Document ID: SEC-2014-0012-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Mercantile Exchange, Inc.
Posted Date: 2014-01-06T05:00Z

[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 688-690]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-31518]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71201; File No. SR-CME-2013-35]

Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Modifications to Its OTC FX Fee Schedule

December 30, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 23, 2013, Chicago Mercantile Exchange 
Inc. (``CME'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change 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 Rules 
19b-4(f)(2) and 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.
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    \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)(2) and 17 CFR 240.19b-4(f)(4)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CME proposes to extend the terms of a current OTC FX fee waiver 
program. The text of the proposed rule change is below. Italicized text 
indicates additions; bracketed text indicates deletions.

* * * * *

CME OTC FX Fee Waiver Program

Program Purpose

    The purpose of this Program is to incentivize market 
participants to submit transaction in the OTC FX products listed 
below to the Clearing House for clearing. The resulting increase in 
volume benefits all participant segments in the market.

Product Scope

    The following cleared only OTC FX products (``Products''):
    1. CME Cleared OTC FX--Emerging Markets
    a. USDBRL, USDCLP, USDCNY, USDCOP, USDIDR, USDINR, USDKRW, 
USDMYR, USDPEN, USDPHP, USDRUB, USDTWD Non-Deliverable Forwards.
    b. USDCZK, USDHUF, USDHKD, USDILS, USDMXN, USDPLN, USDSGD, 
USDTHB, USDTRY, USDZAR Cash-Settled Forwards.
    2. CME Cleared OTC FX--Majors
    a. AUDJPY, AUDUSD, CADJPY, EURAUD, EURCHF, EURGBP, EURJPY, 
EURUSD, GBPUSD, NZDUSD, USDCAD, USDCHF, USDDKK, USDJPY, USDNOK, 
USDSEK Cash-Settled Forwards.

Eligible Participants

    The temporary reduction in fees will be open to all market 
participants and will automatically be applied to any transaction in 
the Products submitted to the Clearing House for clearing.

Program Term

    Start date is February 1, 2012. End date is [December 31, 2013] 
June 30, 2014.

Hours

    The Program will be applicable regardless of the transaction 
time.

Program Incentives

    Fee Waivers. All market participants that submit transactions in 
the Products to the

[[Page 689]]

Clearing House will have their clearing fees waived.
* * * * *

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 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 such 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 and currently offers clearing 
services for many different futures and swaps products. With this 
filing, CME proposes to modify the fees that apply to certain OTC FX 
cleared-only products cleared at CME. More specifically, the proposed 
changes would extend the existing CME fee waiver program supporting OTC 
FX products through June 30, 2014. The fee waiver program applies to 
all market participants and the fee waivers automatically apply to any 
transaction in the covered products submitted to CME for clearing. The 
current program by its terms is set to expire on December 31, 2013. All 
other terms of the fee waiver program would remain unchanged. Although 
the changes would become effective on filing, CME plans to 
operationalize the proposed fee changes on January 2, 2014.
    The changes that are described in this filing impact fees for OTC 
FX products; these proposed fee changes are therefore limited to CME's 
business as a derivatives clearing organization clearing products under 
the exclusive jurisdiction of the Commodity Futures Trading Commission 
(``CFTC'') and do not materially impact CME's security-based swap 
clearing business in any way. CME notes that it has already submitted 
the proposed rule changes that are the subject of this filing to its 
primary regulator, the CFTC, in CME Submission 13-455R.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\5\ More specifically, the proposed rule changes establish or 
change a member due, fee or other charge imposed by CME under Section 
19(b)(3)(A)(ii) \6\ of the Securities Exchange Act of 1934 and Rule 
19b-4(f)(2) \7\ thereunder. CME believes that the proposed fee change 
is consistent with the requirements of the Securities Exchange Act of 
1934 and the rules and regulations thereunder and, in particular, to 
17A(b)(3)(D),\8\ because the proposed fee changes apply equally to all 
market participants clearing covered products and therefore the 
proposed changes provide for the equitable allocation of reasonable 
dues, fees and other charges among participants. CME also notes that it 
operates in a highly competitive market in which market participants 
can readily direct business to competing venues.
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    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
    \8\ 15 U.S.C. 78q-1(b)(3)(D).
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    Furthermore, the proposed changes are limited in their effect to 
swaps products offered under CME's authority to act as a derivatives 
clearing organization. These products are under the exclusive 
jurisdiction of the CFTC.\9\ As such, the proposed CME changes are 
limited to CME's activities as a derivatives clearing organization 
clearing swaps that are not security-based swaps. CME believes the 
proposed changes will promote increased centralized clearing of swaps 
products and should therefore 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.\10\
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    \9\ 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 over-the-counter derivatives markets, 
promoting the prompt and accurate clearance of transactions and 
protecting investors and the public interest.
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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    Because the proposed changes are limited in their effect to swaps 
products offered under CME's authority to act as a derivatives clearing 
organization, the proposed changes are also 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, and swaps that are not security-based swaps or mixed 
swaps; 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 also consistent with the requirements of 
Section 17A of the Exchange Act \11\ and are properly filed under 
Section 19(b)(3)(A) \12\ and Rule 19b-4(f)(4)(ii) \13\ thereunder.
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    \11\ 15 U.S.C. 78q-1.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(4)(ii).
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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 rule changes simply 
extend a current CME OTC FX fee waiver and as such do not affect the 
security-based swap clearing activities of CME in any way and therefore 
do 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) \14\ of the Act and paragraphs (f)(2) and 
(f)(4)(ii) of Rule 19b-4 \15\ 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.\16\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2) and 17 CFR 240.19b-4(f)(4)(ii).
    \16\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 690]]

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 No. SR-CME-2013-35 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-CME-2013-35. 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 or 
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/market-regulation/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-2013-35 
and should be submitted on or before January 27, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31518 Filed 1-3-14; 8:45 am]
BILLING CODE 8011-01-P