[Federal Register Volume 88, Number 216 (Thursday, November 9, 2023)]
[Notices]
[Pages 77384-77388]
[FR Doc No: 2023-24759]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98850; File No. SR-FINRA-2023-014]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Establish a Short-Form Membership Application
Process and Partial Fee Waiver for Certain Firms Applying Due to
Amended Exchange Act Rule 15b9-1

November 3, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on October 30, 2023, the Financial Industry Regulatory
Authority, Inc. (``FINRA'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
FINRA. FINRA has designated the proposed rule change as constituting a
``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4
under the Act,\3\ which renders the proposal effective upon receipt of
this filing by the Commission. 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to adopt (1) FINRA Interpretive Material 1013-3
(``IM-1013-3'') that would set forth a short-form membership
application process for firms that apply for FINRA membership due to
the amendments to Exchange Act Rule 15b9-1,\4\ adopted by the
Commission on August 23, 2023; \5\ and (2) FINRA Interpretive Material
Section 4(e) of Schedule A to the FINRA By-Laws (``IM-Section 4(e)'')
that would provide a partial waiver of the new membership application
fee to those firms that are eligible to apply for FINRA membership
pursuant to proposed IM-1013-3. Proposed IM-1013-3 and IM-Section 4(e)
would be available only to SEC-registered non-FINRA member firms that
apply for FINRA membership due to the Commission's Exchange Act Rule
15b9-1 amendments and, as of August 23, 2023, have been a member of a
national securities exchange with which FINRA has had a regulatory
service agreement (``RSA'') for the 12-month period prior to August 23,
2023 (``Eligible Firms'').
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    \4\ 17 CFR 240.15b9-1.
    \5\ See Securities Exchange Act Release No. 98202 (August 23,
2023), 88 FR 61850 (September 7, 2023).
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    The text of the proposed rule change is available on FINRA's
website at http://www.finra.org, at the principal office of FINRA and
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On August 23, 2023, the Commission adopted amendments to Exchange
Act Rule 15b9-1 that narrowed the exemption from membership in a
registered national securities association (``Association'') for
certain SEC-registered brokers or dealers that effect securities
transactions other than on a national securities exchange of which they
are a member.\6\ Under amended Exchange Act Rule 15b9-1, a broker or
dealer that effects securities transactions other than on a national
securities exchange of which it is a member is exempt from Association
membership if such broker or dealer (1) is a member of a national
securities exchange; (2) carries no customer accounts; and (3) such
transactions result solely from orders that are routed by a national
securities exchange of which it is a member to comply with order
protection regulatory requirements, or are solely for the purpose of
executing the stock leg of a stock-option order.\7\ Due to the
amendments, certain existing SEC-registered brokers or dealers will no
longer qualify for the exemption from Association membership and must
become FINRA members.\8\ The Commission has announced an effective date
of November 6, 2023, and a compliance date of September 6, 2024.
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    \6\ See supra note 5.
    \7\ 17 CFR 240.15b9-1.
    \8\ FINRA is currently the only registered national securities
association.
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Application Review Process for New FINRA Membership Under FINRA Rule
1013 (New Member Application and Interview) and Application Filing Fee
    An entity seeking to become a new FINRA member firm must undergo an
application process that typically begins by filing Form NMA
(Application for New Membership) with FINRA in accordance with Rule
1013.\9\ FINRA Rule 1014 (Department Decision) provides that after
considering the application, a membership interview, other information
and documents provided by the applicant or obtained by FINRA, and the
public interest and protection of investors, FINRA must determine
whether the applicant meets the standards for admission.\10\ Under Rule
1014, FINRA must render a decision on a new membership application
within 180 days after the application is filed (or such later date as
FINRA and the applicant have agreed in writing).\11\ When the applicant
submits Form NMA, it must also submit the appropriate filing fee
pursuant to Section 4(e) of Schedule A to the FINRA By-Laws. As
described below, FINRA is proposing to establish a short-form
membership application process for Eligible Firms and provide for a
partial waiver of the new membership application fee.
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    \9\ A firm seeking new FINRA membership must also, among other
requirements, provide FINRA with the documents and information
outlined in Rule 1013(a)(1)(B) through (R).
    \10\ See generally Rule 1014(a).
    \11\ Pursuant to FINRA Rule 1015 (Review by National
Adjudicatory Council), an applicant may file a written request for
review of FINRA's decision with the National Adjudicatory Council.
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Short-Form Membership Application Process
    In lieu of completing Form NMA and the other requirements under
Rule 1013, including the new membership interview, proposed IM-1013-3
would allow an Eligible Firm to undergo a new membership application
process that would permit completing a short-form application. An
Eligible Firm would otherwise remain subject to all applicable FINRA
rules, including the provisions of the FINRA Rule 1000 Series
(Membership Application and Associated Person Registration).\12\
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    \12\ While FINRA typically has 180 days after a firm submits a
new membership application to issue a decision, absent any factors
that might prompt a request for additional information or for a full
membership application, FINRA anticipates that it can process most
applications for Eligible Firms and issue a decision in line with,
or in many cases more quickly than, FINRA's current Fast-Track
Review process timeframe for eligible applications. Under the Fast-
Track Review process, FINRA aims to process eligible full membership
applications within 100 days. See infra note 14.
