards, the Clearing House should not accept the IRS Product trades or migration
positions. In the event that the Clearing House declines to accept certain IRS Product trades or
migration positions, it shall incur no liability with respect to the trades and positions that are notaccepted. It shall be the sole responsibility of the IRS Clearing Members who are parties to such tradesor positions to take action as they deem necessary or proper for their own protection.
In addition, if the Clearing House determines in good faith that, based on the exercise of prudent risk
management standards, that an IRS Clearing Member poses undue risk to the Clearing House basedon its IRS Product portfolio, the Clearing House may take any or all of the following actions with respect
to such IRS Clearing Member: 1) impose an additional performance bond requirement; 2) prohibit theaddition of any new IRS Contract positions, or 3) require the reduction or unwinding of IRS Contract
positions.
IRS Clearing Members shall permit on-site risk reviews in accordance with CME Rules and subject toreasonable standards of confidentiality. IRS Clearing Members will also be subject to on-going oversightby the IRS Risk Committee regarding their IRS activities related to the CME Clearing House. All suchinquiries shall be conducted in a manner consistent with oversight of IRS Clearing Members and inaccordance with reasonable standards of confidentiality.

8G11-13.

[RESERVED]

8G14.

MITIGATION OF IRS LOSSIn the event of a default by an IRS Clearing Member, all IRS Clearing Members shall work
cooperatively with their customers, other IRS Clearing Members and the Clearing House toadminister the mitigation of any losses that may occur as a result of such default and shall ensurethat resources required to be provided by IRS Clearing Members to the IRS Default Management
Committee are promptly made available.
IRS Clearing Members shall work cooperatively with the Clearing House, the IRS Risk Committee
and the IRS Default Management Committee to (i) mitigate any losses that may occur as a result ofa default, (ii) liquidate the defaulted IRS Clearing Member’s IRS Contracts, (iii) bid in each Default
Management Auction as required by the Clearing House and (iv) take any other action reasonably
requested by the IRS Risk Committee.

8G15.

[RESERVED]

8G16.

FINANCIAL CALCULATIONS
Financial calculations required for IRS Contracts will be performed by CME Clearing on the date such IRS
Contracts are cleared in the Clearing House in accordance with CME Clearing’s procedures. Financial
calculations for IRS Contracts that are received and processed after the daily clearing cycle will be
performed on the next Business Day.

8G17.

IRS CLEARING SERVICE ACCESSCME shall provide open access to its IRS Contract clearing services for any execution venue or
trade processing or confirmation service that desires to facilitate the submission of IRS Producttransactions to the Clearing House for clearing, subject to the Clearing House’s normal operational
requirements applied to all such third-party services, including the requirement, in this instance,that an IRS Clearing Member guaranty all transactions in IRS Products that are submitted to theClearing House for clearing.

8G18.

IRS SWAPTIONS MEMBERSHIP
8G18.A.
IRS Swaptions Eligibility
1. An IRS Clearing Member interested in clearing IRS Swaptions must demonstrate to CME
Clearing it has the ability, commitment and expertise to risk manage IRS Swaptions and has theoperational capability to clear IRS Swaptions.
2. IRS Clearing Members interested in clearing IRS Swaptions are required to respond to aquestionnaire and are subject to CME Clearing diligence for assessment that such IRS Clearing© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

Page 6 of 24

Member has sufficient internal market risk, credit risk and operational risk processes andmanagement frameworks to clear IRS Swaptions, including the ability to properly measure, monitor
and limit risks associated with clearing IRS Swaptions.
3. Each IRS Swaptions Clearing Member shall submit to ongoing diligence reviews by CME
Clearing.
4. Each IRS Swaptions Clearing Member shall nominate IRS Swaptions trader(s) to the IRS Default
Management Committee.
5. “ IRS Swaptions Clearing Member” means an IRS Clearing Member that has been approved by
the Clearing House as eligible to clear IRS Swaptions.
8G18.B.
IRS Swaptions Information Submissions
1. Each IRS Swaptions Clearing Member shall submit the IRS Swaptions Information Submission
File on each Business Day at the time specified by the Clearing House for each IRS Swaptions
currency it is eligible to clear. The information submitted by an IRS Swaptions Clearing Member in
the IRS Swaptions Information Submission File shall be consistent with the information used by the
IRS Swaptions Clearing Member for its internal valuation of IRS Swaptions.
“IRS Swaptions Information Submission File” means the file containing the requested market data,internal price levels and such other information as specified by the Clearing House for eachmoneyness/expiry/tenor combination.
2. “Failed IRS Swaptions Submission” means a failure to submit (i) all or a portion of an IRS
Swaptions Information Submission File at or prior to the time designated by the Clearing House or(ii) the IRS Swaptions Information Submission File in the proper format.
3. During a calendar month that is not during an IRS Cooling Off Period, an IRS Swaptions Clearing
Member will be assessed a penalty per Failed IRS Swaptions Submission based on the following
table:# of Failed IRS Swaptions
Submissions for that month

Penalty per Failed IRS
Swaptions Submission

1

0

2

$10,000

3$50,000

4+$100,000

During an IRS Cooling Off Period, an IRS Swaptions Clearing Member will be assessed apenalty per Failed IRS Swaptions Submission based on the following table:# of Failed IRS Swaptions
Submissions for that month

Penalty per Failed IRS
Swaptions Submission

1

0

2

$30,000

3$150,000

4+$300,000

Penalties shall be assessed monthly and payable with the IRS Guaranty Fund payment cycle.
In addition, the IRS Swaptions Clearing Member may be referred to the Chief Regulatory
Officer for potential further disciplinary action. Penalties from Failed IRS Swaptions
Submissions shall become part of the IRS Priority of Payments as additional CME IRS
Contribution to the IRS Priority of Payments pursuant to CME Rule 8G802 and shall be applied
to IRS Losses on a pro rata basis with other CME IRS Contribution.
8G18.C. Withdrawal from IRS Swaptions Clearing Membership
An IRS Swaptions Clearing Member that intends to no longer be eligible to clear IRS Swaptions
shall provide written notice of such intent to the Clearing House. The IRS Swaptions Clearing© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Member’s withdrawal shall be effective on the earlier of (i) the date Clearing House Staff approves
such withdrawal and (ii) the 10th Business Day following the date of the clearing cycle in which thewithdrawing IRS Swaptions Clearing Member liquidates or transfers to an appropriate IRS
Swaptions Clearing Member all of its open customer and house positions in IRS Swaptions (suchearlier date, the “IRS Swaptions Withdrawal Date”). Promptly following the IRS Swaptions
Withdrawal Date, the Clearing House shall post a notice of the IRS Swaptions Clearing Member’s
withdrawal from its eligibility to clear IRS Swaptions.
An IRS Swaptions Clearing Member withdrawing with an IRS Swaptions Withdrawal Date that is
not during an IRS Cooling Off Period will not be responsible for the requirements of an IRS
Swaptions Clearing Member following the IRS Swaptions Withdrawal Date. An IRS Swaptions
Clearing Member withdrawing with an IRS Swaptions Withdrawal Date during an IRS Cooling Off
Period shall remain liable for all requirements of IRS Swaptions Clearing Members until the end of
the IRS Cooling Off Period in which it withdraws from eligibility to clear IRS Swaptions.
An IRS Swaptions Clearing Member may withdraw from eligibility to clear IRS Swaptions without
withdrawing as an IRS Clearing Member.

8G19-24.

[RESERVED]

8G25.

IRS DEFAULT MANAGEMENT COMMITTEEIn the event of a potential or actual default with respect to IRS Contracts, an IRS Default
Management Committee shall be convened which shall be comprised of traders nominated by IRS
Clearing Members and approved by the Clearing House. The purpose of this committee shall be toadvise the Clearing House with respect to issues arising from the potential or actual default of an
IRS Clearing Member and to manage the process of the liquidation and/or transfer of such IRS
Clearing Member’s portfolio of IRS Contracts. Such advice may include advice on hedging the risk
associated with a defaulted IRS Clearing Member’s portfolio, structuring the defaulted IRS Clearing
Member’s portfolio for liquidation or transfer, and administration of the Default Management Auction
process.

8G26.

[RESERVED]

8G27.

