Notice2026-11383
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.; Notice of Filing of a Proposed Rule Change Relating to Amendments to Chicago Mercantile Exchange Inc.'s Rules Governing Performance Bond Requirements: Account Holder Level
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 8, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 109 (Monday, June 8, 2026)</title>
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[Federal Register Volume 91, Number 109 (Monday, June 8, 2026)]
[Notices]
[Pages 34693-34696]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11383]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105607; File No. SR-CME-2026-001]
Self-Regulatory Organizations; Chicago Mercantile Exchange Inc.;
Notice of Filing of a Proposed Rule Change Relating to Amendments to
Chicago Mercantile Exchange Inc.'s Rules Governing Performance Bond
Requirements: Account Holder Level
June 3, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 1, 2026, Chicago Mercantile Exchange Inc. (``CME'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change described in Items
I, II, and III below, which Items have been substantially prepared by
CME. CME filed the proposed rule change pursuant to Section 19(b)(2) of
the Act.\3\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
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I. CME's Statement of the Terms and Substance of the Proposed Rule
Change
CME's proposed rule change is filed as Exhibit 5 to this filing and
consists of additions to Rule 930 in Chapter 9 of the CME Rulebook
relating to customer performance bond requirements for security futures
contracts that CME intends to list for trading. Each addition is
described in more detail below.
[[Page 34694]]
II. CME's Statement of the Purpose of, and Statutory Basis for the
Proposed Rule Change
In its filing with the Commission, CME included statements
concerning the purpose of 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. CME's Statement of the Purpose of, and Statutory Basis for the
Proposed Rule Change
1. Purpose
Background
CME is registered with the Commodity Futures Trading Commission
(``CFTC'') as a designated contract market (``DCM'') and a derivatives
clearing organization under the Commodity Exchange Act (``CEA''). On
April 10, 2026, CME, in its capacity as a DCM, submitted a 1-N notice
filing to the Securities and Exchange Commission (``SEC'' or
``Commission'') to register as a national securities exchange for
security futures products pursuant to the notice registration
provisions of Section 6(g) of the Securities Exchange Act of 1934, as
amended (``Act'' or ``Exchange Act'').\4\ On April 29, 2026, the
Commission issued a notice acknowledging receipt of such written notice
and effectiveness of CME's notice registration as a national securities
exchange contemporaneously with CME's submission of the 1-N notice on
April 10, 2026.\5\
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\4\ 15 U.S.C. 78f(g).
\5\ Acknowledgement of Receipt of Notice of Registration as a
National Securities Exchange Pursuant to Section 6(g) of the
Securities Exchange Act of 1934 by Chicago Mercantile Exchange Inc.
(Apr. 29, 2026) [Release No. 34-105336; File No. 10-251], available
at <a href="https://www.sec.gov/files/rules/other/2026/34-105336.pdf">https://www.sec.gov/files/rules/other/2026/34-105336.pdf</a>.
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CME was previously registered with the SEC as a national securities
exchange pursuant to the notice registration provisions of the Act and
offered physically-delivered single security futures contracts pursuant
to that registration and its registration as a DCM. CME ceased offering
those contracts for trading in March 2011 and its former notice-
registration lapsed.\6\ Under its current notice-registration, CME
plans to list cash-settled futures on individual equity securities for
trading pursuant to listing standard rules for security futures
products that it will adopt under a separate rule filing it will file
in accordance with the filing procedures of Section 19(b)(7) of the Act
\7\ and Rule 19b-7 under the Act.\8\
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\6\ As a result of this procedural history, CME understands and
acknowledges that the rules it previously adopted governing its
listing and trading of any security futures products are null and
void. Accordingly, this proposed rule change constitutes an initial
rule filing subject to the filing requirements of Exchange Act
Section 19(b)(4) [15 U.S.C. 78s(b)(2)] and SEC Rule 19b-4 [17 CFR
240.19b-4].
\7\ 15 U.S.C. 78s(b)(7).
\8\ 17 CFR 240.19b-7.
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CME is submitting this proposed rule change in connection with its
plans to list cash-settled single stock futures, to establish customer-
level margin requirements for security futures that are consistent with
current Commission (and CFTC) requirements, as described in the
following section.
Description of the Proposed Rule Change
CME Rule 930 (Performance Bond Requirements; Account Holder Level)
sets out customer-level performance bond requirements, also known as
margin requirements, for positions in futures and options on futures
contracts listed for trading on CME. The proposed rule change will
revise Rule 930 to add margin requirements specific to security futures
products that CME may from time-to-time list for trading. Specifically,
the proposed revisions to Rule 930 will establish procedures relating
to the determination and administration of customer margin requirements
for security futures and the applicability of those requirements,
specifically excluding qualifying security futures dealers from those
requirements and related regulatory requirements. The proposed
additions to Rule 930 largely reinstate the margin provisions for
security futures that CME previously added to Rule 930, with some
modifications to align with the Commission's (and CFTC's) current
margin requirements for security futures and some non-substantive
clarification changes to the prior text.
