
[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Notices]
[Pages 74722-74723]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30270]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68401; File No. SR-CME-2012-42]


Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; 
Order Approving Proposed Rule Change Regarding the Valuation of 
Securities on Deposit

December 11, 2012.

I. Introduction

    On October 10, 2012, Chicago Mercantile Exchange Inc. (``CME'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-CME-2012-42 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ The proposed rule change was published for comment in 
the Federal Register on October 30, 2012.\3\ The Commission received no 
comment letters regarding this proposal. For the reasons discussed 
below, the Commission is granting approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 34-68093 (October 
24, 2012), 77 FR 65730 (October 30, 2012).
---------------------------------------------------------------------------

II. Description

    CME is proposing to issue an Advisory Notice that announces certain 
changes to the way CME will value securities on deposit. Under the 
proposed changes, CME will begin using the current market value, plus 
accrued interest, to value securities on deposit. CME currently 
excludes accrued interest from the value of securities on deposit. 
Therefore, with this adjustment, accrued interest will now be included 
in the market value of the security. The purpose of the adjustment is 
to harmonize valuations with existing industry conventions. CME 
initially

[[Page 74723]]

planned to implement these changes beginning on December 3, 2012; \4\ 
however, CME has delayed the implementation date and will notify its 
Clearing Members of the new implementation date in a subsequent notice 
to its members.\5\
---------------------------------------------------------------------------

    \4\ See supra note 3.
    \5\ Telephone conversation among Tim Elliott, Executive Director 
and Associate General Counsel, CME; Gena Lai, Senior Special 
Counsel, SEC; Justin Byrne, Attorney-Adviser, SEC; December 4, 2012.
---------------------------------------------------------------------------

III. Discussion

    Section 19(b)(2)(C) of the Act \6\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \7\ 
requires, among other things, that the rules of a clearing agency are 
designed to promote the prompt and accurate clearance and settlement of 
securities transactions and, to the extent applicable, derivative 
agreements, contracts, and transactions, and 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that these changes are consistent with the 
requirements of Section 17A(b)(3)(F) of the Act \8\ and the rules and 
regulations thereunder applicable to CME. These changes would use the 
current market value, plus accrued interest, for securities on deposit 
at CME, which will better align CME's practices with the marketplace 
and expectations of its participants. The changes will therefore 
promote the prompt and accurate clearance and settlement of securities 
transactions and, to the extent applicable, derivative agreements, 
contracts, and transactions, and assure the safeguarding of securities 
and funds which are in the custody or control of the clearing agency or 
for which it is responsible.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \9\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-CME-2012-42) be, 
and hereby is, approved.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).
    \11\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2012-30270 Filed 12-14-12; 8:45 am]
BILLING CODE 8011-01-P