IRS RISK COMMITTEE
There shall be an IRS Risk Committee which shall serve to provide guidance to the Clearing Houseon general matters relating to IRS Products including risk management policies and practices. In
addition to the responsibilities set forth in these Rules, the IRS Risk Committee shall have thecomposition, responsibilities and other characteristics as set forth in its Charter.
If the IRS Risk Committee determines that a IRS Clearing Member fails to meet the requirements
for being an IRS Clearing Member or is in a financial or operational condition which jeopardizes or
may jeopardize the integrity of the Clearing House, the IRS Risk Committee may, by majority vote:
1. Order the IRS Clearing Member or its customers to deposit such additional performance bondwith the Clearing House as deemed appropriate to protect the integrity of open contracts;
2. Prescribe such additional capital or other financial requirements as it deems appropriate;
3. Impose position limits on IRS Clearing Members based on their regulatory capital and suchother criteria as it deems appropriate;
4. Suspend an IRS Clearing Member, subject to approval of any two of the following individuals: theChief Executive Officer, the Global Head of Clearing & Post-Trade Services, the Chairman of theBoard, a Chairman of the IRS Risk Committee or the Chairman of the Clearing House OversightCommittee;
5. Order the IRS Clearing Member to cease and desist from the conduct found to be contrary to thebest interests of the Clearing House; and/or
6. Order the liquidation or transfer of all or a portion of the open positions of the IRS Clearing
Member; provided that all costs associated with any such liquidation and/or transfer shall solely beobligations of the IRS Clearing Member.
No person shall serve on the IRS Risk Committee unless they have agreed in writing that they will
not publish, divulge, or make known in any manner, any facts or information regarding the businessof any person or entity or any other information which may come to their attention in their official
capacity as a member of the IRS Risk Committee, except when reporting to the Board or to acommittee concerned with such information or to the Legal Department, Financial & Regulatory© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Surveillance Department or Market Regulation Department, when requested by the CFTC or othergovernmental agency or self-regulatory organization or when compelled in any judicial oradministrative proceeding.
All information and documents provided to the IRS Risk Committee and all deliberations anddocuments related thereto shall be treated as non-public and confidential and, subject to theprovisions in the previous paragraph, shall not be disclosed, except as necessary to further a
Clearing House investigation or as required by law.

8G28.

WIND UP OF IRS CLEARING OPERATIONS
Without prejudice to any other provision within this chapter 8G, the Exchange may wind-up clearing
operations for IRS Products in the following situations:(a) As a result of a default in which the IRS financial safeguards package is exceeded, producing
an IRS Termination Event, as defined in Rule 8G802.B.5. In such case, the Clearing House
shall close out all open IRS Contracts in accordance with the provisions of Rule 8G802.B.6.
(b) Following a default, during an IRS Cooling Off Period, as defined in Rule 8G802.H. In suchcase, the Clearing House shall provide such advance notice of termination as it determines tobe reasonable and may establish other risk-reducing requirements, in both cases in
consultation with the IRS Risk Committee. In such case, the Clearing House shall work with
the IRS Risk Committee and IRS Clearing Members to provide for bulk porting of IRS
Contracts and collateral to another clearing house that is willing to receive such positions,liquidation and/or termination of IRS Contracts, to the extent practicable under thecircumstances. The final close-out of any open IRS Contracts on the termination date shall be
conducted as set forth below.
(c) Upon the determination of the Exchange to cease providing clearing services for IRS Products
for any reason. Without prejudice to (b) above, in such case, the Clearing House shall provide
not less than 90 days written notice to IRS Clearing Members and market participants of the
final date of termination. The Clearing House shall work with the IRS Risk Committee and IRS
Clearing Members to ensure an orderly termination process, including providing for bulk
porting of IRS Contracts and collateral to another clearing house that is willing to receive such
positions, and liquidation and/or termination of IRS Contracts. The final close-out of any open
IRS Contracts on the termination date shall be conducted as set forth below.
If clearing services for IRS Products are terminated pursuant to paragraph (b) or (c) above, on theeffective date of termination specified in the notice, the Clearing House shall fix a U.S. dollar
amount (the “Close-out Value”) to be paid to or received from the Clearing House in respect of all
IRS Contracts to be terminated, by conducting a special settlement cycle to determine a final
settlement price for all open IRS Contracts. Using such Close-out Value, the Clearing House shalldetermine for each IRS Clearing Member its total net pay obligation to, or net collect expectation
from, the Clearing House in respect of its terminated proprietary and customer positions in IRS
Contracts, if any. The Clearing House shall make payment to each IRS Clearing Member with a
net collect, and each IRS Clearing Member with a net pay shall pay such amount to the Clearing
House. The Clearing House may require pays from IRS Clearing Members to be funded
immediately prior to making payment on collects. If any IRS Clearing Member fails to make a final
payment to the Clearing House pursuant to this Rule 8G28, it shall be declared in default and theClearing House shall process the default in accordance with Rule 8G802 as part of the final
termination process. Promptly following the termination of all open IRS Contracts pursuant to thisRule 8G28 the Clearing House shall release to IRS Clearing Members their remaining contributions
to the IRS Guaranty Fund.

8G29-599. [RESERVED]
8G600.

DISPUTES RELATING TO IRS PRODUCTS
Neither the Clearing House nor any committee of the Exchange shall address disputes among IRS
Clearing Members and/or IRS Participants relating to any matter regarding the execution of any
IRS Contract or any IRS Product. A sub-committee of the IRS Advisory Committee shall be
responsible for the arbitration of disputes and claims among IRS Clearing Members, clients and/or
CME relating to the submission of IRS Products for clearing at the Clearing House and othermatters related to clearing at the Clearing House. The Chairman of the IRS Advisory Committee
shall have the discretion to determine whether the dispute is or is not arbitrable under these Rules.

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8G601-801. [RESERVED]
8G802.

