Document ID: SEC-2014-0557-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Mercantile Exchange Inc.
Posted Date: 2014-04-07T04:00Z

[Federal Register Volume 79, Number 66 (Monday, April 7, 2014)]
[Notices]
[Pages 19158-19159]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07639]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71842; File No. SR-CME-2014-12]

Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Modifications to CME Rule 281H.02.A. Regarding CME's Cleared 
OTC U.S. Dollar/Indonesian Rupiah (USD/IDR) Spot, Forwards and Swaps 
Contracts

April 1, 2014.
    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 March 28, 2014, 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 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.
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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)(4)(ii).
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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 (``DCO''). More 
specifically, the proposed rule changes would amend certain aspects of 
CME Rule 281H.02.A. regarding CME's Cleared OTC U.S. Dollar/Indonesian 
Rupiah (USD/IDR) Spot, Forwards and Swaps contracts.

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 DCO with the Commodity Futures Trading 
Commission and offers clearing services for many different futures and 
swaps products. The proposed rule changes that are the subject of this 
filing are limited to CME's business as a DCO offering clearing 
services for CFTC-regulated swaps products.
    The proposed rule changes amend CME Rule 281H.02.A., which deals 
with CME's Cleared OTC U.S. Dollar/Indonesian Rupiah (USD/IDR) Spot, 
Forwards and Swaps contracts. These contracts are non-deliverable 
foreign currency forward contracts and, as such, are considered to be 
``swaps'' under applicable regulatory definitions.\5\
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    \5\ See Commodity Futures Trading Commission and Securities and 
Exchange Commission Joint Final Rule Defining ``Swap,'' ``Security-
Based Swap,'' and ``Security-Based Swap Agreement;'' Mixed Swaps; 
Security-Based Swap Agreement Recordkeeping; Final Rule, 77 FR 
48207, 48255 (August 13, 2012).
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    CME specifically seeks to amend the Day of Cash Settlement rule for 
the cleared only USD/IDR contracts since the internationally accepted 
benchmark fixing that underlies these contracts will be amended 
effective March 28, 2014. The fixing for the USD/IDR contract is moving 
onshore to Bank Indonesia (i.e., the Central Bank of Indonesia). These 
changes will be effective upon filing.
    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 any way. CME notes that it has also

[[Page 19159]]

certified the proposed rule changes that are the subject of this filing 
to its primary regulator, the Commodity Futures Trading Commission 
(``CFTC''), in a separate filing, CME Submission No. 14-091R.
    CME believes the proposed rule changes are consistent with the 
requirements of the Exchange Act including Section 17A of the Exchange 
Act.\6\ CME is amending the CME Rulebook so that the Day of Cash 
Settlement rule for CME's cleared only USD/IDR contracts conforms with 
the internationally accepted benchmark fixing that occurs at 10:00 a.m. 
Jakarta time and will therefore facilitate CME's settlement process. 
The proposed changes are intended to enhance CME's ability to complete 
settlements on a timely basis under varying circumstances 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.\7\
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    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    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 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 over-the-
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 OTC FX 
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 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.

As such, the changes are therefore consistent with the requirements of 
Section 17A of the Exchange Act \8\ and are properly filed under 
Section 19(b)(3)(A) \9\ and Rule 19b-4(f)(4)(ii) \10\ thereunder.
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    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 proposed changes 
conform CME's OTC FX rulebook with internationally accepted benchmarks 
for the purpose of enhancing CME's ability to complete settlements on a 
timely basis under varying circumstances

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) \11\ of the Act and paragraph (f)(4)(ii) of Rule 
19b-4 \12\ 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(4)(ii).
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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 
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-2014-12 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-2014-12. 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-2014-12 and 
should be submitted on or before April 28, 2014.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07639 Filed 4-4-14; 8:45 am]
BILLING CODE 8011-01-P