80 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 

23 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). 

5Pursuant to a teleconference with CME’s 

counsel on December 19, 2014, staff in the Division 

of Trading and Markets has modified this sentence 

to insert references to the Agreement’s execution 

and implementation date. 

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–2014–18. 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 

filing also will 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–2014–18 and should 

be submitted on or before January 23, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30696 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73938; File No. SR–CME– 

2014–19] 

Self-Regulatory Organizations; 

Chicago Mercantile Exchange Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Regarding Certain Contractual 

Arrangements That Apply to Its Overthe-Counter Interest Rate Swap 

Clearing Offering 

December 24, 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 December 

15, 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 proposing to make certain 

revenue sharing and governance 

changes related to certain contractual 

arrangements that apply to its over-thecounter interest rate swap (‘‘OTC IRS’’) 

clearing offering. CME entered into this 

arrangement (the ‘‘Agreement’’) with a 

group of clearing members on June 30, 

2012 and the proposed rule change has 

been implemented by CME since June 

30, 2012.5

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 derivatives 

clearing organization with the 

Commodity Futures Trading 

Commission (‘‘CFTC’’) and operates a 

substantial business clearing futures and 

swaps contracts subject to the 

jurisdiction of the CFTC. CME is filing 

this proposed rule change with respect 

to the Agreement made with various 

third-party financial institutions (dealer 

founding members, ‘‘DFMs’’) relating to 

its OTC IRS clearing business. The 

Agreement incentivized the DFMs to 

support CME’s initial development of its 

OTC IRS clearing infrastructure and is 

designed to ensure that the DFMs 

continue their demonstrated 

commitment to CME’s ongoing IRS 

clearing efforts. The existing DFMs were 

selected based on their support in 

CME’s development of its clearing 

initiative, ability to provide liquidity, 

their client clearing and risk 

management expertise, as well as their 

willingness to test and generally support 

centralized clearing in IRS Contracts on 

an on-going basis. CME may invite other 

firms to join the Agreement in the future 

so long as such firms are approved by 

a majority of the then-existing DFMs. 

In summary, under the Agreement, 

the DFMs that satisfy their obligations 

under the Agreement will receive a 

portion of the clearing revenues and 

market data revenues generated in 

connection with CME’s clearing of 

certain specified IRS Contracts, will be 

subject to a cap on the IRS clearing fees 

payable to CME, and will be entitled to 

participate on CME’s IRS advisory 

group. In addition, CME has agreed to 

minimum IRS clearing member 

representation on the IRS Risk 

Committee (the ‘‘IRS RC’’). These 

aspects and other relevant background 

and context regarding the Agreement are 

described in greater detail below. 

DFM Obligations Under the Agreement 

Under the Agreement, DFMs are 

required to (i) maintain an IRS clearing 

membership at CME in good standing, 

(ii) offer customers the ability to clear 

IRS Contracts at CME on a nondiscriminatory basis by comparison to 

the terms offered for clearing of 

substantially similar IRS Contracts 

through any U.S.-based derivatives 

clearing organization, (iii) provide to 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 81 

6The DFM share of gross revenue is based on the 

number of DFMs and adjusted for applicable 

discounts, rebates, taxes and expenses. 

7 During a December 22, 2014 teleconference with 

CME counsel, staff in the Division of Trading and 

Markets confirmed that CME has filed the following 

fee-related filings relating to the Agreement: 

Securities Exchange Act Release No. 34–66102 (Jan. 

5, 2012), 77 FR 1775 (Jan. 11, 2012) (File No. SR– 

CME–2011–22); Securities Exchange Act Release 

No. 34–67036 (May 21, 2012), 77 FR 31416 (May 

25, 2012) (File No. SR–CME–2012–18) and 

Securities Exchange Act Release No. 34–71088 

(Dec. 17, 2013), 78 FR 77512 (Dec. 23, 2013) (File 

No. SR–CME–2013–32). 

8The Agreement does not amend the charter of 

the IRS RC. 

9This includes all IRS Clearing Members, not just 

DFMs. 

10For instance, if the actual number of IRS 

Clearing Membership Representatives is 5, then a 

majority of the IRS Clearing Membership 

Representatives will be selected from those IRS 

Clearing Members with the 7 largest average 

contributions to the IRS Guaranty Fund. 