PROTECTION OF CLEARING HOUSE
8G802.A.
Default by IRS Clearing Member
The Clearing House shall establish a separate guaranty fund for IRS Contracts (the “IRS Guaranty
Fund”). Each IRS Clearing Member shall contribute to the IRS Guaranty Fund in accordance withthe requirements of Rule 8G07. A non-defaulted IRS Clearing Member’s deposit to the IRS
Guaranty Fund may be applied by the Clearing House in accordance with this Rule 8G802 to
mitigate any loss to the Clearing House attributable to IRS Contracts and will not be applied tolosses in any other product classes.
1. Default by IRS Clearing Member(i) If an IRS Clearing Member (i) fails to promptly discharge any obligation to the Clearing
House or (ii) becomes subject to any bankruptcy, reorganization, arrangement,
insolvency, moratorium, or liquidation proceedings, or other similar proceedings under
U.S. federal or state bankruptcy laws or other applicable law, the Clearing House may
declare such IRS Clearing Member to be in default. If an Affiliate of an IRS Clearing
Member fails to discharge any obligation to the Clearing House and the Clearing House
determines that the default by such Affiliate is likely to cause a default of the IRS Clearing
Member, the Clearing House may declare such IRS Clearing Member to be in default.
Upon a default, the Clearing House shall act promptly to mitigate any loss caused by suchdefault. The Clearing House may engage in any commercially reasonable transaction toeliminate or reduce the risk created by the default, including but not limited to, entering
into hedges, liquidating positions in the market, auctioning or selling a portion or all of theportfolio of the defaulting firm and, if applicable, its customers. The Clearing House shallmaintain procedures for managing the default of an IRS Clearing Member (suchprocedures, the “IRS Default Management Guidelines”). All information received by a
Clearing Member, its affiliate or customer in connection with the Clearing House’s
liquidation and default management processes shall be treated as confidential.
All obligations, costs and expenses incurred thereby shall be an obligation of the defaulted
IRS Clearing Member to the Clearing House.
(ii) Defaults by different IRS Clearing Members will each be considered a separate default
event. After an IRS Clearing Member has been declared in default, subsequent failuresby such defaulted IRS Clearing Member to discharge any obligation shall be consideredpart of the same original default and shall not be considered separate default events,
unless and until the original default has been fully resolved and such IRS Clearing
Member has been restored to good standing or is no longer an IRS Clearing Member.
(iii) The defaulted IRS Clearing Member shall not take any action that would interfere with theability of the Clearing House to mitigate the loss or to apply the assets of the defaulted
IRS Clearing Member to offset any loss. The defaulted IRS Clearing Member shall not file
any action in any court seeking to stay the actions of the Clearing House with respect tothe default.
(iv) A defaulted IRS Clearing Member shall immediately make up any deficiencies in its IRS
Guaranty Fund deposit resulting from such default and in any event no later than the closeof business on the banking day following demand by the Clearing House.
2. Application of Defaulted IRS Clearing Member’s Collateral; Rights and Obligations of Clearing
House
Upon the default of an IRS Clearing Member IRS Collateral shall be applied by the Clearing House
to discharge any loss to the Clearing House associated with such default (an “IRS Loss”) in
accordance with and subject to this Rule 8G802. An IRS Loss shall include, but shall not be limited
to, costs associated with the liquidation, transfer and managing of IRS Contracts of the defaulted
IRS Clearing Member, hedging costs and other costs incurred by the Clearing House related to
managing the risk surrounding the default of the IRS Clearing Member.
An IRS Loss arising in the defaulted IRS Clearing Member’s proprietary account class shall besatisfied from the IRS Collateral. An IRS Loss resulting from any cleared swaps customer of a
defaulted IRS Clearing Member shall be satisfied by application of performance bond, excess
performance bond, other collateral and settlement variation gains (“IRS Customer Collateral”) held
for the respective cleared swaps customer consistent with Part 22 of the CFTC’s regulations. After© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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finalizing the IRS Loss of the defaulted IRS Clearing Member’s proprietary account, the Clearing
House shall reserve any excess IRS Collateral that remains first, to satisfy any IRS Loss arising in
the defaulted IRS Clearing Member’s customer account class for IRS Contracts, and second, tosatisfy any losses to the Clearing House arising in other product classes, including, but not limited
to, pursuant to Rule 818; provided however that such excess IRS Collateral shall not be applied toan IRS Loss arising from the IRS Contracts of a defaulted cleared swaps customer until after any
permitted application of IRS Customer Collateral held in such customer account class.
Any remaining IRS Customer Collateral of a customer of an IRS Clearing Member following final
resolution of any IRS Loss attributed to such customer shall remain in such customer accountclass, where it may be used to satisfy losses of such customer to the Clearing House arising insuch account class with respect to other product classes Any customer assets used by the Clearing
House to cure an IRS Loss associated with a customer account shall not be added to the defaulted
IRS Clearing Member’s collateral generally. The Clearing House shall not use IRS Customer
Collateral to satisfy a payment obligation, realized loss or expense to the Clearing House in respectof the defaulted IRS Clearing Member’s proprietary account.
Should an IRS Loss continue to exist after application of the amounts above, any remaining
deficiency shall be satisfied pursuant to the procedures in Rule 8G802.B, in accordance with Part
22 of the CFTC’s regulations as applicable. Any such amount shall continue to be a liability of thedefaulted IRS Clearing Member to the Clearing House, which the Clearing House may collect fromany other assets of such clearing member or by process of law.
8G802.B.
Satisfaction of Clearing House Obligations
1. Application of Clearing House and non-defaulting IRS Clearing Member contributions
If the IRS Collateral and the IRS Customer Collateral, as described in Rule 8G802.A, is insufficient
to cover the IRS Loss produced by the default, the Clearing House shall cover, or reduce the sizeof, such IRS Loss by applying the following funds to such losses in the order of priority as follows(the “IRS Priority of Payments”):(i)First, the corporate contribution of CME for IRS Products (the “CME IRS
Contribution”), which shall equal $150,000,000;(ii)
Second, the IRS Guaranty Fund (excluding the contribution of the defaulted IRS
Clearing Member), which shall be applied in the following manner:(a)the IRS Guaranty Fund contribution of Subordinated Bidders equal to therelevant Aggregate Subordinated Amounts of such Subordinated Bidders
applied on a pro rata basis until the entire IRS Loss is allocated; then, to theextent not all IRS Losses have been applied after application pursuant to thissub-section (a);(b)
the (remaining) IRS Guaranty Fund of all IRS Clearing Members (excluding
an amount of the IRS Guaranty Fund of each Winning Bidder equal to the
Final Aggregate Seniorized Amounts for such Winning Bidders) will beapplied pro rata until the entire IRS Loss is allocated; then, to the extent not
all IRS Losses have been applied after application pursuant to this subsection (b); and(c)the (remaining) IRS Guaranty Fund of all Winning Bidders will be applied pro
rata;
(iii)
Third, IRS Assessments against all IRS Clearing Members (excluding any defaulted
IRS Clearing Members), which shall be assessed against each non-defaulted IRS
Clearing Member pro rata in proportion to their required contributions to the IRS
Guaranty Fund in accordance with Rule 8G07. Assessments against non-defaulted
IRS Clearing Members shall be subject to a maximum of the maximum IRS
Assessment assigned to such IRS Clearing Member pursuant to Rule 8G07 at thetime of the default, and also subject to the limits set forth in Rule 8G802.H in the caseof multiple successive defaults.
Non-defaulted IRS Clearing Members and their customers shall not take any action that wouldinterfere with the ability of the Clearing House to collect and apply assets and proceeds inaccordance with this Rule 8G802.B, including, but not limited to, attempting to obtain a court
order. Determinations under this Rule 8G802.B that are based upon an IRS Clearing
Member’s IRS Guaranty Fund deposit and/or IRS Assessment requirement shall be based
upon the requirement in effect at the time of the default.

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2.

As used herein:"Aggregate Subordinated Amount" means the sum of all subordinated amounts as determinedby the Clearing House in accordance with the IRS Default Management Guidelines.
"Final Aggregate Seniorized Amount" means the sum of all seniorized amounts as determinedby the Clearing House in accordance with the IRS Default Management Guidelines.
"Subordinated Bidder" means in respect of each Default Management Auction, the IRS
Clearing Member(s) whose IRS Guaranty Fund contribution is subject to subordination as
determined by the Clearing House in accordance with the IRS Default Management
Guidelines.
"IRS Default Management Guidelines" means the IRS Default Management Guidelines of the
Clearing House.
"Winning Bidder" means, in respect of each Default Management Auction, the IRS Clearing
Member(s) designated as such by the Clearing House with respect to such Default
Management Auction.
Modification of Clearing House’s Obligations for IRS Contracts(a) If at any time following a default of an IRS Clearing Member, the assets available to cover
the default under the preceding sections of Rule 8G802 are insufficient to satisfy the IRS
Loss and obligations of the Clearing House to IRS Clearing Members as a result of suchdefault, then absent an IRS Termination Event, the Clearing House shall, in a manner thatis consistent with the requirements of the Commodity Exchange Act and the regulations
adopted thereunder, conduct its next settlement cycle as described in Rule [8G802.B.2(b)].
(b) If the circumstances described in Rule [8G802.B.2(a)] occur, the Clearing House shallissue a Clearing Advisory Notice to inform IRS Clearing Members and their customers ofsuch circumstances and conduct a settlement cycle to determine settlement prices for all
IRS Contracts and the net portfolio gain or loss for each IRS Clearing Member and its
customers, in accordance with the following:(i) The net portfolio gain of an IRS Clearing Member (a “collect”), or the net portfolio loss ofan IRS Clearing Member (a “pay”), shall be determined separately for:(A) the IRS Clearing Member’s proprietary positions in IRS Contracts (the net portfolio gainor net portfolio loss for such positions, a “Proprietary IRS Collect” or a “Proprietary IRS
Pay”), and(B) the positions in IRS Contracts of each customer of the IRS Clearing Member held in an
account consistent with Part 22 of the CFTC’s regulations (each customer's net portfolio
gain or net portfolio loss for such positions, an “Individual Customer IRS Collect” or an“Individual Customer IRS Pay”).
(ii) The Clearing House Oversight Committee (after considering any recommendation of the
IRS Emergency Financial Committee) may determine a maximum amount of position
liquidation payments that may be included in the Aggregate IRS Collects, based upon thenexisting facts and circumstances, that it deems appropriate to mitigate further disruptions to
the markets.
(iii) The Clearing House shall notify each IRS Clearing Member of the amount of its
remaining IRS Assessments, Proprietary IRS Pays and Individual Customer IRS Pays andeach IRS Clearing Member shall pay all such amounts no later than the time required forthe relevant settlement cycle. If an IRS Clearing Member does not pay all such amounts to
the Clearing House, the Clearing House shall determine such IRS Clearing Member to be
in default and may take any of the actions specified in 8G802.A with respect to such IRS
Clearing Member and its customers. Payments owed by each non-defaulted customer ofthe defaulted IRS Clearing Member shall be paid by such non-defaulted customer to theClearing House in accordance with Rule 8G802.I.
(iv) If the amount of Aggregate IRS Available Funds received by the Clearing House
exceeds the Aggregate IRS Collects, the Clearing House shall calculate reimbursementsof, and distribute, the excess funds, in reverse order of the utilization of the IRS Priority ofPayments.
(v) If the amount of the Aggregate IRS Collects exceed the amount of Aggregate IRS
Available Funds received:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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3.

