SEC Division of Trading and Markets no-action letter: Chicago Mercantile Exchange Inc.

The staff of the SEC Division of Trading and Markets will not recommend enforcement action against the Chicago Mercantile Exchange Inc. (CME) and its credit default swap clearing members for engaging in specific clearing activities related to Restructuring European Single Name Credit Default Swap Contracts spun out from iTraxx Contracts. This relief applies despite CME's withdrawal from clearing agency registration, allowing it to provide clearance and settlement services under Sections 17A(b)(1), 3C(a), 3E(b), 3E(d), 3E(e), and 15(c)(3) of the Exchange Act, as well as Rules 8c-1, 15c2-1, and 15c3-3. The no-action position is conditional upon CME maintaining segregated accounts for customer positions in accordance with Section 4d(f) of the Commodity Exchange Act or applicable Exchange Act provisions, ensuring customers are eligible contract participants, and requiring non-conforming subordination agreements for affiliate and non-affiliate customers. This relief expires if CME becomes registered as a clearing agency with the Commission.

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DIVISION OF
TRADING AND MARKETS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
January 15, 2016
Senior Managing Director and President, CME Clearing Chicago Mercantile Exchange Inc. 20 South Wacker Drive Chicago, Illinois 60606 Re: No-Action Relief for Chicago Mercantile Exchange Inc. and its Credit Default Swap Clearing Members to Provide Clearing Services for Restructuring European Single Name Credit Default Swap Contracts Dear Mr. Cutinho:
In your letter dated January 15, 2016, on behalf of the Chicago Mercantile Exchange Inc. ("CME"), you request assurances from the staff of the Division of Trading and Markets ("Staff') that it would not recommend enforcement action to the Securities and Exchange Commission ("Commission" or "SEC") under the specific legal provisions discussed below against CME and its credit default swap clearing members ("CDS Clearing Members") if CME and its CDS Clearing Members engage in the activities discussed in your letter. In particular, CME requests assurances that the Staff would not recommend enforcement action against:

CME under the registration requirements of Section 17 A(b )( 1) of the Securities
Exchange Act of 1934 ("Exchange Act") in connection with the provision of clearance and settlement services to CDS Clearing Members and the customers of CDS Clearing Members for certain security-based swaps that are component transactions "spun out" (as described below) of iTraxx Contracts (as defined below) as a result of a Restructuring Credit Event (as defined below; such spun-out component transactions, the "Restructuring European Single Name CDS Contracts");
CME's CDS Clearing Members under Section 3C(a) of the Exchange Act by reason of
clearing security-based swaps, either with respect to their proprietary positions or on behalf of customers, through an unregistered clearing agency if CME provides clearance and settlement services to CDS Clearing Members and their customers in respect of Restructuring European Single Name CDS Contracts (as described below), in the event that the Commission determines that the clearing requirement shall apply to Restructuring European Single Name CDS Contracts pursuant to Section 3C of the

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