[Federal Register Volume 60, Number 204 (Monday, October 23, 1995)]
[Notices]
[Pages 54339-54340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26150]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Chicago Mercantile Exchange Proposal To Revise Member Margin
Requirements
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed contract market rule changes.
-----------------------------------------------------------------------
SUMMARY: The Chicago Mercantile Exchange (``CME'') has submitted
proposed rule amendments which would revise margin requirements for
certain CME members. Acting pursuant to the authority delegated by
Commission Regulation 140.96, the Division of Trading and Markets has
determined to publish the CME proposal for public comment. The Division
believes that publication of the CME proposal is in the public interest
and will assist the Commission in considering the views of interested
persons.
DATES: Comments must be received on or before November 22, 1995.
FOR FURTHER INFORMATION CONTACT: Clarence Sanders, Attorney, Division
of Trading and Markets, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581. Telephone:
(202) 418-5484.
SUPPLEMENTARY INFORMATION:
I. Description of Proposed Rule Amendments
By a letter dated August 11, 1995, the CME submitted proposed rule
amendments pursuant to Section 5a(a)(12)(A) of the Commodity Exchange
Act (``Act'') and Commission Regulation 1.41(c) to revise margin
requirements for certain CME members.
Under existing CME Rule 827.C., CME clearing members are prohibited
from accepting a customer's order (whether for a CME member or
nonmember) unless the performance bond margin held for the customer's
pre-existing open positions meets or exceeds CME maintenance
requirements, or is forthcoming within a reasonable time. The proposal
would establish an exception to the provisions of Rule 827.C. and
thereby permit a qualifying clearing member to accept orders from a CME
equity member whose performance bond margin is less than applicable CME
requirements or whose account is in debit, if the performance bond
margin deficiency or debit amount is less than the lesser of (i)
$100,000 or (ii) 50 percent of the market value (current bid) of the
member's membership interest.\1\ Under the proposal, however, the
exception would not apply in those cases where the member's membership
interest is assigned to the qualifying clearing member for clearing
privileges pursuant to CME Rule 902 or is used as a guarantee for a CME
Rule 106.D. transferee (lessee) or trading permit holder, or where the
qualifying clearing member is guaranteeing a loan to the CME member for
the purchase of the membership.
\1\ A CME qualifying clearing member is a member of the CME
clearing house who has qualified a CME floor member to execute CME
futures or spot call commodity contracts. A CME qualifying clearing
member agrees to guarantee and assume complete responsibility for
(i) all trades executed or directed to be executed by the qualified
member and (ii) all orders that the qualified member negligently
executes or fails to execute. See CME Rule 924.
---------------------------------------------------------------------------
The proposal would not afford beneficial treatment for net capital
purposes when computing current receivables or capital charges for
undermargined accounts. When computing current receivables or
undermargined account capital charges, memberships would continue to be
non-allowable assets.
II. Request for Comments
The Commission requests comments on any aspect of the CME's
proposed rule amendments that members of the public believe may raise
issues under the Act or Commission regulations. In particular, the
Commission requests comments regarding the liquidity of the market for
CME memberships, including discussion of the market's ability to
provide transactional immediacy and efficient pricing.
Copies of the proposed rule amendments and related materials are
available for inspection at the Office of the Secretariat, Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street
NW, Washington, DC 20581. Copies also may be obtained through the
Office of the Secretariat at the above address or by
[[Page 54340]]
telephoning (202) 418-5100. Some materials may be subject to
confidential treatment pursuant to 17 CFR 145.5 or 145.9.
Any person interested in submitting written data, views, or
arguments on the proposed amended rule should send such comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW, Washington, DC 20581, by the
specified date.
Issued in Washington, DC, on October 18, 1995.
Alan L. Seifert,
Deputy Director.
[FR Doc. 95-26150 Filed 10-20-95; 8:45 am]
BILLING CODE 6351-01-P