(A) the Clearing House shall notify IRS Clearing Members and provide an
opportunity for IRS Clearing Members and their customers to make voluntary
contributions to the Clearing House;(B) if the amount of the Aggregate IRS Collects continues to exceed the amount ofAggregate IRS Available Funds after the Clearing House adds any voluntary
contributions from Rule 8G802.B.2(b)(v)(A) to the Aggregate IRS Available
Funds, then the Clearing House shall apply IRS Gains Haircuts (as defined
below) to the Proprietary IRS Collects and Individual Customer IRS Collects forthe current settlement cycle and each successor settlement cycle on the current
Business Day and, unless a Bankruptcy Event has occurred, each of the next
two Business Days in accordance with the following:
Proprietary IRS Collects and Individual Customer IRS Collects each shall be
reduced on a pro rata basis according to the amount of such collects, to equal
the amount of Aggregate IRS Available Funds received relative to the Aggregate
IRS Collects (such process, an “IRS Gains Haircut”);(C) The Clearing House Oversight Committee may instruct the Clearing House toextend or reduce the number of days during which IRS Gains Haircuts areapplied under the process under Rule 8G802.B.2(b)(v) by up to two Business
Days at a time, provided that in no circumstance may the Clearing House
conduct settlement cycles in which IRS Gains Haircuts are applied for longer
than five Business Days. Before providing such instruction, the Clearing House
Oversight Committee must consider any recommendation of the IRS Emergency
Financial Committee. Any recommendation of the IRS Emergency Financial
Committee and the decision of the Clearing House Oversight Committee, eachregarding adjusting the duration of settlement cycles with IRS Gains Haircuts,must be based upon then existing facts and circumstances, be in furtherance of
the integrity of the Clearing House and the stability of the financial system, andtake into consideration the legitimate interests of clearing members andcustomers of clearing members.
(D) For each settlement cycle conducted in accordance with this subparagraph (v):For non-defaulted IRS Clearing Members, the Clearing House shall pay thehaircut Proprietary IRS Collects and Individual Customer IRS Collects to IRS
Clearing Members as soon as practicable after receipt of the Aggregate IRS
Available Funds. For non-defaulted customers of a defaulted IRS Clearing
Member, subject to applicable law, the Clearing House will account for Individual
Customer IRS Collects owed to each customer.
(c) If a Bankruptcy Event occurs (i) following a default of an IRS Clearing Member and (ii)during the IRS Cooling Off Period, all IRS Contracts shall be terminated promptly inaccordance with Rule [8G802.B.6].
IRS Partial Tear-Ups and IRS Full Tear-Ups(a) The Clearing House may, at any time following a default of an IRS Clearing Member, notify
IRS Clearing Members and provide an opportunity for IRS Clearing Members to voluntarily
agree to have their proprietary positions or, with a customer’s consent, to agree to haveeach such customer’s positions, extinguished by the Clearing House.
(b) If proprietary or customer positions in IRS Contracts of a defaulted IRS Clearing Member
remain open (the “Remaining Open IRS Positions”) following the last settlement cycle
conducted pursuant to Rule 8G802.B.2, the Clearing House shall extinguish the Remaining
Open IRS Positions through a partial tear-up process (“IRS Partial Tear-Up”) or a full tearup process (“IRS Full Tear-Up”) of proprietary and customer positions of non-defaulted IRS
Clearing Members and non-defaulted customers of the defaulted IRS Clearing Member inaccordance with the following:i. The Clearing House Oversight Committee shall determine the appropriate scope ofeach IRS Partial Tear-Up or shall determine that an IRS Full Tear-Up is appropriate, in
accordance with Part 22 of the CFTC’s regulations. Before making such determination,
the Clearing House Oversight Committee must consider any recommendation of the
IRS Emergency Financial Committee. Any recommendation of the IRS Emergency
Financial Committee and each determination of the Clearing House OversightCommittee made for purposes of this Rule 8G.802.B.3(b) must:© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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A.
B.

be based upon then existing facts and circumstances;be in furtherance of the integrity of the Clearing House and the stability of thefinancial system;
C. take into consideration the legitimate interests of clearing members andcustomers of clearing members; andD. aim to extinguish Remaining Open IRS Positions and any additional positionsin IRS Contracts deemed necessary to mitigate further disruptions to themarkets affected by the Remaining Open IRS Positions.
ii. Such IRS Partial Tear-Up may include, but need not be limited to, the following
methods:
A. Tear-Up of Positions in IRS Contracts that Offset Remaining Open IRS
Positions
Proportionate extinguishment of IRS Contracts held by non-defaulted IRS
Clearing Members, their non-defaulted customers and the non-defaulted
customers of the defaulted IRS Clearing Member whose positions offset the
Remaining Open IRS Positions, relative to the size of the Remaining Open IRS
Positions; andB. Tear-Up of All Positions in IRS Contracts within a Product or Combination of
Products.
Extinguishment of all open positions in IRS Contracts for a product or
combination of products.
iii. An IRS Full Tear-Up would involve the extinguishment of all open positions in IRS
Contracts.
(c) In connection with any settlement cycle with IRS Gains Haircuts, the Clearing House
Oversight Committee may instruct the Clearing House to extinguish a portion of theRemaining Open IRS Positions through an IRS Partial Tear-Up of proprietary and customer
positions of non-defaulted IRS Clearing Members and non-defaulted customers of thedefaulted IRS Clearing Member. The Clearing House Oversight Committee would
determine the appropriate scope of each such IRS Partial Tear-Up in accordance with theprocedures set forth in Rule 8G802.B.3(b)(i) and (ii), except that each reference to“Remaining Open IRS Positions” shall mean the relevant portion of Remaining Open IRS
Positions.
4. IRS Product Limited Recourse
If a default occurs, IRS Collateral, IRS Customer Collateral and the IRS Priority of Payments shallbe the sole source of payments to cover the IRS Loss until the default is fully and finally resolved,
as applicable. In the event the IRS Collateral, IRS Customer Collateral and the IRS Priority ofPayments are insufficient to cover the IRS Loss, regardless of whether CME is able to require an
IRS Clearing Member to cure a deficiency in the IRS Guaranty Fund because of the occurrence ofa Bankruptcy Event (as such term is defined in Rule 818.A), IRS Clearing Members and theholders of IRS Contracts shall have no recourse to any other funds or any other entity, including
without limitation the guaranty funds that support clearing of other products, CME, CME Group Inc.
or any of its affiliates other than any amounts recovered as described in Rule 8G802.E.
5. IRS Termination Events
If at any time following a default: (a) the Clearing House is unable to cover a settlement variation
payment obligation when due and has no expectation of accessing funds to permit it to cover suchpayment obligation (for example through access to credit lines or assessment funds), (b) the
Clearing House determines (after consultation with the IRS Risk Committee) that the available IRS
Collateral and the IRS Priority of Payments will be insufficient to satisfy Default Management
Auction bid results for the defaulted IRS Clearing Member’s portfolio, (c) the Clearing Houseotherwise determines (after consultation with the IRS Risk Committee) the IRS Loss will exceed theavailable IRS Collateral and IRS Priority of Payments, or (d) a Bankruptcy Event of the Exchange(each an “IRS Termination Event”), then all IRS Contracts shall be terminated and the IRS
Collateral and IRS Priority of Payments shall be distributed in accordance with Rule 8G802.B.6
below. If the IRS Customer Collateral attributable to a cleared swaps customer of the defaulted IRS
Clearing Member is sufficient to satisfy any IRS Loss associated with such cleared swaps
customer, the IRS Customer Collateral shall be so applied and any remaining IRS Customer© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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Collateral shall remain in such customer account class. The Clearing House shall, in a manner thatis consistent with the requirements of the Commodity Exchange Act and the regulations adopted
thereunder (including, without limitation Part 190 of the Regulations, if applicable) fix a U.S. dollar
amount (the “IRS Close-Out Value”) to be paid to or received from the Clearing House in respect of
all IRS Contracts to be terminated by conducting a special settlement cycle to determine a final
settlement price for all open IRS Contracts.
6. Termination of IRS Contracts on an IRS Termination Event; Netting and Offset
If an IRS Termination Event occurs as described in Rule 8G802.B.5, all IRS Contracts shall beterminated promptly. The Clearing House shall determine the amount to be paid to or collectedfrom each non-defaulted IRS Clearing Member, and the IRS Collateral and IRS Priority ofPayments shall be distributed, as follows:(i) The Clearing House shall, in a manner that is consistent with the requirements of theCommodity Exchange Act and the regulations adopted thereunder (including, without limitation
Part 190 of the Regulations, if applicable) fix a U.S. dollar amount (the “IRS Close-Out Value”)
to be paid to or received from the Clearing House in respect of all IRS Contracts to beterminated by conducting a special settlement cycle to determine a final settlement price for all
open IRS Contracts.
(ii) The net portfolio gain of a non-defaulted IRS Clearing Member (a “collect”), or the net
portfolio loss of a non-defaulted IRS Clearing Member (a “pay”), shall be determined
separately for (a) its proprietary positions in IRS Contracts (a “Close-Out Proprietary IRS
Collect” or a “Close-Out Proprietary IRS Pay”) and (b) the positions of each of its customers in
IRS Contracts (each, a Close-Out “Individual Customer IRS Collect” or a “Close-Out Individual
Customer IRS Pay”), using the IRS Close-Out Value for IRS Contracts. The Clearing House
shall also use the IRS Close-Out Value to determine a Close-Out Individual Customer IRS
Collect or a Close-Out Individual Customer IRS Pay for each non-defaulted cleared swaps
customer of a defaulted IRS Clearing Member. The sum of all Close-Out Proprietary IRS
Collects and Close-Out Individual Customer IRS Collects shall be the “Aggregate Close-Out
IRS Collects”.
The sum of all Close-Out Proprietary IRS Pays and Close-Out Individual
Customer IRS Pays shall be the “Aggregate Close-Out IRS Pays”.
(iii) The Clearing House shall determine the amount of each non-defaulted IRS Clearing
Member’s remaining payment obligations, if any, in respect of IRS Assessments (which,
together with the CME IRS corporate contribution and any remaining IRS Guaranty Fundamounts and any IRS Assessments previously funded, constitute the “Remaining IRS Priorityof Payments”).
(iv) The Clearing House shall add any remaining IRS Collateral, IRS Customer Collateral (ifapplicable as described in Rule [8G802.A.2.] above) and Remaining IRS Priority of Payments
to the Aggregate Close-Out IRS Pays, and deduct the amount of any uncovered IRS Loss (thesum of such amount, the “Aggregate Close-Out IRS Available Funds”).
(v) The Clearing House shall then notify each IRS Clearing Member of the amount of its
remaining IRS Assessments, Close-Out Proprietary IRS Pay and Close-Out Individual
Customer IRS Pays and each IRS Clearing Member shall pay all such amounts no later than
the time specified by the Clearing House in such notice. If an IRS Clearing Member does notmake such payment, the Clearing House shall determine such IRS Clearing Member to be in
default and may take any of the actions specified in 8G802.A with respect to such IRS Clearing
Member and its customer. Payments owed by each non-defaulted customer of the defaulted
IRS Clearing Member shall be paid by such non-defaulted customer to the Clearing House inaccordance with Rule 8G802.I.
(vi) If the amount of Aggregate Close-Out IRS Available Funds received by the Clearing House
exceeds the Aggregate Close-Out IRS Collects, the Clearing House shall calculate
reimbursements of the excess funds, in reverse order of the IRS Priority of Payments.
(vii) If the Aggregate Close-Out IRS Collects exceed the amount of Aggregate Close-Out IRS
Available Funds received, the Clearing House shall haircut the amount of each Close-Out
Proprietary IRS Collect (such haircut amount, the “Allocated Close-Out Proprietary IRS
Collect”) and Close-Out Individual Customer IRS Collect (such haircut amount, the “Allocated
Close-Out Individual Customer IRS Collect”) on a pro rata basis based on the amount ofAggregate Close-Out IRS Available Funds received relative to the amount of the Close-Out
Proprietary IRS Collects and Close-Out Individual Customer IRS Collects (such process, a“Close-Out IRS Gains Haircut”).

