Via Portal Submission February 15, 2023

 MGEX Submission No. 23-9

Mr. Christopher Kirkpatrick

Secretary of the Commission

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street NW

Washington, DC 20581

RE: Rule Certification Submission Pursuant to Regulation 40.6(a); Amendment

to MGEX Rules Chapter 21

Dear Mr. Kirkpatrick:

Pursuant to Commodity Exchange Act (“CEAct”) Section 5c and Commodity Futures 

Trading Commission (“CFTC” or “Commission”) Regulation 40.6(a), the Minneapolis 

Grain Exchange, LLC (“MGEX” or “Exchange”) hereby certifies that the attached 

amendments to MGEX Rules regarding liens on collateral deposited by Clearing 

Members with the Clearing House complies with the CEAct and CFTC Regulations.

MGEX further certifies that the submission and pending changes to the MGEX Rules have 

been posted on the Exchange website at the following link: 

http://www.mgex.com/regulation.html.

Overview of Rule Amendment

MGEX is proposing the following Rule amendments to better illuminate the bankruptcy 

remoteness of collateral deposited by Clearing Members with the Clearing House. MGEX 

previously submitted a similar Rule which MGEX allowed to become dormant, as defined 

in Part 40, in favor of drafting this version Rule which provides added clarity and 

specificity. As amended, the Rule will still require Clearing Members grant the Clearing 

House a first priority security interest against any collateral deposited with the Clearing 

House. The Rule now also provides additional information on Clearing Member duties 

and the method of receiving Clearing Member collateral. Finally, this Rule makes Clearing 

Member ownership of such collateral more evident in the occurrence of an MGEX 

bankruptcy or related MGEX bankruptcy proceedings.

DCO Core Principles

In connection with adding Rule 2100.05., the Exchange has reviewed the core principles 

for DCOs (“DCO Core Principles”) and has determined that the amendment complies with 

the requirements of such principles. During the review, MGEX identified the following 

DCO Core Principles as potentially being impacted:
MINNEAPOLIS GRAIN EXCHANGE, LLC

400 South 4th Street | 130 Grain Exchange Building | Minneapolis, MN 55415

612-321-7159

mgex.com

• DCO Core Principle D – Risk Management: Core Principle D requires DCOs to 

maintain the ability to manage risks associated with discharging the responsibilities 

of the DCO through the use of appropriate tools and procedures. This Rule 

provides greater clarity on the tools MGEX may utilize to manage risks associated 

with discharging its responsibilities as a DCO to satisfy this core principle. 

• DCO Core Principle F – Treatment of Funds: As amended, CFTC Regulation 39.15

requires that DCOs “establish standards and procedures that are designed to 

protect and ensure the safety of funds and assets belonging to the clearing 

members and their customers.” Part of this requirement is that a DCO shall “hold 

funds belonging to clearing members in a manner which minimizes the risk of loss

or of delay in the access” to such funds. The proposed addition of MGEX Rule 

2100.05. acts as an additional safeguard to further enhance the manner that 

MGEX holds funds and assets of its clearing members, and is therefore consistent 

with the requirements of Core Principle F.

• DCO Core Principle L – Public Information: Core Principle L requires DCOs to 

provide market participants with sufficient information and to have clear and 

comprehensive rules and procedures. The amendment to Rule 2100.05. will be 

incorporated into the Exchange’s Rules, which are posted publicly on the MGEX 

website in satisfaction of this core principle.

Pursuant to MGEX Bylaw 3.1., the MGEX Board of Directors unanimously approved the 

attached amendments to the MGEX Rules. There were no substantive opposing views 

expressed by the Board of Directors, nor is the Exchange aware of any substantive 

opposing views with respect to this filing. The attached amendments are to be effective 

when incorporated into MGEX’s Rules on its website, which will be at least 10 business 

days following the date of this submission. If there are any questions regarding this 

submission, please contact me at (612) 321-7159 or apilon@mgex.com. Thank you for 

your attention to this matter.

Sincerely, 

Amanda R. Pilon

Associate Corporate Counsel, MGEX Clearing
MINNEAPOLIS GRAIN EXCHANGE, LLC

400 South 4th Street | 130 Grain Exchange Building | Minneapolis, MN 55415

612-321-7159

mgex.com

EXHIBIT A

The following MGEX Rule is to be amended. Additions are underlined while 

deletions are marked through.

2100.05 LIEN ON COLLATERAL

Each Clearing Member hereby grants to the Clearing House to secure obligations of such 

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 such Clearing Member. 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.