Federal Register / Vol. 79, No. 195 / Wednesday, October 8, 2014 / Notices 60879 

53See ISE Letters I and II. See also notes 29–37 

and 44–49 and accompanying text describing the 

issues and concerns raised by these comments. 

54See supra notes 29–37 and 44–49 and 

accompanying text. 

55See Notice, 79 FR at 27353. 

56See Amendment No. 1 at 4. 

57See, e.g., CBOE Rule 6.74; NYSE MKT Rule 

934NY; NYSE Arca Rule 6.47. CBOE Rule 6.74 

provides that for purposes of establishing priority 

at the same price, bids and offers of In-Crowd 

Market Participants have first priority, except with 

respect to public customer orders resting in the 

electronic book; and all other bids and offers 

(including bids and offers of broker-dealer orders in 

the electronic book and electronic quotes of MarketMakers) have second priority. NYSE MKT Rule 

934NY(b)(3) provides that, for a non-facilitation 

cross, if there are bids or offers in the Consolidated 

Book better than the proposed execution price or 

Customer Orders in the Consolidated Book priced 

at the proposed execution price, the Floor Broker 

must trade against such bids or offers in the 

Consolidated Book. Once bids or offers in the Book 

are satisfied, the Floor Broker may cross the balance 

of the orders, if any, to be crossed. NYSE Arca Rule 

6.47 provides that, for crossing orders, the Floor 

Broker must trade against: (i) Customer bids or 

offers on the Consolidated Book priced equal or 

better than the proposed execution price; and (ii) 

better-priced non-Customer bids or offers on the 

Consolidated book along with any equal-priced 

non-Customer bids and offers that are ranked ahead 

of any equal-priced Customer bids and offers. 

58As noted above, the Exchange’s proposal is 

intended to bring its floor priority rules for crossing, 

facilitation, and solicited orders in line with the 

floor priority rules of certain other options 

exchanges. However, the Commission is aware of 

the concerns, as expressed by the commenter, that 

the rules of an options trading floor should allow 

for sufficient competition for orders. This concern 

is one that the Commission staff intends to continue 

to evaluate in the context of its ongoing empirical 

consideration of market structure. For example, 

there currently is relatively little information 

available about the extent and nature of floor 

crossing transactions. The Commission staff, 

however, expects that an exchange with a trading 

floor, as part of its regulatory obligations, will 

monitor the extent to which competition is 

maintained in floor crossing transactions. One way 

an exchange could do so would be to assess 

periodically the level of participation in such 

crossing transactions by market makers and other 

market participants, aside from the firm that 

initiated the cross, and review whether its rules 

appropriately allow for such competition. In 

addition, the Commission reminds broker-dealers 

that the duty of best execution requires them to 

assess periodically the quality of competing markets 

to assure that order flow is directed to the markets 

providing the most beneficial terms for their 

customer orders. See, e.g., Order Execution 

Obligations, Securities Exchange Act Release No. 

37619A (September 6, 1996), 61 FR 48290 at 48322– 

33 (September 12, 1996). Broker-dealers must 

examine their procedures for seeking to obtain best 

execution in light of market and technology changes 

and modify those practices if necessary to enable 

their customers to obtain the best reasonably 

available prices. See id. at 48323. In doing so, 

broker-dealers must take into account price 

improvement opportunities, and whether different 

markets may be more suitable for different types of 

orders or particular securities. See id. 

59 15 U.S.C. 78s(b)(2). 

60 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(4)(ii). 

