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Notice

Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Regarding Clearing Member Anti-Money Laundering Programs

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April 23, 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 April 9, 2012, 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) [3] of the Act and Rule 19b-4(f)(1) [4] thereunder so that the proposed rule change was effective upon filing with the Commission.

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

The text of the proposed rule change is below. Italicized text indicates additions; bracketed text indicates deletions.

* * * * *

CHICAGO MERCANTILE EXCHANGE INC. RULEBOOK

Rule 100-980—No Change.

* * * * *

Chapter 9. Clearing Members

Rule 981. ANTI-MONEY LAUNDERING AND ECONOMIC SANCTIONS COMPLIANCE

Each clearing member shall develop and implement a written [anti-money laundering] compliance program approved in writing by senior management reasonably designed to achieve and monitor the clearing member's compliance with [the] all applicable requirements of the Bank Secrecy Act (31 U.S.C. §  5311 et[.] seq.) , the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.) (“IEEPA”), the Trading with the Enemy Act (50 U.S.C. App. § 1 et seq.) (“TWEA”), and the Executive Orders and [the implementing] regulations issued pursuant thereto, including the regulations issued [promulgated thereunder] by the U.S. Department of the Treasury and, as applicable, the Commodity Futures Trading Commission. That [anti-money laundering] compliance program shall, at a minimum,

1. Establish and implement policies, procedures and internal controls reasonably designed to assure compliance with [the] all applicable provisions of the Bank Secrecy Act, IEEPA, TWEA, and all applicable Executive Orders and regulations issued pursuant thereto [the implementing regulations thereunder];

2. Provide for independent testing for compliance to be conducted by clearing member personnel or by a qualified outside party;

3. Designate an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program; and

4. Provide ongoing training for appropriate personnel.

Clearing members must also supervise and ensure that their guaranteed introducing brokers are in compliance with the [anti-money laundering] provisions contained in this Rule.

* * * * *

Rule 981-End—No change

* * * * *

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.

A. Self-Regulatory Organization's Statement of Purpose of, and Statutory Basis for, the Proposed Rule Change

CME proposes to adopt certain rule changes to CME Rule 981, which deals with CME clearing member anti-money laundering (“AML”) compliance programs. At present, CME Rule 981 requires clearing members to develop and implement a written AML program reasonably designed to achieve compliance with applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.). CME proposes to revise Rule 981 to further require clearing members to have a written AML compliance program reasonably designed to achieve compliance with the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.), the Trading with the Enemy Act (50 U.S.C. App. 1, et seq.), and Executive Orders and regulations issued thereunder.

These amendments would therefore expand Rule 981 to encompass all applicable Office of Foreign Asset Control (OFAC) sanctions programs. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze assets under U.S. jurisdiction. OFAC sanctions are broad and extraterritorial in scope and all investments and transactions in the U.S., or involving U.S. persons or corporations, must comply.

The proposed rule change that is the subject of this filing will become immediately effective upon filing. CME notes that it has also certified the proposed rule change that is the subject of this filing to its primary regulator, the Commodity Futures Trading Commission. The text of the CME proposed rule amendment is listed above with additions italicized and deletions in brackets.

The proposed CME rule amendment is designed to ensure that CME has in place appropriate eligibility standards by ensuring that clearing members have AML compliance programs that address all applicable requirements. The amendment simply expands existing CME Rule 981 to encompass all applicable OFAC sanctions programs. As such, the proposed amendments constitute a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing CME rule. Therefore, the proposed rule change is therefore properly filed under Section 19(b)(3)(A) and Rule 19b-4(f)(1) thereunder of the Act.

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) of the Act and paragraph (f)(1) of Rule 19b-4 thereunder and therefore became effective on filing. 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 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 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-2012-12 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-2012-12. 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 a.m. and 3 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/files/SEC_19b-4_12-12.pdf. 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-2012-12 and should be submitted on or before May 18, 2012.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.5

Kevin M. O'Neill,

Deputy Secretary.

Footnotes

[FR Doc. 2012-10159 Filed 4-26-12; 8:45 am]

BILLING CODE 8011-01-P