Performance Bond Rates. Proposed Rule 930.B.2.a. provides that
customer performance bond rates shall be established at levels no lower
than those prescribed by SEC Rule 242.403 and CFTC Regulation 41.45 or
any successor regulations. Proposed Rule 930.B.2.c. elaborates by
establishing the requisite performance bond level for each long or
short position in a security future at 15% of the current market value
of such security futures contract, or such other requirement as may be
established by the SEC and CFTC for purposes of SEC Rule 242.403(b)(1)
and CFTC Regulation 41.45(b)(1).
Proposed Rule 930.B.2.d. sets out exceptions to that 15%
requirement as permitted under SEC Rule 242.403(b)(2) and CFTC
Regulation 41.45(b)(2), which establish that a self-regulatory
authority may set the required initial or maintenance performance bond
level for offsetting positions involving security futures and related
positions at a level lower than the level that would apply if
performance bond requirements for such positions were calculated
separately based on the aforementioned 15% requirement, provided the
rules establishing such lower performance bond levels meet the criteria
set forth in Section 7(c)(2)(B) of the Act. That Section requires that:
(I) The margin requirements for a security future product be
consistent with the margin requirements for comparable option contracts
traded on any exchange registered pursuant to [Section 6(a) of the
Act]; and
(II) Initial and maintenance margin levels for a security future
product not be lower than the lowest level of margin, exclusive of
premium, required for any comparable option contract traded on any
exchange registered pursuant to [Section 6(a) of the Act], other than
an option on a security future.
Proposed Rule 930.B.2.d. includes a table that sets out in detail
the performance bond offsets available with respect to particular
combinations of security futures and related positions. The offset
strategies in the table align with those the SEC and CFTC have
acknowledged are permissible, as set forth in their joint 2020 release
on Customer Margin Rules Relating to Security Futures (the ``Customer
Margin Release'').
Non-Customers. Proposed Rule 930.B.2.b. identifies ``exempted
persons'' and ``market makers'' as non-customers for purposes of the
proposed rule amendments. Those non-customers are, therefore, exempt
from the application of such provisions. Exempted persons are
specifically identified by reference to applicable SEC and CFTC
Regulations.
Market Maker Exclusion. SEC Rule 242.400(c)(2)(v) and CFTC
Regulation 41.42(c)(2)(v) permit exchanges to adopt rules containing
specified requirements for security futures dealers, on the basis of
which the financial relations between security futures intermediaries,
on the one hand, and qualifying security futures dealers, on the other,
are excluded from the customer performance bond requirements for
security futures. Rules so adopted by an exchange must meet the
criteria set forth in Section 7(c)(2)(B) of the Act. CME
[[Page 34695]]
proposes a market maker exclusion in its proposed Rule 930.B.2.b.
consistent with the requirements of those provisions. To qualify for
the market maker exclusion, a person must be a member of CME and
registered as a dealer with the SEC under Section 15(b) of the Act.
A proposed market maker must also hold itself out as willing to buy
and sell security futures for its own account on a regular or
continuous basis. The proposed market maker exclusion provides three
alternative ways for a person to satisfy this requirement. Under the
first alternative, the market maker must (1) provide continuous two-
sided quotations throughout the trading day for all delivery months of
security futures contracts representing a meaningful proportion of the
total trading volume of security futures contracts on the Exchange,
subject to relaxation during unusual market conditions as determined by
CME (such as a fast market in either a security futures contract or a
security underlying a security futures contract) at which times the
market maker must use its best efforts to quote continuously and
competitively; and (2) when providing quotations, quote with a maximum
bid/ask spread of no more than the greater of $0.20 or 150% of the bid/
ask spread in the primary market for the security underlying each
security futures contract. Beginning on the 181st calendar day after
the commencement of trading of security futures contracts on the
Exchange, a ``meaningful proportion of the total trading volume of
security futures contracts on the Exchange from time to time'' shall
mean a minimum of 20% of such trading volume.
Under the second alternative, the market maker must (1) respond to
at least 75% of the requests for quotation for all delivery months of
security futures contracts representing a meaningful proportion of the
total trading volume of security futures contracts on the Exchange,
subject to relaxation during unusual market conditions as determined by
the CME (such as a fast market in either a security futures contract or
a security underlying a security futures contract) at which times the
Market Maker must use its best efforts to quote competitively; and (2)
when responding to requests for quotation, quote within five seconds
with a maximum bid/ask spread of no more than the greater of $0.20 or
150% of the bid/ask spread in the primary market for the security
underlying each security futures contract. As with the first
alternative, beginning on the 181st calendar day after the commencement
of trading of security futures contracts on the Exchange, a
``meaningful proportion of the total trading volume of security futures
contracts on the Exchange from time to time'' shall mean a minimum of
20% of such trading volume.