above.53 In its review of the proposal, 

the Commission has carefully 

considered all of the comments 

received. The Commission 

acknowledges the concerns raised by 

the commenter, as detailed above,54

about the potential impact on 

competition resulting from the Proposal 

in the Exchange’s rules governing 

priority and order allocation for open 

outcry transactions. At the same time, 

the Commission also acknowledges the 

Exchange’s belief that this Proposal will 

encourage order flow providers to send 

additional crossing, facilitation, and 

solicited orders to the Exchange,55 as 

well as its belief that today, electronic 

options trading is well-established and 

no longer requires special rules and 

incentives to develop further.56

Phlx Rule 1014, Commentary 

.05(c)(ii), as proposed to be revised, 

describes priority for crossing, 

facilitation, and solicited orders in open 

outcry transactions. The proposed rules 

governing open outcry during crossing, 

facilitation, and solicited transactions 

on the Exchange floor are similar to the 

rules governing priority in crossing 

transactions at other exchanges.57 Given 

that other options exchanges currently 

have rules that provide lower priority to 

non-priority customer orders on the 

electronic book during crossing 

transactions on those exchanges, the 

Exchange’s proposed revisions to its 

priority scheme for floor transactions 

will allow Phlx to compete with other 

floor-based exchanges that have 

substantially similar rules. Accordingly, 

the Commission believes that it would 

be appropriate and consistent with the 

Act to approve the Exchange’s proposed 

rule change.58

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 59 that the 

proposed rule change, as modified by 

Amendment No. 1, (SR–Phlx–2014–23) 

be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.60

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–23984 Filed 10–7–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73287; File No. SR–CME– 

2014–39] 

Self-Regulatory Organizations; 

Chicago Mercantile Exchange Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Make Amendments to CME 

ClearPort Hours for Certain 

Commodity Index Cleared OTC Swap 

Contracts 

October 2, 2014. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder 2

notice is hereby given that on 

September 25, 2014, Chicago Mercantile 

Exchange Inc. (‘‘CME’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

primarily by CME. CME filed the 

proposal pursuant to Section 19(b)(3)(A) 

of the Act,3 and Rule 19b–4(f)(4)(ii) 4

thereunder, so that the proposal was 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CME is filing proposed rules changes 

that are limited to its business as a 

derivatives clearing organization. CME 

proposes to amend the current CME 

ClearPort hours for certain enumerated 

commodity index cleared swap 

contracts. The proposed changes are as 

follows: 

Clearing code Cleared OTC Swap product DCM Rulebook 

chapter 

CAW ............................ AUD Chicago Soft Red Winter Swap (Cleared Only) .......................................................................... CBT 14G 

CCS ............................. Corn Calendar Swap (Clearing Only) .................................................................................................. CBT 10C 

CPC ............................. USD Malaysian Crude Palm Oil Calendar Swap (Cleared Only) ........................................................ CME 204A 


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60880 Federal Register / Vol. 79, No. 195 / Wednesday, October 8, 2014 / Notices 

Clearing code Cleared OTC Swap product DCM Rulebook 

chapter 

DFL .............................. DAP FOB NOLA Swaps (Clearing Only) ............................................................................................. CBT 48 

DFT .............................. DAP FOB Tampa Swaps (Clearing Only) ............................................................................................ CBT 47 

DG2 ............................. Bloomberg Commodity Index 2-Month Forward Swaps (Cleared OTC) ............................................. CBT 29B 

DG3 ............................. Bloomberg Commodity Index 3-Month Forward Swaps (Cleared OTC) ............................................. CBT 29C 

DGS ............................. Bloomberg Commodity Index Swaps (Cleared OTC) .......................................................................... CBT 29A 

KAW ............................ AUD KC Hard Red Winter Wheat Swap (Cleared Only) ..................................................................... CBT 14J 

KWS ............................ KC HRW Wheat Calendar Spread Options ......................................................................................... CBT 14M 

RRE ............................. S&P GSCI Enhanced ER Index Swaps (Cleared OTC) ...................................................................... CME 415B 

SE2 .............................. S&P GSCI ER Index 2 Month Forward Swaps (Cleared OTC) ........................................................... CME 415E 

SE3 .............................. S&P GSCI–ER Index 3 Month Forward Swaps (Cleared OTC) .......................................................... CME 415F 

SES ............................. S&P GSCI ER swap ............................................................................................................................. CME 415A 

SNS ............................. Soybean Calendar Swaps (Clearing Only) .......................................................................................... CBT 11D 

UFG ............................. Urea (Granular) FOB Egypt Swaps (Clearing Only) ............................................................................ CBT 50 

UFN ............................. Urea (Granular) FOB US Gulf Coast Swaps (Clearing Only) .............................................................. CBT 45 

UFU ............................. UAN FOB NOLA Swaps (Clearing Only) ............................................................................................. CBT 46 

UFZ .............................. Urea (Prilled) FOB Yuzhny Swaps (Clearing Only) ............................................................................. CBT 49 

WCS ............................ Wheat Calendar Swaps (Clearing Only) .............................................................................................. CBT 14C 

The current hours for submission to 

clearing via CME ClearPort for the 

above-referenced contracts are 5:00 p.m. 