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(viii) For non-defaulted IRS Clearing Members, the Clearing House shall pay the Close-Out
Proprietary IRS Collect or Allocated Close-Out Proprietary IRS Collects, as applicable, andClose-Out Individual Customer IRS Collects or Allocated Close-Out Individual Customer IRS
Collects, as applicable, as soon as practicable after receipt of the Aggregate Close-Out IRS
Available Funds. For non-defaulted customers of a defaulted-IRS Clearing Member, subject toapplicable law, the Clearing House will account for Individual Customer IRS Collects owed toeach such non-defaulted customer.
(ix) Upon the completion of payments, all IRS Contracts shall be extinguished, and theClearing House shall have no further access to funds or collateral in respect of IRS Contracts
or IRS clearing activity of a non-defaulting IRS Clearing Member. For the avoidance of doubt,
neither IRS Contracts that are extinguished under this Rule [8G802.B.6] nor any claims
thereunder shall be available for netting under Rule 818.
7. No Claims Against the Exchange or Clearing House(a) IRS Clearing Members, their affiliates and their customers shall have no claim against the
Exchange, CME Group Inc. or any affiliates of the Exchange or CME Group or any
directors, officers or employees of any of the foregoing, including but not limited to claims
against any other guaranty fund established by the Exchange, CME Group Inc. or any of
its affiliates with respect to losses suffered as a result of the application of any provision ofthis Rule 8G802.B.
No beneficial holder of an IRS Contract shall have any claim against its non-defaulted IRS
Clearing Member as a result of the application of this Rule 8G802.B. other than any
amounts recovered as described in Rule 8G802.E.
(b) Notwithstanding anything in subparagraph (a), IRS Clearing Members, for both theirproprietary positions in IRS Contracts and their customers’ positions in IRS Contracts, andnon-defaulted customers of defaulted IRS Clearing Members will have a claim on any
recovery from the defaulted IRS Clearing Member or the estate of the defaulted IRS
Clearing Member in the amount of the IRS Gains Haircuts and Close-Out IRS Gains
Haircuts, each in the aggregate, applied to such positions (such amount with respect to all
non-defaulted IRS Clearing Members and their customers and the non-defaulted
customers of the defaulted IRS Clearing Member, “Aggregate IRS Gains Haircuts”), as set
forth more fully in Rule 8G802.E. If the recovery from the defaulted IRS Clearing Member
is less than the Aggregate IRS Gains Haircuts, non-defaulted IRS Clearing Members andtheir customers and the non-defaulted customers of defaulted IRS Clearing Members will
share pro rata in the recovery.
8. Non-Petition
No IRS Clearing Member and no customer of an IRS Clearing Member shall institute against, or
join any other person in instituting against, the Exchange any bankruptcy, reorganization,
arrangement, insolvency, moratorium, liquidation or examinership proceedings, or other similar
proceedings under U.S. federal or state bankruptcy laws or other applicable law arising out of any
claimed default by the Clearing House on an IRS Contract as a result of the termination of such
IRS Contract and related payments in accordance with these Rules.
9. Fedwire and Satisfaction of IRS Assessments
All amounts assessed by the Clearing House against an IRS Clearing Member pursuant to this
Chapter and any advance assessments pursuant to Rule 8G802.C where notice of suchassessment is delivered to an IRS Clearing Member during the hours in which the Federal
Reserve's wire transfer system (Fedwire) is in operation shall be paid to the Clearing House bysuch IRS Clearing Member prior to the close of the Fedwire on such day; provided, however, that
where notice of such assessment is delivered to an IRS Clearing Member within one (1) hour prior
to the close of Fedwire or after the close of Fedwire shall be paid to the Clearing House within one(1) hour after Fedwire next opens.
Any IRS Clearing Member that does not satisfy an assessment made pursuant to this Chapter 8G
shall be in default. Any IRS Loss that occurs as a result of such default shall itself be assessed by
the Clearing House to non-defaulted IRS Clearing Members pursuant to Rule 8G802.A and
8G802.B.
After payment of an IRS Assessment pursuant to Rule 8G802.B, an IRS Clearing Member shallcharge other clearing members for whom it clears contracts or carries positions on its books torecover their proportional share of the assessment. Such other clearing members shall promptly© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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pay the charge.
10. Details of Implementation
While adherence to the provisions of this Rule 8G802.B shall be mandatory, the detailed
implementation of the process of finalizing an IRS Loss with respect to a default, including theliquidation, hedging, auction or sale of positions or assets of the defaulted IRS Clearing Member,shall be conducted by the Clearing House in consultation with the IRS Default Management
Committee.
8G802.C.
Limited Advance Assessment Authority
If a default occurs and the collateral for IRS Contracts of the defaulted IRS Clearing Member for its
proprietary and customer accounts (including any IRS Contracts entered into by the Clearing
House to hedge such defaulted Clearing Members’ IRS Contracts) held by the Clearing House(after taking into account settlement variation payment obligations) is less than 50 percent of theperformance bond requirement for IRS Contracts calculated using the performance bondmethodology at the time of default, the Clearing House may issue an advance assessment demand
to non-defaulted IRS Clearing Members to contribute capital up to a maximum of the amount thatwould be necessary to bring the collateral of the defaulted IRS Clearing Member to 100% of therelevant requirement. Any such assessment shall be subject to any cap on assessments pursuant
to Rule 8G802.B and shall be made pro rata among IRS Clearing Members on the same basis asassessments under Rule 8G802.B.
8G802.D.
Utilization of Remaining IRS Collateral of Defaulted IRS Clearing Member;
Restoration of Funds Following Final Determination of Losses
1. After the default of an IRS Clearing Member is finally resolved, excess IRS Collateral of the IRS
Clearing Member may be used by the Clearing House for losses to the Clearing House of such IRS
Clearing Member for Base Products on a pro rata basis based on the amount of any unresolved
losses for such product classes.
2. If, after the default of an IRS Clearing Member is finally resolved, the Clearing House determinesthat collateral of the defaulted IRS Clearing Member, surplus funds, IRS Guaranty Funds, IRS
Assessments, other guaranty fund contributions, or assessment powers were employed in amanner different from what would have occurred had all assets been secured and liquidated
immediately and the IRS Loss finalized simultaneously, then the Clearing House shall make
distributions or rebalancing allocations to non-defaulted IRS Clearing Members and/or the guaranty
funds, as appropriate.
8G802.E.
Rights of Clearing House for Recovery of Loss
Losses caused by the default of an IRS Clearing Member are amounts due to the Clearing House
from such IRS Clearing Member and shall remain legal obligations thereof notwithstanding theClearing House’s recourse to the loss-mutualization provisions of this Rule 8G802 and Rule 802,which amounts the Clearing House shall take commercially reasonable steps to recover (including
claims submitted in an insolvency or resolution proceeding). If any portion of these amounts issubsequently recovered by the Clearing House, the net amount of such recovery shall be credited
to non-defaulted IRS Clearing Members (whether or not they are still IRS Clearing Members at thetime of recovery) on a pro rata basis based on (1) the amount of their (and their customers’, if
applicable) voluntary contributions with respect to such default, (2) the amount of their (and theircustomers’, if applicable) Aggregate IRS Gains Haircuts with respect to such default, (3) theamount of their IRS Assessments utilized by the Clearing House with respect to such default, and(4) the amount of their guaranty fund contribution utilized by the Clearing House with respect tosuch default, each in the order listed, and then to the Exchange for the amount of the CMEContribution utilized by the Clearing House with respect to such default..
If an IRS Clearing Member clears contracts or carries positions for other clearing members andsuch other clearing members were required to pay an assessment pursuant to Rule 8G802.B, such
IRS Clearing Member shall return to such other clearing members, a pro rata share of any
recoveries received by such IRS Clearing Member which shall be calculated on the basis of theassessed amount paid by the other clearing member relative to the total assessment paid by the
IRS Clearing Member.
8G802.F.
IRS Guaranty Fund Contributions to be Restored
In the event it shall become necessary to apply all or part of the IRS Guaranty Fund to meet
obligations to the Clearing House pursuant to this Rule 8G802, IRS Clearing Members shall restore
their deposits to the IRS Guaranty Fund to previously required level prior to the close of business© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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on the next banking day after notice that such amount is due from the Clearing House, subject tothe maximum obligations to contribute to the IRS Guaranty Fund and to fund IRS Assessments set
forth in 8G802.H.
8G802.G.
Default Management Across Account Classes
Subject to Rule 8G831, the procedures set forth in 8G802.A and 8G802.B shall be conducted
separately by the Clearing House with respect to open positions and associated performance bonddeposits for different product classes and account classes. Upon a default, the Clearing House
may, in accordance with applicable law, act immediately to attempt to transfer to alternate IRS
Clearing Members part or all customer positions and associated performance bond collateral withrespect to any cleared swaps customer that has not defaulted on payment obligations.
8G802.H.
IRS Cooling Off Period and Multiple Defaults
The provisions set forth in Rule 8G802.A and 8G802.B shall apply with respect to each default by
an IRS Clearing Member. If more than one IRS Clearing Member default occurs at a time or inclose sequence, including a default that occurs by reason of an IRS Clearing Member’s failure tosatisfy an assessment demand, the Clearing House shall manage the defaults separately. Upon adefault, non-defaulted IRS Clearing Members shall be subject to a maximum obligation tocontribute to the IRS Guaranty Fund and to fund IRS Assessments equal to the aggregate amounts
set forth in Rules 8G07 and 8G802. This maximum shall apply from the date of the original default
until the later of (i) the 25th Business Day thereafter and (ii) if another IRS Clearing Member is indefault during the 25 Business Days following the initial or any subsequent default, the 25th
Business Day following the last default (the “IRS Cooling Off Period”), regardless of the number ofdefaults that occur during such IRS Cooling Off Period.
The maximum does not limit IRS Clearing Members’ obligations to restore their IRS Guaranty Fundcontributions as set forth in Rule 8G802.F, except that if the IRS Clearing Member’s required IRS
Guaranty Fund contribution would exceed the maximum, the IRS Clearing Member’s IRS Guaranty
Fund requirement shall be reduced accordingly for the remainder of the IRS Cooling Off Period.
Following an IRS Cooling Off Period, the Clearing house shall notify each IRS Clearing Member of
its IRS Guaranty Fund deposit obligation and its IRS Assessments exposure.
The aggregate maximum contribution for the IRS Cooling Off Period shall be based upon each IRS
Clearing Member’s IRS Guaranty Fund requirement and IRS Assessments in effect at the time ofthe original default, provided that if an IRS Clearing Member’s IRS Guaranty Fund requirement and
IRS Assessments is increased during the IRS Cooling Off Period due to material changes in its
own business creating a material shortfall as to the requirement (as described in Rule 8G07) thenthe maximum shall be based on the revised requirement.
The CME IRS Contribution shall be limited to an aggregate maximum of $150,000,000 during the
Cooling Off Period, regardless of the number of defaults that occur during such Cooling Off Period.
8G802.I.
Post-Default Cleared Swaps Customer Account Processing
1. In order to minimize disruptions and loss to its public customers if an IRS Clearing Member
defaults, each IRS Clearing Member shall cause its cleared swaps customers to establish
arrangements to directly make all required performance bond and settlement variation payments
directly to the Clearing House and to keep current and on file with the Clearing House any direction
to transfer its open positions and collateral to another IRS Clearing Member.
2. The Clearing House shall treat positions and collateral of the cleared swaps customers of an IRS
Clearing Member, which has been declared to be in default, in accordance with Part 22 of the
CFTC’s regulations. Immediately after the default of an IRS Clearing Member, the Clearing House
shall cease netting settlement variation among the cleared swaps customers of the defaulted
Clearing Member.
3. If the Clearing House ceases to net settlement variation margin of the customers of a defaulted
IRS Clearing Member, the Clearing House will calculate the settlement variation margin obligation
owed to each customer (“collects”), and also calculate the settlement variation margin obligation
owed to the Clearing House by each customer (“pays”). The Clearing House will account for
settlement variation margin collects owed to each customer. The Clearing House will procure
customer settlement variation margin pays from the following sources:(i) Directly from the obligated customer in accordance with the arrangements establishedpursuant to 8G802.I.1 or by attaching any excess collateral attributable to that customer; and© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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(ii) By means of liquidating the IRS collateral supporting the customer’s position attributed toa customer that fails to make a required settlement variation payment when due. The
proceeds of such liquidation shall be used to meet the customer's variation pay obligation to
the clearing house. (If the collateral is liquidated, the positions supported by the collateral shallbe promptly liquidated.)
4. Any unmet customer obligation to the Clearing House will be an “IRS Loss,” per 8G802.A.2, andwill be cured in accordance with the provisions of 8G802.B. Consistent with Part 22 of the CFTC’s
regulations, if the IRS Customer Collateral attributable to a cleared swaps customer of thedefaulted IRS Clearing Member is sufficient to satisfy any IRS Loss associated with such clearedswaps customer, the IRS Customer Collateral shall be so applied and any remaining IRS Customer
Collateral shall remain in such customer account class.
5. The Clearing House shall rely on its own books and records to identify the portfolio of rights andobligations arising from the IRS Contracts of each cleared swaps customer. To the extent the
Clearing House’s books and records are not available or the Clearing House determines that its
books and records are not accurate, the Clearing House shall rely on the information provided by
the defaulted IRS Clearing Member to identify the portfolio of rights and obligations arising from the
IRS Contracts for each of its cleared swaps customers.

