Document ID: SEC-2015-1465-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Mercantile Exchange, Inc.
Posted Date: 2015-09-03T04:00Z

[Federal Register Volume 80, Number 171 (Thursday, September 3, 2015)]
[Notices]
[Pages 53358-53360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21867]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75781; File No. SR-CME-2015-016]

Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Reduce the Minimum IRS Guaranty Fund Contribution of IRS Clearing 
Members

August 28, 2015.
    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 August 24, 2015, 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) thereunder,\4\ 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 the proposed rule change that is limited to its 
business as a derivatives clearing organization. More specifically, the 
proposed rule change would reduce the minimum IRS Guaranty Fund 
Contribution of IRS Clearing Members to $15,000,000 for all IRS 
Clearing Members (including affiliates).

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 (``CFTC'') and currently offers 
clearing services for many different futures and swaps products. With 
this filing, CME proposes to make rulebook changes that are limited to 
its business clearing futures and swaps under the exclusive 
jurisdiction of the CFTC. More specifically, the proposed rules would 
reduce the minimum IRS Guaranty Fund Contribution of IRS Clearing 
Members to $15,000,000 for all IRS Clearing Members (including 
affiliates).
    CME periodically reviews its requirements for clearing membership 
and has determined that it is appropriate to change the minimum 
contribution to $15,000,000 as the current minimum, established at the 
time of launch of the IRS clearing service to ensure a robust financial 
safeguards for IRS products, can be reduced due to the growth of IRS 
clearing activity at CME and corresponding growth of the IRS Guaranty 
Fund size.\5\ The change could also encourage more entities to apply 
for

[[Page 53359]]

IRS clearing membership which would further the diversification of IRS 
Clearing Members and provide additional liquidity to the default 
management process. No other changes to IRS clearing membership 
requirements are being proposed.
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    \5\ As of March 31, 2015, the IRS Guaranty Fund was 
approximately $2.473 billion.
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    The proposed rule change that is described in this filing is 
limited to CME's business as a derivatives clearing organization 
clearing products under the exclusive jurisdiction of the CFTC. CME has 
not cleared security based swaps and does not plan to and therefore the 
proposed rule change does not impact CME's security-based swap clearing 
business in any way. The proposed rule change would become effective 
upon filing but will be operationalized on August 31, 2015. CME notes 
that it has also submitted the proposed rule change that is the subject 
of this filing to its primary regulator, the CFTC, in CME Submission 
15-346.
    CME believes the proposed rule change is consistent with the 
requirements of the Exchange Act including Section 17A.\6\ The proposed 
rules change the minimum IRS Guaranty Fund Contribution of IRS Clearing 
Members to $15,000,000 as the current minimum, established at the time 
of launch of the IRS clearing service to ensure a robust financial 
safeguards for IRS products, can be reduced due to the growth of IRS 
clearing activity at CME and corresponding growth of the IRS Guaranty 
Fund size. The change could also encourage more entities to apply for 
IRS clearing membership which would further the diversification of IRS 
Clearing Members and provide additional liquidity to the default 
management process. The proposed rule change is therefore 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 rule change is limited to CME's futures 
and swaps clearing businesses, which mean they are limited in their 
effect to products that are under the exclusive jurisdiction of the 
CFTC. As such, the proposed rule change is limited to CME's activities 
as a DCO clearing futures that are not security futures and 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.
    Because the proposed rule change is limited in its effect to CME's 
futures and swaps clearing businesses, the proposed rule change is 
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 proposed rule change is 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 rules reduce 
the minimum IRS Guaranty Fund Contribution of IRS Clearing Members to 
$15,000,000 for all IRS Clearing Members (including affiliates) and 
could be expected to encourage more entities to apply for IRS clearing 
membership. Further, the changes are limited to CME's futures and swaps 
clearing businesses 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

    Pursuant to Section 19(b)(3)(A) of the Exchange Act \11\ and Rule 
19b-4(f)(4)(ii) thereunder,\12\ CME has designated 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.
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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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    CME believes that the proposal does not significantly affect any 
securities clearing operations of CME because CME recently filed a 
proposed rule change that clarified that CME has decided not to clear 
security-based swaps, except in a very limited set of 
circumstances.\13\ 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 security-based swaps. Therefore, this proposal will have no 
effect on any securities clearing operations of CME.
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    \13\ See Securities Exchange Act Release No. 73615 (Nov. 17, 
2014), 79 FR 69545 (Nov. 21, 2014) (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.
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    At any time within 60 days of the filing of the proposed 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 Exchange 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.

[[Page 53360]]

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-2015-016 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-2015-016. 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/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-2015-016 and 
should be submitted on or before September 24, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-21867 Filed 9-2-15; 8:45 am]
 BILLING CODE 8011-01-P