CT to 4:15 p.m. CT next day, SundayFriday. The new hours for the abovereferenced contracts will be 6:00 p.m. 

CT to 5:45 p.m. CT next day, SundayFriday. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CME included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. CME has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of these statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

CME is registered as a DCO with the 

Commodity Futures Trading 

Commission and offers clearing services 

for many different futures and swaps 

products. The proposed rule change that 

is the subject of this filing is limited to 

CME’s business as a DCO offering 

clearing services for CFTC-regulated 

swaps products. The proposed rule 

change would amend the CME ClearPort 

hours for commodity index cleared 

swap contracts. CME ClearPort provides 

functionality for the acceptance of 

contracts for clearing. The affected 

contracts are listed below: 

Clearing code Cleared OTC Swap product DCM Rulebook 

chapter 

CAW ............................ AUD Chicago Soft Red Winter Swap (Cleared Only) .......................................................................... CBT 14G 

CCS ............................. Corn Calendar Swap (Clearing Only) .................................................................................................. CBT 10C 

CPC ............................. USD Malaysian Crude Palm Oil Calendar Swap (Cleared Only) ........................................................ CME 204A 

DFL .............................. DAP FOB NOLA Swaps (Clearing Only) ............................................................................................. CBT 48 

DFT .............................. DAP FOB Tampa Swaps (Clearing Only) ............................................................................................ CBT 47 

DG2 ............................. Bloomberg Commodity Index 2-Month Forward Swaps (Cleared OTC) ............................................. CBT 29B 

DG3 ............................. Bloomberg Commodity Index 3-Month Forward Swaps (Cleared OTC) ............................................. CBT 29C 

DGS ............................. Bloomberg Commodity Index Swaps (Cleared OTC) .......................................................................... CBT 29A 

KAW ............................ AUD KC Hard Red Winter Wheat Swap (Cleared Only) ..................................................................... CBT 14J 

KWS ............................ KC HRW Wheat Calendar Spread Options ......................................................................................... CBT 14M 

RRE ............................. S&P GSCI Enhanced ER Index Swaps (Cleared OTC) ...................................................................... CME 415B 

SE2 .............................. S&P GSCI ER Index 2 Month Forward Swaps (Cleared OTC) ........................................................... CME 415E 

SE3 .............................. S&P GSCI–ER Index 3 Month Forward Swaps (Cleared OTC) .......................................................... CME 415F 

SES ............................. S&P GSCI ER swap ............................................................................................................................. CME 415A 

SNS ............................. Soybean Calendar Swaps (Clearing Only) .......................................................................................... CBT 11D 

UFG ............................. Urea (Granular) FOB Egypt Swaps (Clearing Only) ............................................................................ CBT 50 

UFN ............................. Urea (Granular) FOB US Gulf Coast Swaps (Clearing Only) .............................................................. CBT 45 

UFU ............................. UAN FOB NOLA Swaps (Clearing Only) ............................................................................................. CBT 46 

UFZ .............................. Urea (Prilled) FOB Yuzhny Swaps (Clearing Only) ............................................................................. CBT 49 

WCS ............................ Wheat Calendar Swaps (Clearing Only) .............................................................................................. CBT 14C 

The current hours for submission to 

clearing via CME ClearPort for these 

contracts are 5:00 p.m. CT to 4:15 p.m. 

