SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested

Registered Entity Identifier Code (optional): 23-098

Organization: Chicago Mercantile Exchange Inc. ("CME")

Filing as a: DCM SEF DCO SDR

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): 02/10/23 Filing Description: Modifications to the CME 

Operational Risk Management Framework

SPECIFY FILING TYPE

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: See filing.

New Product Please note only ONE product per Submission.

Certification § 40.2(a)

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Official Product Name:

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a)

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a)

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a), § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected:
20 S. Wacker Drive Chicago, IL 60606 T 312 930 8167 Sean.Downey@cmegroup.com cmegroup.com

Sean Downey

Clearing Chief Compliance Officer, Enterprise Risk Officer & Policy

CME Clearing

February 10, 2023

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Re: CFTC Regulation 40.6(a) Certification. Modifications to the CME

Operational Risk Management Framework.

CME Submission No. 23-098

Dear Mr. Kirkpatrick:

Pursuantto CommodityFutures TradingCommission (“CFTC” or“Commission”) Regulation40.6(a), Chicago

Mercantile Exchange Inc. (“CME” or “Clearing House”), as a derivatives clearing organization (“DCO”),

certifies to the Commission modifications to the CME Operational Risk Management Framework 

(“ORMF”) effective on February 28, 2023 (collectively, the “Amendments”).

Consistent with CFTC Regulation 39.18(b), the ORMF is maintained by the Clearing House and establishes 

its practices to identify and minimize sources of operational risk, which could arise from its core clearing 

process. As described below, the ORMF is reviewed and approved on at least an annual basis. The 

Amendments were primarily approved as part of the annual review process. 

The ORMF is approved by CME’s Risk Committee (i.e., committee established by the Board of Directors 

(“Board”))

1 and the Board at least annually. The Amendments covered in this year’s annual approval of the 

ORMF relate to the following three areas: 

i. Operational Aspects of a Member Default: While CME Clearing’s practice of employing 

processes to effectively manage the operational components of a clearing member default have 

not changed, the ORMF has been updated to specifically identify the potential inability to manage 

a clearing member default from an operational perspective as a key risk. This was previously 

captured under other key risks identified in the ORMF. Additionally, although CME Clearing does 

not believe this risk will materialize, this will provide for enhanced focus on the operational aspects 

of default management from a risk control and assessment perspective.

ii. Governance Arrangements: The ORMF has been updated to reflect the further formalization of 

the Clearing House’s governance arrangements for operational risk management, consistent with 

broader practices. In particular, consistent with other Clearing House management committees, a 

written charter has been adopted to outline the responsibilities, criteria for membership, 

organization, and structure of the Operational Risk Management Team, which is now referred to 

as the Operational Risk Management Committee. 

The ORMF changes also set out the roles and responsibilities more clearly for reviewing and 

1 See http://investor.cmegroup.com/static-files/86ce3be0-764a-4be6-b1b2-841b6a28af86.
20 S. Wacker Drive Chicago, IL 60606 T 312 930 8167 Sean.Downey@cmegroup.com cmegroup.com

approving the ORMF and the Clearing House’s overall operational risk management. With respect 

to the latter, consistent with prior updates to CME Clearing’s Risk Management Framework 

(“RMF”), the ORMF has been updated to reflect that the Chief Compliance Officer (“CCO”) of the 

Clearing House now serves as the Enterprise Risk Officer of the Clearing House.

2

In addition, 

similar to other risk management policies, the governance arrangements have been amended to 

provide the CCO of the Clearing House the authority to approve non-substantive changes to the 

ORMF, with the authority approved by the Nominating and Governance Committee (i.e., committee 

established by the Board).3

Finally, similar to risk management policies, the ORMF was updated to detail the governance that 

would be followed where rules filed with the CFTC are subject to minor modification in that review 

process.4

iii. Streamlining the ORMF Structure and General Documentation Enhancements: Without 

changing the practices outlined in the ORMF, the structure of the ORMF has been updated to 

reduce repetitiveness and improve the clarity. Additionally, language in the ORMF has been 

updated, as appropriate, to align with the description of the practices in other risk management 

policies maintained by CME Clearing that are subject to the review and approval of the Clearing 

House Oversight Committee (i.e., committee established by the Board), such as the RMF. In 

addition, certain content has been removed entirely from the ORMF which is more appropriately, 

and fulsomely, covered in other documentation, such as the RMF.

5

 

Finally, the updates to the ORMF include changes to simplify language and make the document 

more concise, as well as formatting changes to make the document consistent with CME Clearing’s

other risk management policies.

 

DCO Core Principle Review

CME reviewed the DCO core principles (“Core Principles”) as set forth in the Commodity Exchange Act

(“CEA” or “Act”) and identified that the Amendments may impact the following core principles:

• DCO Core Principle A – Compliance: The Amendments include references to standards 

considered relative to enterprise risk management and the Clearing House’s enterprise risk 

officer.

• DCO Core Principle D – Risk Management: The Amendments further describe the Clearing 

House’s risk management practices with respect to assessing and managing operational risk 

and enhance the ability of the Clearing House to effectively manage the risks associated with 

discharging the responsibilities of the DCO. 

• DCO Core Principle G – Default Rules and Procedures: The Amendments further describe 

the Clearing House’s risk management practices with respect to operational aspects of a 

clearing member default and reinforce the internal oversight of the operational aspects of CME 

Clearing’s default management practices.

• DCO Core Principle O – Governance Fitness Standards: The Amendments more clearly 

2 CME Submission, No. 22-492 (Nov. 2022), available at https://www.cmegroup.com/content/dam/cmegroup/market-regulation/rulefilings/2022/11/22-492.pdf.

3 CME Submission, No. 23-018 (Jan. 2023), available at https://www.cmegroup.com/content/dam/cmegroup/market-regulation/rulefilings/2023/1/23-018.pdf.

4 CME Submission, No. 22-233 (June 2022), available at https://www.cmegroup.com/content/dam/cmegroup/market-regulation/rulefilings/2022/6/22-233.pdf.

5 CME Clearing notes that the description of CME Clearing’s regulatory framework, as well as references to the Principles for financial 

market infrastructures (“PFMIs”), were also removed because they are clearly articulated in 17 CFR 39 and the PFMIs themselves.
20 S. Wacker Drive Chicago, IL 60606 T 312 930 8167 Sean.Downey@cmegroup.com cmegroup.com

articulate the Clearing House’s governance arrangements.

CME has requested confidential treatment with respect to the revised ORMF, which has been submitted 

concurrently with this certification. Exhibit A provides the ORMF in blackline format. For convenience, 

Exhibit B provides a clean version of the revised ORMF.

Pursuant to Section 5(c) of the Act and CFTC Regulation 40.6(a), CME certifies that the Amendments

comply with the Act and regulations thereunder. There were no substantive opposing views to this action.

The Clearing House certifies that this submission has been concurrently posted on the Clearing House’s

website at https://www.cmegroup.com/market-regulation/rule-filings.html.

If you require any additional information regarding this submission, please contact me at 312-930-8167 or

via email at sean.downey@cmegroup.com. 

 Sincerely,

/s/ Sean Downey

Managing Director - Clearing Chief Compliance Officer, 

Enterprise Risk Officer& Policy

CME Clearing

Attachments: Exhibit A – Modifications to the Operational Risk Management Framework (attached under 

separate cover) (blackline format) (confidential treatment requested)

Exhibit B – Modifications to the Operational Risk Management Framework (attached under 

separate cover) (clean version) (confidential treatment requested)