11CME’s IRS advisory group includes a 

representative from each of the DFMs and a 

representative from CME. In addition, CME may 

invite up to 2 non-DFM IRS clearing members that 

are in the top 10 contributors to the IRS Guaranty 

Fund and up to 3 non-IRS Clearing Members to 

appoint representatives to the IRS advisory group. 

12 15 U.S.C. 78q–1(b)(3)(F). 

13 15 U.S.C. 78q–1(b)(3)(C). 

14 15 U.S.C. 78q–1(b)(3)(I). 

15 15 U.S.C. 78q–1(b)(3)(F). 

16 15 U.S.C. 78q–1. 

17 15 U.S.C. 78q–1(b)(3)(C). 

CME certain pricing curves for daily 

settlement prices for IRS Contracts, and 

(iv) submit IRS Contracts to CME that 

generate specified minimum annual 

fees. 

Economic Incentives for the DFMs 

Under the Agreement 

Under the Agreement, DFMs will pay 

a specified fee for each IRS Contract 

submitted to CME for clearing. In 

addition, CME and the DFMs have 

agreed to share certain of the adjusted 

gross revenues associated with CME’s 

IRS Contracts clearing activities,6

including the sale of market data 

generated by such activities (the 

‘‘Revenue Pools’’). DFMs that qualify 

during a relevant measurement period 

will each receive a pro-rata share of the 

Revenue Pools based on volumes of IRS 

Contracts submitted to CME. In 

addition, the non-customer fees charged 

to each DFM for the clearing of IRS 

Contracts during a given measurement 

period will not exceed a specified 

annual cap.7

Finally, CME has agreed to offer each 

DFM the option of electing, in lieu of 

the incentives under the Agreement, any 

other pricing structure for the clearing 

of IRS Contracts that any other IRS 

clearing member chooses to accept from 

CME. 

Governance Rights 

In addition, CME has agreed with the 

DFMs that, among other things: 

1. It will exercise its rights under 

CME’s IRS RC charter 8 so as to cause a 

majority of the IRS RC to be composed 

such that (i) employees or directors of 

IRS Clearing Members 9 maintain a 

majority of the IRS RC (the ‘‘IRS 

Clearing Membership Representatives’’) 

and (ii) a majority of the IRS Clearing 

Membership Representatives be selected 

from those IRS Clearing Members that 

have the ‘‘n’’ largest average 

contributions to the IRS Guaranty Fund, 

where ‘‘n’’ is equal to the actual number 

of IRS Clearing Membership 

Representatives plus two (2); 10

2. each DFM may appoint a 

representative (a ‘‘DFM Representative’’) 

to participate on CME’s IRS advisory 

group; 11 and 

3. it will not launch any IRS Product 

that was not originally contemplated by 

the Agreement in the IRS Guaranty 

Fund if a majority the DFM 

Representatives object to such launch 

based on material risk management 

concerns that such DFM Representatives 

have identified and that CME is unable 

to reasonably mitigate. 

Section17A of the Act does not permit 

the rules of a clearing agency to unfairly 

discriminate in the admission of 

participants or among participants in 

the use of the clearing agency.12 The 

rules of a clearing agency must also 

assure its participants are fairly 

represented with respect to the 

administration of its affairs.13 Further, 

the rules of the clearing agency must not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act.14

Although the terms of the Agreement 

deliver certain rights to a set of 

participants that are not offered to 

others, CME believes the proposed rules 

are nevertheless consistent with the 

requirements of the Act for the 

following reasons. 

