Document ID: SEC-2013-1502-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Mercantile Exchange Inc.
Posted Date: 2013-08-22T04:00Z

[Federal Register Volume 78, Number 163 (Thursday, August 22, 2013)]
[Notices]
[Pages 52228-52230]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20461]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70220; File No. SR-CME-2013-15]

Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding the Benchmark Used in Connection With Settling CME Palm Oil 
Futures and CME Palm Oil Swaps

August 16, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on August 5, 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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CME is filing proposed rule changes that are limited to its 
business as a derivatives clearing organization. More specifically, the 
proposed rule changes would make amendments to its rules regarding the 
USD/MYR foreign exchange benchmark used in connection with the 
settlement of U.S. Dollar Cash Settled Crude Palm Oil Futures (``CME 
Palm Oil Futures'') and USD Malaysian Crude Palm Oil Calendar Swaps 
(Cleared Only) (``CME Palm Oil Swaps'').

[[Page 52229]]

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 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. The self-regulatory organization 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 make amendments to its rules regarding the USD/
MYR foreign exchange benchmark used in connection with the settlement 
procedures for the U.S. Dollar Cash Settled Crude Palm Oil Futures 
(``CME Palm Oil Futures'') and USD Malaysian Crude Palm Oil Calendar 
Swaps (Cleared Only) (``CME Palm Oil Swaps''). Although these changes 
will be effective on filing, CME plans to operationalize the new USD/
MYR benchmarks for CME Palm Oil Futures and CME Palm Oil Swaps on 
August 6, 2013.
    Currently, the settlement prices for CME Palm Oil Futures and CME 
Palm Oil Swaps are based off Bursa Malaysia Crude Palm Oil Futures 
(``BM CPO Futures''), which are traded in Malaysian Ringgit. 
Settlements for the CME Palm Oil Futures and CME Palm Oil Swaps are 
determined by converting the BM CPO Futures settlement prices into U.S. 
dollars using the Association of Banks in Singapore (``ABS'') 11:00 
a.m. spot USD/MYR fixing. On July 5, 2013, ABS announced that it would 
discontinue publication of this spot FX fixing after August 5, 2013. 
ABS has recommended that the market settle its USD/MYR transactions 
going forward using the onshore USD/MYR Spot Rate reported by Persatuan 
Pasaran Kewangan Malaysia (``PPKM''). The PPKM USD/MYR Spot Rate is 
also the USD/MYR rate reported by the Bank Negara Malaysia, which 
requires all licensed onshore banks to reference this rate when pricing 
all foreign exchange contracts involving Malaysian Ringgit.
    Given ABS's sudden decision to discontinue publishing its USD/MYR 
FX fixing, CME plans to begin using the PPKM USD/MYR Spot Rate 
beginning August 6, 2013. CME must implement this change in order to 
continue to provide settlement prices for CME Palm Oil futures and 
swaps.
    The changes that are described in this filing are 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 credit default 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 13-296 and 13-297.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\3\ The proposed rule changes are necessary to facilitate CME's 
futures and swaps product offering, and as such are 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.\4\ Furthermore, the proposed changes are limited in their 
effect to futures and swaps products offered under CME's authority to 
act as a derivatives clearing organization. These products are under 
the exclusive jurisdiction of the CFTC. 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 
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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1.
    \4\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Because the proposed changes are limited in their effect to futures 
and swaps products offered under CME's authority to act as a 
derivatives clearing organization, 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, 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 therefore consistent with the requirements 
of Section 17A of the Exchange Act \5\ and are properly filed under 
Section 19(b)(3)(A) \6\ and Rule 19b-4(f)(4)(ii) \7\ thereunder.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

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 
announce mandatory changes that are necessary to ensure settlement of 
existing CME futures and swap products.

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 pursuant to Section 
19(b)(3)(A) \8\ of the Act and paragraph (f)(4)(ii) of Rule 19b-4 \9\ 
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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(4)(ii).
---------------------------------------------------------------------------

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:

[[Page 52230]]

    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-2013-15 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-2013-15. 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-2013-15 
and should be submitted on or before September 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20461 Filed 8-21-13; 8:45 am]
BILLING CODE 8011-01-P