Effective Sunday, December 2, 2012, for trade date Monday, December 3, 2012, contingent upon closing of the merger of the Board of Trade of Kansas City, Missouri, Inc. (“KCBT”) and the Kansas City Board of Trade Clearing Corporation (“KCBTCC”) with CME Group Inc. on November 30, 2012, and pending all relevant CFTC regulatory review periods, please be advised that KCBT will adopt revised exchange rules (“Rules”) and KCBTCC will adopt revised by-laws (“By-Laws”). Substantive revisions will be adopted to finalize the merger transaction and to conform to applicable CFTC regulations. Conforming amendments will be adopted to align the Rules and By-Laws with comparable provisions in CME Group rulebooks.
Substantive revisions to the KCBT Rules will include the following:
· Revising stock classes, stock ownership requirements for exchange membership, membership transfer rules, and shareholder voting rights to reflect ownership by a single shareholder
· Eliminating Board and Board-level Committee hearings for membership lease approvals and appeals for reinstatement of suspended Permit Holders, reflecting the approach taken by exchanges owned by CMEG
· Changing the KCBT governance structure, officer selection procedure, and number of Board members to conform to the governance structure of CMEG and its subsidiary exchanges
· Dissolving the Appeals, Finance, Products, Membership, Nominating, Regulatory and Oversight, Marketing Education and Public Relations; Planning and Project; Rules; Elevator, Warehouse, Weight and Inspection, and Executive standing Committees to eliminate unnecessary or redundant activities
· Establishing Emergency Financial Committee (“EFC”) powers aligned with the powers, policies, and procedures of the CMEG EFC
· Revising conflict-of-interest and emergency authority provisions to conform with recently implemented DCM Core Principles and the regulations promulgated thereunder
· Removing rulebook chapters related to cash products (Chapter 24 (“Value Line“), Chapter 26 (“Options on VLA”), Chapter 30 (“Cash Trading”), Chapter 31 (“Cash Arbitration”), and Chapter 32 (“Financial Requirements; Cash Grain”)) since KCBT will no longer list cash market products
To view the changes to the KCBT Rules in their entirety, please click on the following link:
Substantive revisions to the KCBTCC By-Laws will include the following:
· Establishing in the Board the powers of the Clearing House Risk Committee (“CHRC”) and aligning those powers, policies and procedures with those of the CMEG CHRC.
· Providing the Board the power to delegate its clearing risk oversight powers to the CHRC
· Eliminating cross-margining rules since the KCBTCC will no longer clear the products to which they apply
· Eliminating rules for special clearing participants since that status applies only in regard to cross-margined products that will no longer be cleared by the KCBTCC
· Changing appointment procedures and duties of KCBTCC officers and managers to reflect the approach taken by the clearinghouse owned by CMEG
· Reallocating risk assessment and liquidation management responsibilities between the Clearing House manager and the Board to conform to the governance structure and risk management functions of CMEG and its clearinghouse
· Allowing outside, non-member directors to be appointed to the Board of Directors (“Board”)
To view the changes to the KCBTCC Rules in their entirety, please click on the following link:
If you have any questions concerning this matter, please contact Stephen Trimper, Senior Director and Associate General Counsel at 312.930.3124, or via email at Stephen.Trimper@cmegroup.com.
For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at 312.930.3434 or firstname.lastname@example.org.