First, the Agreement provides an 

enumerated group of DFMs, who are 

also IRS Clearing Members at CME, with 

economic incentives and other 

contractual rights that will not be 

afforded to other IRS Clearing Members 

who are not DFMs. The rationale for 

providing this group of DFMs with these 

rights is to incentivize them (i) to 

provide substantial support to CME in 

its development and structuring of its 

OTC IRS clearing offering and (ii) to 

serve as the initial set of IRS clearing 

members. These swap market 

participants invested significant time 

and resources to support CME staff’s 

efforts to design, develop, and 

implement CME’s OTC swaps clearing 

infrastructure and agreed to provide 

clearing member services for OTC IRS 

on an ongoing basis. Providing these 

rights to these participants does not 

constitute unfair discrimination among 

participants of CME because of the 

equity ownership-like commitments 

undertaken by these DFMs during 

CME’s initial offering phase. Because 

the DFMs provided these equity 

ownership-like commitments during 

CME’s initial offering phase, there is not 

unfair discrimination among 

participants and the Agreement should 

be seen to be consistent with Section 

17A(b)(3)(F) of the Act.15

With respect to the governance rights 

provided to the DFMs, CME also 

believes that these should be found to 

be consistent with the requirements of 

Section 17A of the Act.16 CME 

recognizes that there would be reason to 

be concerned in circumstances where 

one particular member of a selfregulatory organization (‘‘SRO’’) was 

able to acquire a controlling influence in 

the administration of the affairs of the 

SRO. Such circumstances would have 

the potential to jeopardize an SRO’s 

ability to operate impartially, as a single 

controlling member might be tempted to 

exercise its controlling influence by 

directing the SRO to refrain from 

diligently surveilling the member’s 

conduct or from punishing any conduct 

that violates the rules of the SRO, 

Commodity Exchange Act or other 

applicable laws. However, those types 

of concerns are not present with the 

governance incentives offered to the 

DFMs in the Agreement. 

Further, the Agreement provides for 

significant market participant 

participation in the governance of IRS 

Products by specifying certain 

membership composition criteria for the 

IRS RC. These composition criteria, in 

general, provide assurance that the 

participants with the most exposure to 

CME’s IRS clearing initiative will be 

represented on the IRS RC. This 

granting of a voice to the market 

participants with the greatest risk to the 

Clearing House for IRS products is 

inherently fair and consistent with 

Section 17A(b)(3)(C) of the Act.17

Further, these provisions also ensure 

that no single participant would be able 

to obtain a concentrated and outsized 

influence that would implicate the 

concerns outlined above nor is 

representation on the IRS RC based on 

DFM status. 

Finally, the proposal will not affect 

any securities clearing operations of 

CME because CME recently filed a 


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82 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 

18See Securities Exchange Act Release No. 34– 

73615 (Nov. 17, 2014), 79 FR 69545 (Nov. 21, 2014) 

(File No. SR–CME–2014–49). The only exception is 

with regards to Restructuring European Single 

Name CDS Contracts created following the 

occurrence of a Restructuring Credit Event in 

respect of an iTraxx Component Transaction. The 

clearing of Restructuring European Single Name 

CDS Contracts will be a necessary byproduct after 

such time that CME begins clearing iTraxx Europe 

index CDS. 

19 15 U.S.C. 78q–1(b)(3)(F). 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(4)(ii). 

22See supra note 18. 

proposed rule change that clarified that 

CME has decided not to clear securitybased swaps, except in a very limited 

set of circumstances.18 The rule filing 

reflecting CME’s decision not to clear 

security-based swaps removed any 

ambiguity concerning CME’s ability or 

intent to perform the functions of a 

clearing agency with respect to securitybased swaps. Therefore, this proposal 

will have no effect on any securities 

clearing operations of CME. 

For these reasons, CME submits that 

the specific economic incentives and 

contractual governance rights granted to 

the DFMs should be found to be 

reasonable and consistent with the Act. 

The terms of the Agreement do not 

constitute unfair discrimination in the 

admission of participants or among 

participants in the use of the clearing 

agency but rather provide reasonable 

incentives to support the clearing 

offering. The arrangements should be 

seen as consistent with Section 

17A(b)(3)(F) of the Act,19 and should 

otherwise be seen to be consistent with 

the Act’s investor protection and public 

interest mandates. CME submits that the 

proposed rule change promotes the 

prompt and accurate clearance and 

settlement of transactions, assures the 

safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible, fosters cooperation and 

coordination with persons engaged in 

the clearance and settlement of 

securities transactions, removes 

impediments to and perfects the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions, 

and, in general, protects investors and 

the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CME does not believe that the 

proposed rule change will impose any 

burden that is not reasonable, 

appropriate, or in furtherance of the Act. 

As discussed above, the proposed rules 

will provide an enumerated group of 

DFM firms, who are also IRS Clearing 

Members at CME, with economic 

incentives and other contractual rights 

that will not be afforded to other IRS 

Clearing Members who are not DFMs or 

do not become DFMs. Providing these 

benefits to one set of firms and not all 

could potentially have an impact on 

competition. However, CME believes 

any such impacts should not be seen to 

be unreasonable in light of the fact that 

these benefits were afforded in 

consideration of the substantial support 

provided to CME in the development 

and structuring of its OTC IRS clearing 

offering and the firms’ agreement to 

serve as the initial set of clearing 

members. 