8G803-812. [RESERVED]
8G813.

IRS SETTLEMENT PRICE
Settlement prices for IRS Contracts shall be determined each Business Day pursuant to one ormore of the procedures set forth below.
1. The Clearing House shall determine settlement prices for such IRS Contracts based upon aconsideration of relevant market data, including, but not limited to, trading activity, pricing dataobtained from IRS Contract market participants, the settlement prices of related products and anyother pricing data from sources deemed reliable by the Clearing House.
2. Notwithstanding the above, if a settlement price in any IRS Product, as derived by the normal
methodology used for that IRS Product, is inconsistent with trades, bids or offers in other months/
strikes during the closing range, or other relevant market information, or if there is no relevantmarket activity, a Clearing House official may establish a settlement price that best reflects in its
reasonable judgment the true market valuation at the time of the close.
3. Notwithstanding the above, in the case of inaccuracy or unavailability of a settlement price, or if
a settlement price creates risk management concerns for the Clearing House, the Clearing House
reserves the right to calculate settlement variation using an alternate price determined by the
Clearing House.

8G814-820. [RESERVED]
8G821.

EXCESS PERFORMANCE BOND OF IRS CLEARED SWAPS CUSTOMERSIRS Clearing Members are permitted to transmit performance bond of its cleared swaps customers
for IRS Products in excess of the amount required by the Clearing House in accordance with CME
Rule 821.

8G822-823. [RESERVED]
8G824.