Under the third alternative, the market maker is assigned to a
group of security futures contracts listed on the Exchange that is
either unlimited in nature (``Unlimited Assignment'') or is assigned to
no more than 20% of the security futures contracts listed on the
Exchange (``Limited Assignment''). In addition, this alternative
provides that: (a) At least 75% of the market maker's total trading
activity in Exchange security futures contracts is in its assigned
security futures contracts, measured on a quarterly basis; (b) during
at least 50% of the trading day, the market maker has bids or offers in
the market that are at or near the best market, except in unusual
market conditions (such as a fast market in either a security futures
contract or a security underlying a security futures contract), with
respect to at least 25% (in the case of an Unlimited Assignment) or at
least one (in the case of a Limited Assignment) of its assigned
security futures contracts; and (c) the first two requirements are
satisfied on at least 90% (in the case of an Unlimited Assignment) or
80% (in the case of a Limited Assignment, or in the case of either an
Unlimited or Limited Assignment but where the Exchange is listing four
or fewer security futures contracts) of the trading days in each
calendar quarter.
Under the proposed revisions, market makers are required to
maintain books and records including trading statements and other
financial records that would evidence compliance with these standards.
This recordkeeping requirement includes, without limitation, such
trading statements and other financial records as may be necessary
specifically to verify compliance. Failure on the part of a market
maker to comply with these standards may result in revocation of
security futures dealer status or other sanctions provided under CME
Rules.
Performance Bond Administration. Proposed Rule 930.C.2.a identifies
the types of performance bonds that a security futures intermediary may
accept from a customer. Consistent with SEC Rule 242.404(b) and CFTC
Regulation 41.46(b), acceptable types of performance bonds are limited
to: deposits of cash, margin securities (subject to specified
restrictions), exempted securities, any other assets permitted under
Regulation T of the Board of Governors of the Federal Reserve System to
satisfy a performance bond deficiency in a securities margin account,
and any combination of the foregoing. Proposed Rule 930.C.2.a. further
provides that the different types of eligible performance bonds are to
be valued in accordance with the applicable principles set forth in SEC
Rules 242.404(c) and 242.404(e) and CFTC Regulations 41.46(c) and
41.46(e).
Proposed Rule 930.C.2.b. provides that a security futures
intermediary shall not accept as performance bond from any customer
securities that have been issued by that customer or an affiliate of
that customer unless the intermediary files a petition with and
receives permission from the Exchange for such purpose. Proposed Rule
930.C.2.c. provides that all assets deposited by a customer to meet
performance bond requirements must be and remain unencumbered by third-
party claims against that customer.
Proposed Rule 930.K.2. requires a security futures intermediary to
take the deduction required with respect to an underfunded account in
computing its net capital under applicable SEC and CFTC Regulations if
the customer has failed to comply with a required performance bond call
within a reasonable period of time. This requirement is consistent with
SEC Rule 242.406(a) and CFTC Regulation 41.48(a). Further, Proposed
Rule 930.K.2. requires the liquidation of an account where there is a
liquidating deficit, in accordance with SEC Rule 242.406(b) and CFTC
Regulation 41.48(b).
2. Statutory Basis
CME's proposed rule change is consistent with Section 6(h)(3)(L) of
the Act in conjunction with Section 7(c)(2)(B) of the Act, in that the
proposed margin requirements for a security futures product will not be
lower than the lowest level of margin (excluding premium) required for
a comparable option contracts traded on any registered national
securities exchange. The SEC has implemented this provision in Rule
242.403(b)(1) under the Act, which as revised in 2020 under the
Customer Margin Release sets the minimum margin requirements for
security futures at 15% of current market value (reduced from 20%). The
CME's proposed revisions to CME Rule 930 follow that 15% standard and
also follow the offset strategies recognized under the Customer Margin
Release. Thus, CME's proposed rule change is consistent with Exchange
Act Sections 6(h)(3)(L) and 7(c)(2)(B) and the SEC's current
requirements implementing those statutory provisions.
[[Page 34696]]
CME's proposed rule change is also consistent with Section 6(b)(5)
of the Act in that it promotes competition and is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, and to protect investors and the public
interest. The CME believes that the proposed rule change is designed to
accomplish these goals by permitting members to trade security futures
contracts (as permitted under the Commission's rules and regulations)
and by establishing the margin requirements to be not lower than the
requirements under SEC and CFTC regulations.
B. CME's Statement on Burden on Competition
CME does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because it will apply generally
to market participants that will trade security futures that CME lists
for trading and will not discriminate between market participants.
C. CME's Statement on Comments on the Proposed Rule Change Received
From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#86f4f3eae3abe5e9ebebe3e8f2f5c6f5e3e5a8e1e9f0"><span class="__cf_email__" data-cfemail="2052554c450d434f4d4d454e5453605345430e474f56">[email protected]</span></a>. Please include
File Number SR-CME-2026-001 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street, NE, Washington,
DC 20549.
All submissions should refer to File Number SR-CME-2026-001. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the filing will be available for inspection and copying at
the principal office of CME. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to File Number
SR-CME-2026-001 and should be submitted on or before June 29, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-11383 Filed 6-5-26; 8:45 am]
BILLING CODE 8011-01-P
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