Further, the changes are limited to 

CME’s derivatives clearing business 

and, as such, do not affect securitybased 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 

CME has not solicited, and does not 

intend to solicit, comments regarding 

this proposed rule change. CME has not 

received any unsolicited written 

comments from interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective upon filing pursuant to Section 

19(b)(3)(A) 20 of the Act and Rule 19b– 

4(f)(4)(ii) 21 thereunder. CME asserts that 

this proposal constitutes 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, and swaps that are 

not security-based swaps or mixed 

swaps, and forwards that are not 

security forwards; and (b) does not 

significantly affect any securities 

clearing operations of CME or any rights 

or obligations of CME with respect to 

securities clearing or persons using such 

securities-clearing service, which 

renders the proposed change effective 

upon filing. CME believes that the 

proposal does not significantly affect 

any securities clearing operations of 

CME because CME recently filed a rule 

change that clarified that CME has 

decided not to clear security-based 

swaps, except in a very limited set of 

circumstances.22 The rule filing 

reflecting CME’s decision not to clear 

security-based swaps removed any 

ambiguity concerning CME’s ability or 

intent to perform the functions of a 

clearing agency with respect to securitybased swaps. Therefore, this proposal 

will not have an effect on any securities 

clearing operations of CME. 

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–2014–19 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–2014–19. 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 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 83 

23 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 61308 

(January 7, 2010), 75 FR 2573 (January 15, 2010) 

(SR–NYSEAmex–2009–98) (establishing the NYSE 

Amex Equities SLP Pilot). See also Securities 

Exchange Act Release Nos. 61841 (April 5, 2010), 

75 FR 18560 (April 12, 2010) (SR–NYSEAmex– 

2010–33) (extending the operation of the SLP Pilot 

to September 30, 2010); 62814 (September 1, 2010), 

75 FR 54671 (September 8, 2010) (SR–NYSEAmex– 

2010–88) (extending the operation of the SLP Pilot 

to January 31, 2011); 63615 (December 29, 2010), 76 

FR 611 (January 5, 2011) (SR–NYSEAmex–2010– 

123) (extending the operation of the SLP Pilot to 

August 1, 2011); 64772 (June 29, 2011), 76 FR 39455 

(July 6, 2011) (SR–NYSEAmex–2011–44) (extending 

the operation of the SLP Pilot to January 31, 2012); 

66041 (December 23, 2011), 76 FR 82328 (December 

30, 2011) (SR–NYSEAmex–2011–103) (extending 

the operation of the SLP Pilot to July 31, 2012); 

67496 (July 25, 2012), 77 FR 45390 (July 31, 2012) 

(SR–NYSEMKT–2012–22) (extending the operation 

of the SLP Pilot to January 31, 2013); 68557 

(January 2, 2013), 78 FR 1284 (January 8, 2013) (SR– 

NYSEMKT–2012–85) (extending the operation of 

the SLP Pilot to July 31, 2013); 69820 (June 21, 

2013), 78 FR 38748 (June 27, 2013) (SR– 

NYSEMKT–2013–52) (extending the operation of 

the SLP Pilot to January 31, 2014); 71361 (January 

21, 2014), 79 FR 4364 (January 27, 2014) (SR– 

NYSEMKT–2014–03) (extending the operation of 

the SLP Pilot to July 31, 2014); and 72623 (July 16, 

2014), 79 FR 41592 (July 22, 2014) (SR–NYSEMKT– 

2014–58 (extending the operation of the SLP Pilot 

to December 31, 2014). 

5The information contained herein is a summary 

of the ‘‘New Market Model’’ Pilot and the SLP Pilot. 

See supra note 4 and infra note 6 for a fuller 

description of those pilots. 

6See Securities Exchange Act Release No. 58845 

(October 24, 2008), 73 FR 64379 (October 29, 2008) 

(SR–NYSE–2008–46). 

7See NYSE Rule 103. 

8See NYSE Rule 107B and NYSE MKT Rule 

107B—Equities. NYSE amended the monthly 

volume requirements to an average daily volume 

(‘‘ADV’’) that is a specified percentage of NYSE 

consolidated ADV. See Securities Exchange Act 

Release No. 67759 (August 30, 2012), 77 FR 54939 

(September 6, 2012) (SR–NYSE–2012–38). 

