2013-20461. 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.

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”).

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.

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.

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.

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 [e-mail]. 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]

Kevin M. O'Neill,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  15 U.S.C. 78q-1.

4.  15 U.S.C. 78q-1(b)(3)(F).

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).

8.  15 U.S.C. 78s(b)(3)(A).

9.  17 CFR 240.19b-4(f)(4)(ii).

10.  17 CFR 200.30-3(a)(12).