ADDITIONAL IRS PERFORMANCE BOND
Whenever, in the opinion of the IRS Risk Committee, the President of Global Operations,Technology & Risk, the Global Head of Clearing & Post-Trade Services or, in their absence, theirdelegate, unstable conditions relating to one or more products exist, they may from time to time,call for additional performance bond collateral from IRS Clearing Members. Such additional
performance bond calls may be as much as or more than the original performance bond collateral.
The performance bond collateral thus called for may be for one or more contract(s) from one ormore IRS Clearing Member(s) and on long positions, short positions or both.
In the event market conditions and price fluctuations at any time shall cause the IRS Risk
Committee, the President of Global Operations, Technology & Risk or the Global Head of Clearing& Post-Trade Services or, in their absence, their delegate, to conclude that additional performancebond collateral is required to maintain an orderly market or to preserve fiscal integrity the IRS Risk
Committee or the Global Head of Clearing & Post-Trade Services or their delegate may call for© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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additional performance bond collateral to be deposited with the Clearing House during the nextbanking hour after demand therefor, or at such times as may be specified. Such additional
performance bond collateral may be called from the longs or the shorts or from both.
When the IRS Risk Committee, the President of Global Operations, Technology & Risk or the
Global Head of Clearing & Post-Trade Services or, in their absence, their delegate, shall be of theopinion that any IRS Clearing Member is carrying commitments or incurring risk in its proprietary,customer and/or cross-margin accounts, that are larger than is justified by the financial condition ofthat IRS Clearing Member, then the IRS Risk Committee, the President of Global Operations,Technology & Risk or the Global Head of Clearing & Post-Trade Services or, in their absence, theirdelegate, may require additional performance bond collateral of such IRS Clearing Member whichshall be deposited with the Clearing House during the next banking hour after demand therefor, orat such time as may be specified, or a portion of the open positions of such IRS Clearing Member
may be required to be transferred to the books of another IRS Clearing Member.

8G825-828. [RESERVED]
8G829.

MEASURES TO MITIGATE PROCYCLICALITY
In order to limit procyclical performance bond changes, with respect to IRS contracts, the Clearing
House shall establish performance bond requirements not lower than those that would be
calculated using volatility estimated over a ten (10) year historical lookback period.

8G830.
8G831.

[RESERVED]COMMINGLING OF ELIGIBLE FUTURES, OPTION ON FUTURES, AND SWAPS POSITIONSThe Clearing House shall determine Base Guaranty Fund Products that may be commingled withpositions in IRS Contracts in order to provide risk offsets for proprietary and customer positions on
the basis that the price risks with respect to such products are significantly and reliably correlated(such products, “Commingling Eligible Futures and Options on Futures Products”). Eligible
Clearing Members may elect that any of their proprietary positions in Commingling Eligible Futures
and Options on Futures Products be commingled with proprietary positions in IRS Contracts andsubject to the financial safeguards package for IRS Contracts. Eligible Clearing Members may
elect that any of their customer’s positions in Commingling Eligible Futures and Options on Futures
Products be commingled with such customer’s positions in IRS Contracts and subject to thefinancial safeguards package for IRS Contracts. Any such commingled positions will be subject tothe risk methodology associated with IRS Contracts. Notwithstanding Rule 814, the Clearing
House will not make variation settlement payments (but will require collections) associated with
Commingled Futures and Options on Futures Positions during intra-day variation settlement cycles
which do not include variation settlements for IRS Contracts. If the Clearing House determines at
any time that any Commingled Futures and/or Options on Futures Positions are non-risk reducing,
the Clearing House may either restrict such participant from commingling additional positions or
require such participant to move and/or liquidate any of such Commingled Futures and/or Options
on Futures Positions. At no time shall the risk of commingled futures and/or options on futures
positions exceed the risk of IRS positions within a commingled portfolio by more than $1m DV01. In
the event of a default by an Eligible Clearing Member, Commingled Futures and Options on
Futures Positions of such Eligible Clearing Member or its customers will be subject to the default
management procedures of IRS Products.
Upon the occurrence of an IRS Termination Event, (i) Commingled Futures and Options on Futures
Positions will be subject to the risk methodology associated with futures and options on futures
positions and subject to the Base Guaranty Fund, (ii) proprietary Commingled Futures and Options
on Futures Positions of non-defaulted IRS Clearing Members will be removed from the associated
IRS accounts of such IRS Clearing Member and moved (together with all performance bond ofsuch IRS Clearing Member) to the relevant Base Guaranty Fund Product proprietary accounts ofsuch Clearing Member and (iii) Commingled Futures and Options on Futures Positions ofcustomers of non-defaulted IRS Clearing Members will remain in the commingled portfolio and theassociated performance bond will remain in the relevant Cleared Swaps Account of such IRS
Clearing Member until transferred by the customer or Clearing Member to segregated accounts
maintained in accordance with Section 4d of the CEA (such transfers shall occur as soon asreasonably practicable) and (iv) the Clearing House will make regular intraday variation settlement
payments during intra-day settlement cycles.
“Commingled Futures and Options on Futures Positions” shall mean any positions in Base
Guaranty Fund Products commingled with positions in IRS Contracts in accordance with this Rule

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8G831. As used in Rules 8G04, 8G14, 8G25, 8G28 (except for 8G28(a)), 8G600, 8G802.A,
8G802.B.2,3,7 and 8, 8G802.C, 8G802.I and 8G931, except as otherwise provided therein, theterm “IRS Contracts” shall include Commingled Futures and Options on Futures Positions.
“Eligible Clearing Member” shall mean a firm that has been approved as a Clearing Member and an
IRS Clearing Member.

8G832-912. [RESERVED]
8G913.

WITHDRAWAL FROM IRS CLEARING MEMBERSHIP
8G913.A.
Voluntary Withdrawal
An IRS Clearing Member that intends to withdraw from clearing membership for IRS Products shallprovide written notice of such intent to the Clearing House and the Clearing House OversightCommittee. An IRS Clearing Member’s withdrawal shall be effective on the earlier of (i) the date
Clearing House Staff approves such withdrawal or (ii) the 10th Business Day following the date of
the clearing cycle in which the withdrawing IRS Clearing Member liquidates or transfers to an
appropriate IRS Clearing Member all of its open customer and house positions in IRS Contracts(such earlier date, the “IRS Withdrawal Date”); provided that the withdrawing IRS Clearing Member
shall remain liable for IRS Guaranty Fund contributions and IRS Assessments in accordance with
Rule 8G913.B. Promptly following the IRS Withdrawal Date, the Clearing House shall post a noticeof the IRS Clearing Member’s withdrawal.
An IRS Clearing Member may withdraw from serving as an IRS Clearing Member clearing IRS
Products without withdrawing as a CME, CBOT, NYMEX or COMEX clearing member for any otherproducts, if applicable.
8G913.B.
Release of Guaranty Fund Deposit, Membership and Assignments
When an IRS Clearing Member withdraws from clearing membership for IRS Products (whether
voluntarily or involuntarily), its IRS Guaranty Fund deposit or any other deposits required by the
Clearing House, and any remaining assets available to the Clearing House associated with IRS
Products will be released when Clearing House staff determines that the following has occurred: (1)all contracts and obligations with the Clearing House relating to IRS Products have been settled
and paid, (2) all sums owing to the Clearing House relating to IRS Products have been paid, (3) all
obligations to other members and customers arising out of claims directly related to IRS Contracts
have been paid or otherwise provided for, (4) all obligations to other members and customers
arising out of other arbitration claims relating to IRS Products filed pursuant to Chapter 6 or Rule
8G600 have been paid or otherwise provided for, and (5) the requisite liquidity providers for the
Clearing House have released the security interest in such IRS Clearing Member's "assets"
associated with the clearing of IRS Products in accordance with the terms of the liquidity facility
described in Rule 817; provided, however, that in the event that Clearing House staff determinesthat all of the foregoing other than (4) have occurred, the IRS Risk Committee may in its discretion
authorize the release of such property.
Generally, no such property shall be released prior to the 60th day following the posting of thenotice of the IRS Clearing Member's withdrawal. Notwithstanding the above, Clearing House staff
may grant an exemption to the above restriction for good cause shown. Further, for purposes of theparagraph above, if the withdrawing IRS Clearing Member will not remain a clearing member in any
other capacity with the Exchange, all obligations of the withdrawing IRS Clearing Member to the
Exchange, of whatever nature or kind, shall be accelerated and become due and payable upon theeffective date of withdrawal. If the IRS Clearing Member will remain a clearing member for otherproduct classes other than IRS Products, the foregoing sentence shall apply only to obligations
related to the clearing of IRS Products.
For purposes of Rule 8G802 and 8G07, the IRS Guaranty Fund contributions and IRS
Assessments of a non-defaulted IRS Clearing Member that has withdrawn shall not be accessibleby the Clearing House to satisfy any losses in respect of the default of another IRS Clearing
Member where such default occurred after the IRS Cooling Off Period as of which the withdrawing
IRS Clearing Member had liquidated or transferred all of its open customer and house positions in
IRS. For the avoidance of doubt, a withdrawing IRS Clearing Member shall be subject to IRS
Assessments for all defaults occurring during the Cooling Off Period in which such IRS Clearing
Member withdraws.
8G913.C.
Customer Positions of Withdrawing Clearing Member Following a Default© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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If, following a default that causes mutualized losses under Rule 8G802.B, an IRS Clearing Member
notifies the Clearing House during the applicable IRS Cooling Off Period of its intent to withdraw
from status as an IRS Clearing Member, the IRS Clearing Member shall promptly notify its
customers in writing of such decision. The notice shall specify that customers must close out ortransfer to another IRS Clearing Member their affected open positions, and that the withdrawing
IRS Clearing Member shall have the right to liquidate any customer positions that remain open on
its books after 10 business days have passed from the customers’ receipt of such notice. If any
customer fails to close out or transfer to another IRS Clearing Member during such 10 business
day period, the IRS Clearing Member shall have the right to liquidate any such customer position
that remains open on its books. The IRS Clearing Member shall cooperate with customers andwith the Clearing House on any proposed transfer of customer positions, and shall include in its
notice to customers such information as the Clearing House may require at the time regarding
other IRS Clearing Members that may receive transfers of customer positions. With respect tocustomer positions in products that are listed for electronic trading on any exchange for which theClearing House provides clearing services, the IRS Clearing Member shall liquidate such positionsin the open market unless otherwise agreed with the customer. With respect to customer positionsin IRS products that are not so listed for electronic trading, the IRS Clearing Member may liquidate
such positions by submitting to the Clearing House for clearing an offsetting trade executed at acommercially reasonable price reflecting the clearing member’s side of the market (i.e., the bid side
if liquidating a long position and the offer side if liquidating a short position), taking into account any
pricing information that is available to it in the market at the time, which pricing information shall beshared with the Clearing House and the customer. Each IRS Clearing Member will promptly
provide to its customers reasonable detail of how it determined the liquidation amount for any
liquidation effected pursuant to this Rule 8G913.C.