9See Securities Exchange Act Release Nos. 58877 

(October 29, 2008), 73 FR 65904 (November 5, 2008) 

(SR–NYSE–2008–108) (adopting SLP Pilot 

program); 59869 (May 6, 2009), 74 FR 22796 (May 

14, 2009) (SR–NYSE–2009–46) (extending SLP Pilot 

program until October 1, 2009); 60756 (October 1, 

2009), 74 FR 51628 (October 7, 2009) (SR–NYSE– 

2009–100) (extending SLP Pilot program until 

November 30, 2009); 61075 (November 30, 2009), 

74 FR 64112 (December 7, 2009) (SR–NYSE–2009– 

119) (extending SLP Pilot program until March 30, 

2010); 61840 (April 5, 2010), 75 FR 18563 (April 12, 

2010) (SR–NYSE–2010–28) (extending the SLP Pilot 

until September 30, 2010); 62813 (September 1, 

2010), 75 FR 54686 (September 8, 2010) (SR–NYSE– 

2010–62) (extending the SLP Pilot until January 31, 

2011); 63616 (December 29, 2010), 76 FR 612 

(January 5, 2011) (SR–NYSE–2010–86) (extending 

the operation of the SLP Pilot to August 1, 2011); 

64762 (June 28, 2011), 76 FR 39145 (July 5, 2011) 

(SR–NYSE–2011–30) (extending the operation of 

the SLP Pilot to January 31, 2012); 66045 (December 

23, 2011), 76 FR 82342 (December 30, 2011) (SR– 

NYSE–2011–66) (extending the operation of the 

SLP Pilot to July 31, 2012); 67493 (July 25, 2012), 

77 FR 45388 (July 31, 2012) (SR–NYSE–2012–27) 

(extending the operation of the SLP Pilot to January 

31, 2013); 68560 (January 2, 2013), 78 FR 1280 

(January 8, 2013) (SR–NYSE–2012–76) (extending 

the operation of the SLP Pilot to July 31, 2013); 

69819 (June 21, 2013), 78 FR 38764 (June 27, 2013) 

(SR–NYSE–2013–44) (extending the operation of 

the SLP Pilot to January 31, 2014); 71362 (January 

21, 2014), 79 FR 4371 (January 27, 2014) (SR– 

NYSE–2014–03) (extending the operation of the 

SLP Pilot to July 31, 2014); and 72628 (July 16, 

2014), 79 FR 42588 (July 22, 2014) (SR–NYSE– 

Continued 

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–2014–19 and should 

be submitted on or before January 23, 

2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30697 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73947; File No. SR– 

NYSEMKT–2014–110] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Extending the Operation 

of Its Supplemental Liquidity Providers 

Pilot, Until the Earlier of the Securities 

and Exchange Commission’s Approval 

To Make Such Pilot Permanent or July 

31, 2015 

December 24, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on December 

18, 2014, NYSE MKT LLC (the 

‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. 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 

The Exchange proposes to extend the 

operation of its Supplemental Liquidity 

Providers Pilot (‘‘SLP Pilot’’ or ‘‘Pilot’’) 

(see Rule 107B—Equities), currently 

scheduled to expire on December 31, 

2014, until the earlier of the Securities 

and Exchange Commission’s 

(‘‘Commission’’) approval to make such 

Pilot permanent or July 31, 2015. The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

operation of its SLP Pilot,4 currently 

scheduled to expire on December 31, 

2014, until the earlier of Commission 

approval to make such Pilot permanent 

or July 31, 2015. 

Background 5

In October 2008, the New York Stock 

Exchange LLC (‘‘NYSE’’) implemented 

significant changes to its market rules, 

execution technology and the rights and 

obligations of its market participants all 

of which were designed to improve 

execution quality on the NYSE. These 

changes were all elements of the NYSE’s 

and the Exchange’s enhanced market 

model referred to as the ‘‘New Market 

Model’’ (‘‘NMM Pilot’’).6 The NYSE SLP 

Pilot was launched in coordination with 

the NMM Pilot (see NYSE Rule 107B). 

As part of the NMM Pilot, NYSE 

eliminated the function of specialists on 

the Exchange creating a new category of 

market participant, the Designated 

Market Maker or ‘‘DMM.’’ 7 Separately, 

the NYSE established the SLP Pilot, 

which established SLPs as a new class 

of market participants to supplement 

the liquidity provided by DMMs.8

The NYSE adopted NYSE Rule 107B 

governing SLPs as a six-month pilot 

program commencing in November 

2008. This NYSE pilot has been 

extended several times, most recently to 

December 31, 2014.9 The NYSE is in the 


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