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

[Federal Register Volume 91, Number 109 (Monday, June 8, 2026)]

[Notices]

[Pages 34693-34696]

From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ]

[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 https://www.sec.gov/files/rules/other/2026/34-105336.pdf .

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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

Use the Commission's internet comment form ( http://www.sec.gov/rules/sro.shtml ); or

Send an email to [email protected] . Please include

File Number SR-CME-2026-001 on the subject line.

Paper Comments

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 ( http://www.sec.gov/rules/sro.shtml ).

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