8G914-929. [RESERVED]
8G930.

IRS PERFORMANCE BOND REQUIREMENTS
8G930.A.
Performance Bond System
A Performance Bond System will be adopted by the Exchange.
Performance bond systems other than the Exchange adopted system may be used to meet
Exchange performance bond requirements if the IRS Clearing Member can demonstrate that its
system will always produce a performance bond requirement equal to or greater than the CME
Clearing performance bond requirements.
8G930.B.
Performance Bond Rates for IRS Products
Exchange staff shall determine initial and maintenance performance bond rates used indetermining Exchange performance bond requirements.
8G930.C.
Acceptable Performance Bond Deposits for IRS Products
IRS Clearing Members may accept from their account holders as performance bond cash
currencies of any denomination, readily marketable securities (as defined by SEC Rule 15c31(c)(11) and applicable SEC interpretations), money market mutual funds allowable under CFTC
Regulation 1.25, bank–issued letters of credit, gold warrants that are registered as deliverable forgold futures contracts traded on Commodity Exchange, Inc ., and "London Good Delivery" gold, as
defined by the London Bullion Market Association.
IRS Clearing Members shall not accept as performance bond from an account holder securities
that have been issued, sponsored or otherwise guaranteed by the account holder or an affiliate of
the account holder unless the IRS Clearing Member files a petition with and receives permission
from Clearing House staff.
Unless permitted (either not restricted or specifically authorized) by OFAC and/or any Sanctioning
Body, as applicable, IRS Clearing Members may not accept from their account holders as
performance bond any debt or equity issued by Sanctioned Parties as defined in Rule 543, assets
in which Sanctioned Parties have an interest, or any other assets that are or would be subject toblocking restrictions or sectoral sanction restrictions imposed by the U.S. Department of Treasury’s
Office of Foreign Assets Control or are subject to similar restrictions imposed by another
Sanctioning Body.
Bank-issued letters of credit must be in a form acceptable to the Clearing House. Such letters ofcredit must be drawable in the United States. IRS Clearing Members shall not accept as© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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performance bond from an account holder letters of credit issued by the account holder, an affiliateof the account holder, the clearing member, or an Affiliate of the clearing member.
All assets deposited by account holders to meet performance bond requirements must be andremain unencumbered by third party claims against the depositing account holder.
Except to the extent that Clearing House staff shall prescribe otherwise, cash currency
performance bond deposits shall be valued at market value. All other performance bond deposits
other than letters of credit shall be valued at an amount not to exceed market value less applicable
haircuts as set forth in SEC Rule 240.15c3-1. Warrants shall be valued at an amount not to exceed
the market value of the commodities represented by the warrants less a deduction in the sameamount as the inventory haircut specified in Commission Regulation 1.17(c)(5)(ii).
8G930.D.
Acceptance of Positions
IRS Clearing Members may accept positions for an account provided sufficient performance bondis on deposit in the account or is forthcoming within a reasonable time.
For an account which has been subject to calls for performance bond for an unreasonable time,
IRS Clearing Members may only accept positions that reduce the performance bond requirementsof existing positions in the account.
Clearing members may not accept positions for an account that has been in debit an unreasonabletime.
8G930.E.
Calls for Performance Bond
1. IRS Clearing Members must issue calls for performance bond that would bring an account up to
the initial performance bond requirement: a) when performance bond equity in an account initially
falls below the maintenance performance bond requirement; and b) subsequently, when
performance bond equity plus existing performance bond calls in an account is less than themaintenance performance bond requirement.
Such calls must be made within one business day after the occurrence of the event giving rise to
the call. IRS Clearing members may call for additional performance bond at their discretion.
Notwithstanding the foregoing, an IRS Clearing Member is not required to call for or collectperformance bond for day trades.
2. IRS Clearing Members shall only reduce a call for performance bond through the receipt of
performance bond deposits permitted under subsection C. of this rule. IRS Clearing Members may
cancel a call for performance bond through: a) the receipt of performance bond deposits permitted
under subsection C. of this rule only if such deposits equal or exceed the amount of the total
performance bond call; or b) inter-day favorable market movements and/or the liquidation of
positions only if performance bond equity in the account is equal to or greater than the initial
performance bond requirement. IRS Clearing Members shall reduce an account holder's oldest
outstanding performance bond call first.
3. IRS Clearing Members must maintain written records of all performance bond calls issued andsatisfied in whole or in part.
8G930.F.
Release of Excess Performance Bond
Subject to exceptions granted by Exchange staff, IRS Clearing Members may only release
performance bond deposits from an account if such deposits are in excess of initial performancebond requirements.
8G930.G.
Loans to Account Holders
IRS Clearing Members may not make loans to account holders to satisfy their performance bondrequirements unless such loans are secured as defined in CFTC Regulation 1.17(c)(3). The
proceeds of such loans must be treated in accordance with CFTC Regulation 1.30.
8G930.H.
Aggregation of Accounts and Positions
IRS Clearing Members may aggregate and net positions in accounts under identical ownershipwithin the same classifications of customer segregated, customer secured, customer sequesteredand non-segregated for performance bond purposes. IRS Clearing Members may computeperformance bond requirements on identically owned concurrent long and short positions on a net
basis.
8G930.I.
Liquidation of Accounts
If an account holder fails to comply with a performance bond call within a reasonable time (the IRS
Clearing Member may deem one hour to be a reasonable time), the IRS Clearing Member may© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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close out the account holder's trades or sufficient contracts thereof to restore the account holder'saccount to required performance bond status. IRS Clearing Members shall maintain full discretion
to determine when and under what circumstances positions in any account shall be liquidated.
8G930.J.
Clearing House Authority to Require Additional IRS Performance Bond
The Clearing House, in its sole discretion, has the authority to require IRS Clearing Members tocollect additional performance bond from specific account holders in circumstances deemednecessary by the Clearing House.

8G931-974. [RESERVED]
8G975.

IRS EMERGENCY FINANCIAL CONDITIONS
If the Global Head of Clearing & Post-Trade Services determines that the financial or operational
condition of an IRS Clearing Member or one of its Affiliates is such that to allow that IRS Clearing
Member to continue its operation would jeopardize the integrity of the Exchange, or negatively
impacts the financial markets by introducing an unacceptable level of uncertainty, volatility or risk,
whether or not the IRS Clearing Member continues to meet the required minimum financial
requirements, they may empanel the Chief Executive Officer, Chairman of the Board, Chairman of
the IRS Risk Committee, and Global Head of Clearing & Post-Trade Services (the “IRS Emergency
Financial Committee”). Such committee shall be duly authorized and, upon a unanimous vote of
the panel, be empowered to order (a) an immediate position limitation, (b) an immediatesuspension of the IRS Clearing Member, (c) that all open trades of said clearing member be forliquidation only, (d) the liquidation or transfer of all or a portion of the open positions of the clearing
member, (e) additional performance bond to be deposited with the Clearing House and/or (f) any
other action necessary to protect the financial integrity of the Clearing House. The IRS Clearing
Member affected by action taken shall be notified and may request a hearing before the Board asprovided in Rule 412. To the extent that the IRS Emergency Financial Committee orders that all
open trades of a clearing member be for liquidation only, or the panel orders the liquidation ortransfer of all of the open positions of an IRS Clearing Member, Rule 8G913.B. shall apply and theclearing member shall be treated as a withdrawing clearing member.

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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