Document ID: SEC-2012-0836-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Mercantile Exchange, Inc.
Posted Date: 2012-05-25T04:00Z

[Federal Register Volume 77, Number 102 (Friday, May 25, 2012)]
[Notices]
[Pages 31416-31418]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12723]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67036; File No. SR-CME-2012-18]

Self-Regulatory Organizations; Chicago Mercantile Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify a Fee Program Related to Its OTC Interest Rate Swap Clearing 
Offering

May 21, 2012.
    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 May 9, 2011, 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 proposed rule change 
pursuant to Section 19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) 
\4\ thereunder, so that the proposed rule change was effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested parties.
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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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).

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[[Page 31417]]

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

    CME is proposing to make certain fee-related changes that would 
apply to its OTC Interest Rate Swap clearing offering.\5\ The text of 
the proposed changes is listed below. Additions are in italics, 
deletions in brackets.
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    \5\ CME previously established the fee program in another rule 
filing. See Exchange Act Release No. 34-66102 (January 5, 2012), 77 
FR 1775 (January 11, 2012) [CME-2011-22].
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* * * * *

CME Incentive Program for Over-The-Counter Interest Rate Swaps

Program Purpose

    The purpose of the Program is to incentivize participants to 
increase the volume in CME over-the-counter (``OTC'') interest rate 
swaps which will improve market liquidity. The resulting addition of 
liquidity for these Products (as defined below) benefits all 
participants in the market.

Product Scope

    CME OTC Interest Rate Swaps cleared by the Clearing House 
(``Products'').

Eligible Participants

    CME may designate up to [five (5)] six (6) participants in the 
Program based on their level of expertise and experience with the 
Products. Participants may be CME members and/or non-members. CME will 
also take potential participants' experience in the Products and 
historical volume in the Products with the Clearing House when making 
its selections.

Program Term

Non-Asset Managers
Qualification Period: January 6, 2012 through December 31, 2012
Earned Incentive Period: January 1, 2013 through December 31, 2016
Asset Managers
Qualification Period: January 6, 2012 through December 31, 2012
Earned Incentive Period: January 1, 2013 through December 31, 2021

Hours

N/A

Obligations

    Participants must provide designated accounts to CME in order for 
the account to receive consideration for the incentives described 
below.

Incentives

    1. Fee Discounts. Once accepted into the Program, participants will 
be eligible to receive predetermined discounts for transaction fees and 
maintenance fees in the Products during the Term.
    2. Volume Discount Incentives. Additionally, once accepted into the 
Program, participants may qualify for predetermined fee discounts based 
on the overall fees charged for transactions in the Products submitted 
to the Clearing House during the Qualification Period.

Monitoring and Termination of Status

    The Clearing House shall monitor participants' activity and 
performance and shall retain the right to revoke Program participant 
status if they conclude from review that a Program participant no 
longer meets the eligibility requirements of the Program.

II. Self-Regulatory Organization's Statement of 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.\6\
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    \6\ The Commission has modified the text of the summaries 
prepared by CME.
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A. Self-Regulatory Organization's Statement of Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    CME currently offers clearing for certain OTC Interest Rate Swap 
products. CME has certain fee programs that apply to its OTC Interest 
Rate Swap (``IRS'') clearing offering. The proposed changes that are 
the subject of this filing modify one of its existing fee programs. The 
proposed changes are related to the fees CME charges for clearing and 
therefore will become effective upon filing. However, the Program will 
become operative on May 23, 2012.
    The proposed changes modify a current volume incentive program that 
is designed to incentivize participants to increase their volume in CME 
OTC IRS through predetermined fee discounts for transaction fees and 
maintenance fees (``Program''). The Program currently may include up to 
five participants (including CME members and/or non-members) designated 
by CME based on factors including potential participants' experience in 
IRS activities and historical volumes in IRS with CME. The change 
proposed by this filing would simply increase the number of eligible 
participants from five to six.
    Pursuant to Commodity Futures Trading Commission (``CFTC'') 
regulations, the Program has been interpreted by CME as an incentive 
program subject to CFTC Regulation 40.6(d), requiring a self-
certification filing to the CFTC, although no change to text of the CME 
rulebook is required. CME notes that it has already certified the 
proposed changes that are the subject of this filing to its primary 
regulator, the CFTC, in CME Submission No. 12-136. The text of the CME 
proposed changes is above. The proposed changes establish or change a 
member due, fee or other charge imposed by CME under Section 
19(b)(3)(A)(ii) of the Securities Exchange Act of 1934 and Rule 19b-
4(f)(2) thereunder. CME believes that the proposed changes are 
consistent with the requirements of the Act and the rules and 
regulations thereunder and, in particular, to 17A(b)(3)(D),\7\ in that 
it provides for the equitable allocation of reasonable dues, fees and 
other charges among participants. CME notes that it operates in a 
highly competitive market in which market participants can readily 
direct business to competing venues.
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    \7\ 15 U.S.C. 78q-1(b)(3)(D).
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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.

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 was filed pursuant to Section 
19(b)(3)(A)(ii) \8\ of the Act and Rule 19b-4(f)(2) \9\ thereunder and 
thus became effective upon filing because it establishes or changes a 
due, fee, or other charge applicable to a member. At any time within 
sixty days of the filing of such rule change, the Commission summarily 
may temporarily suspend such rule change if it appears to the 
Commission

[[Page 31418]]

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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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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 may be submitted by using 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-2012-18 on the subject line.
     Paper comments should be sent 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-2012-18. 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. 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-2012-18 and should be 
submitted on or before June 15, 2012.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12723 Filed 5-24-12; 8:45 am]
BILLING CODE 8011-01-P