Notice of Commission Order - Application for Exemptive Relief - CME Group Exchanges

CME Group Exchanges orders and notices
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CHICAGO MERCANTILE EXCHANGE INC., BOARD OF TRADE OF THE CITY OF CHICAGO, INC., COMMODITY EXCHANGE, INC., AND NEW YORK MERCANTILE EXCHANGE, INC.

APPLICATION FOR EXEMPTIVE RELIEF

NOTICE OF COMMISSION ORDER

 

On October 22, 2013, the Commission issued an order applicable to Chicago Mercantile Exchange Inc., Board of Trade of the City of Chicago, Inc., Commodity Exchange, Inc., and New York Mercantile Exchange, Inc. (collectively, the CMEG Exchanges) whereby the following relief has been provided:

(a) pursuant to section 147 of the Securities Act (Ontario) (OSA) each of the CMEG Exchanges is exempt from the requirement to be recognized as an exchange under section 21 of the OSA;

(b) pursuant to section 80 of the Commodity Futures Act (Ontario) (CFA) each of the CMEG Exchanges is exempt from the requirement to be registered as a commodity futures exchange under subsection 15(1) of the CFA; and

(c) pursuant to section 38 of the CFA, trades in CMEG Contracts by Hedgers who are Ontario Users (as those terms are defined in issued order) are exempt from the registration requirement under section 22 of the CFA.

A copy of the Order is published in Chapter 2 of this Bulletin. In issuing the Order, no material amendments were made to the draft exemption order published for comment.

The Commission published the CMEG Exchanges’ application and draft exemption order for comment on August 22, 2013 on the OSC website at www.osc.gov.on.ca. A comment letter was received from TMX Group Limited which is also available on the OSC website. We summarize below the main comments and Staff's responses.

 

Comment   Response
The commenter raised concerns about the absence of reciprocity between Canadian and U.S. regulators, which creates an “unlevel playing field”. The commenter submitted that, because the SEC does not recognize the regulation and oversight of the OSC for Canadian exchanges seeking to carry on business in the U.S., U.S.-based exchanges should face a similar requirement when seeking to operate in the Canadian market.   As noted in OSC Staff Notice 21-702 Regulatory Approach for Foreign-Based Stock Exchanges, we are prepared to exempt an exchange if it is subject to an appropriate regulatory and oversight regime in another jurisdiction by its home regulator, subject to any terms and conditions necessary to protect Ontario investors, and subject to terms and conditions allowing the Commission to have access to information on the operations of the foreign-based securities exchange and the trading activity of Ontario participants. We also note that in the case of the CMEG Exchanges, their primary regulator in the U.S. is the CFTC.