CT next day, Sunday-Friday. Under the 

proposed rule change, the new hours for 

the affected contracts would be 6:00 

p.m. CT to 5:45 p.m. CT next day, 

Sunday-Friday. The proposed change in 

hours will shorten the period in which 

daily trade submission is halted from 45 

minutes to 15 minutes. The proposed 

new hours will be made known to the 

trading community in advance of the 

effective date via a Special Executive 

Report and will be posted in the trading 

specifications for the contracts on the 

CME Web site. 

The changes that are described in this 

filing are limited to CME’s business as 

a DCO clearing products under the 

exclusive jurisdiction of the CFTC and 

do not materially impact CME’s 

security-based swap clearing business in 


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5 15 U.S.C. 78q–1. 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(4)(ii). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(4)(ii). 12 17 CFR 200.30–3(a)(12). 

any way. The proposed changes would 

become effective immediately but 

would be operationalized on October 6, 

2014. CME notes that it has also 

certified the proposed rule change that 

is the subject of this filing to its primary 

regulator, the Commodity Futures 

Trading Commission (‘‘CFTC’’), in a 

separate filing, CME Submission No. 

14–382. 

CME believes the proposed rule 

change is consistent with the 

requirements of the Exchange Act 

including Section 17A of the Exchange 

Act.5 CME is proposing revised hours 

for acceptance of cleared swap 

contracts; the proposed changes would 

have the effect of shortening the period 

in which daily trade submission is 

halted from 45 minutes to 15 minutes 

and, as such, should be seen to be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions and, to the extent 

applicable, derivatives agreements, 

contracts, and transactions, to assure the 

safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible, and, in general, to protect 

investors and the public interest 

consistent with Section 17A(b)(3)(F) of 

the Exchange Act.6

Furthermore, the proposed changes 

are limited in their effect to products 

offered under CME’s authority to act as 

a DCO. The products that are the subject 

of this filing are under the exclusive 

jurisdiction of the CFTC. As such, the 

proposed CME changes are limited to 

CME’s activities as a DCO clearing 

swaps that are not security-based swaps, 

futures that are not security futures and 

forwards that are not security forwards. 

CME notes that the policies of the CFTC 

with respect to administering the 

Commodity Exchange Act are 

comparable to a number of the policies 

underlying the Exchange Act, such as 

promoting market transparency for overthe-counter derivatives markets, 

promoting the prompt and accurate 

clearance of transactions and protecting 

investors and the public interest. 

Because the proposed changes are 

limited in their effect to products 

offered under CME’s authority to act as 

a DCO, the proposed changes are 

properly classified as effecting a change 

in an existing service of CME that: 

(a) Primarily affects the clearing 

operations of CME with respect to 

products that are not securities, 

including futures that are not security 

futures, swaps that are not securitybased swaps or mixed swaps; and 

forwards that are not security forwards; 

and 

(b) does not significantly affect any 

securities clearing operations of CME or 

any rights or obligations of CME with 

respect to securities clearing or persons 

using such securities-clearing service. 

As such, the changes are therefore 

consistent with the requirements of 

Section 17A of the Exchange Act 7 and 

are properly filed under Section 

19(b)(3)(A) 8 and Rule 19b–4(f)(4)(ii) 9

thereunder. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CME does not believe that the 

proposed rule change will have any 

impact, or impose any burden, on 

competition. The amendments would 

adopt new CME ClearPort hours for 

twenty commodity index cleared swap 

contracts. Further, the changes are 

limited to CME’s derivatives clearing 

business and, as such, do not affect the 

security-based swap clearing activities 

of CME in any way and therefore would 

not impose any burden on competition 

that is inappropriate in furtherance of 

the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments relating to the 

proposed changes have not been 

solicited or received. CME will notify 

the Commission of any written 

comments received by CME. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective upon filing pursuant to Section 

19(b)(3)(A) 10 of the Act and Rule 19b– 

4(f)(4)(ii) 11 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CME–2014–39 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CME–2014–39. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filings will also be available for 

inspection and copying at the principal 

office of CME and on CME’s Web site at 

http://www.cmegroup.com/marketregulation/rule-filings.html. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–CME–2014–39 and should 

be submitted on or before October 29, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–23980 Filed 10–7–14; 8:45 am] 

BILLING CODE 8011–01–P 


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