Decision: Chicago Mercantile Exchange Inc.
Headnote
OSC Rule 91-507 -- derivatives trade reporting obligations -- Applicant seeking extension of relief from requirements to publicly disseminate transaction level data 48 hours from the execution time stamp -- relief granted, subject to conditions.
DIRECTOR'S EXEMPTION
IN THE MATTER OF CHICAGO MERCANTILE EXCHANGE INC.
DECISION
(Section 42 of Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting)
WHEREAS Chicago Mercantile Exchange Inc. (the "Applicant") is a designated trade repository pursuant to an order under section 21.2.2 of the Securities Act (Ontario) (the "Act") dated September 19, 2014 (the "Designation Order") and therefore the Applicant, as a designated trade repository, is subject to obligations under Ontario Securities Commission ("OSC" or the "Commission") Rule 91-507 Trade Repositories and Derivatives Data Reporting ("OSC Rule 91-507");
AND WHEREAS the Applicant previously applied to the Director (as such term is defined in section 1 of the Act) for an order pursuant to Section 42 of OSC Rule 91-507 exempting the Applicant from the requirements under subsection 39(3) and item 7 of Appendix C of OSC Rule 91-507 for a designated trade repository to publicly disseminate prescribed transaction-level data for certain derivatives, 48 hours after the time and date represented by the execution timestamp field of the transaction (the "48-Hour Dissemination Requirement") and was granted an exemption from the 48 Hour Dissemination Requirement on February 9, 2017, expiring on February 9, 2022 (the "2017 Exemption");
AND WHERAS the Applicant has filed an application to the Director to issue a decision to extend the expiry date for the 48-Hour Dissemination Requirement relief;
AND UPON the Applicant having represented to the Director that:
1. the Applicant is a corporation organized under the laws of the State of Delaware in the United States and is a wholly owned subsidiary of CME Group Inc. ("CMEG");
2. CMEG is a publicly traded for-profit corporation organized under the laws of Delaware and listed for trading on the NASDAQ Global Select Market and is the ultimate parent company of the Applicant;
3. the Applicant provides trade repository services in Ontario pursuant to the Designation Order and is subject to requirements and obligations applicable to designated trade repositories under OSC Rule 91-507 and to the terms and conditions that are set out in Schedule "A" of the Designation Order;
4. the Applicant accepts derivatives transaction data required to be reported under the OSC Rule 91-507 for credit, interest rate, commodity, equity and foreign exchange asset classes;
5. as prescribed in Appendix C to OSC Rule 91-507, the Applicant is required to publicly disseminate transaction-level data for certain derivatives (the "Disseminated Transactions") in compliance with the 48-Hour Dissemination Requirement;
6. in order to publicly disseminate the Disseminated Transactions and comply with the 48-Hour Dissemination Requirement, the Applicant relies on technology infrastructure and resources that are shared across the whole of its organization (the "Applicant's Systems");
7. the Applicant's Systems, including the technology infrastructure and resources used to publicly disseminate the Disseminated Transactions, require certain periods of non-operation or downtime ("System Downtime") to comply with system and operational risk control requirements including the requirements set out in section 21 of OSC Rule 91-507 as well as
8. to allow for regular maintenance, major system upgrades, database patches and emergency fixes, all which are critical for the safe, secure and efficient operation of the Applicant's trade repository services;
9. there are twenty-four consecutive hours of System Downtime scheduled each week, starting at 1:00 am ET on Saturday until 1:00 am ET on Sunday, affecting the Applicant's Systems;
10. System Downtime can also occur on an ad hoc basis; and
11. as a consequence of both scheduled and ad hoc System Downtime, the Applicant is from time to time unable to comply with the 48-Hour Dissemination Requirement for certain Disseminated Transactions;
AND UPON the Director being satisfied that exempting the Applicant from the 48-Hour Dissemination Requirement would not be prejudicial to the public interest;
IT IS THE DECISION of the Director that pursuant to section 42 of OSC Rule 91-507, the Applicant is exempted from the 48-Hour Dissemination Requirement when the Applicant is prevented from publicly disseminating a Disseminated Transaction in accordance with the 48-Hour Dissemination Requirement as a direct consequence of System Downtime upon expiry of the 2017 Exemption (the "2022 Exemption");
PROVIDED THAT:
1. the Applicant publicly disseminates each Disseminated Transaction that was not publicly disseminated in accordance with the 48-Hour Dissemination Requirement as a direct consequence of System Downtime as soon as practicable following the conclusion of the period of System Downtime that prevented public dissemination of the Disseminated Transaction in accordance with the 48-Hour Dissemination Requirement; and
2. the 2022 Exemption expires on the coming into force of subsequent amendments to OSC Rule 91-507, which will permit trade repositories to exceed the 48-Hour Dissemination Requirement due to periods of routine and ad hoc downtime required for maintenance, system upgrades, database patches or emergency fixes.
DATED: January 28, 2022