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    FINRA recognizes that Eligible Firms have already undergone a
membership application and review process with at least one national
securities exchange to determine whether these firms were fit for
membership. In addition, FINRA currently has substantial information
about and experience with these firms and therefore is familiar with
their businesses and associated risks (e.g., operational risks, market
risk, market integrity risk) by virtue of the regulatory services FINRA
provides pursuant to the RSAs it has with the national securities
exchanges of which Eligible Firms are members.\13\ For example, FINRA
already conducts exams of Eligible Firms pursuant to an RSA, including
trading-related exams for most of these firms. FINRA also provides,
among other regulatory services, cross-market surveillance,
investigations and disciplinary services pursuant to those RSAs. Some
of the Eligible Firms are also affiliates of member firms. For these
reasons, FINRA believes an abbreviated, short-form membership
application process is appropriate for the Eligible Firms and that, in
most cases, FINRA can effectively determine whether an Eligible Firm
meets the membership standards in Rule 1014 without requiring
submission of a Form NMA, provision of additional information or
engaging in a formal interview with the firm.
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    \13\ FINRA already has access to most, if not all, documents and
information that would be required of these Eligible Firms during
the membership application process. For example, by virtue of the
regulatory services FINRA provides pursuant to the RSAs and related
Central Registration Depository (``Web CRD[supreg]'') agreements it
has with the national securities exchanges of which Eligible Firms
are members, FINRA has access to, among other documents and
information, Forms BD, Forms U4 for all registered persons and
principals and other information available on Web CRD[supreg], as
well as Risk Assessment Reports, financial filings such as FOCUS
Reports and Annual Reports and most recent Examination Reports with
accompanying files and dispositions.
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    Nonetheless, depending on particular facts and circumstances, FINRA
may find it necessary to obtain additional information to evaluate an
Eligible Firm for membership. To that end, proposed IM-1013-3 would
provide that FINRA, in the public interest and for the protection of
investors, may require an Eligible Firm to provide FINRA with
additional information or documents or meet any other requirement
pursuant to Rule 1013, or to apply for membership pursuant to the full
application and interview process under Rule 1013.\14\ In addition,
proposed IM-1013-3 would provide that if an Eligible Firm's application
for FINRA membership seeks to materially expand or change the firm's
business operations, such firm would be required to apply for new FINRA
membership pursuant to the full application and interview process under
Rule 1013, including completing Form NMA and submitting the appropriate
application fee set forth in Section 4(e) of Schedule A to the FINRA
By-Laws.\15\
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    \14\ Factors that might prompt a request for additional
information or a full membership application could include, for
example, whether an Eligible Firm's associated person is subject to
a statutory disqualification or there are regulatory gaps identified
that such firm would need to address to come into compliance with
FINRA rules.
    \15\ If a firm is approved for FINRA membership and subsequently
contemplates a business expansion to include activities beyond the
scope underlying the new membership approval or a material change in
business operations as that term is defined in paragraph (m) under
FINRA Rule 1011 (Definitions), then such firm must apply for
approval for a change in business operations pursuant to FINRA Rule
1017 (Application for Approval of Change in Ownership, Control, or
Business Operations) and would be subject to the appropriate fee
pursuant to Schedule A to the FINRA By-Laws.
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    Proposed IM-1013-3 would also require an Eligible Firm to submit
the

short-form application to FINRA at least 120 calendar days before the
amended Exchange Act Rule 15b9-1 compliance date to provide FINRA with
the time to process a firm's short-form membership application before
the amended Exchange Act Rule 15b9-1 compliance date--unless FINRA, in
its discretion, agrees to accept an application after this deadline but
before the amended Exchange Act Rule 15b9-1 compliance date.\16\ As
stated above, the Commission has announced a compliance date of
September 6, 2024.
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    \16\ As stated above, certain factors may prompt a request for
additional information or for a full membership application, which
could prolong the time needed for FINRA to process a firm's
application and issue a decision. Therefore, FINRA would encourage
firms to apply for membership pursuant to proposed IM-1013-3 even
earlier than 120 days before the compliance date of amended Exchange
Act Rule 15b9-1.
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Partial Membership Application Fee Waiver
    As stated above, the fee for an application for new membership,
submitted through Form NMA, is typically subject to the fee structure
set forth under Section 4(e) of Schedule A to the FINRA By-Laws.\17\
FINRA is proposing a partial waiver of the new membership application
fee for a short-form application submitted pursuant to proposed IM-
1013-3. Proposed IM-Section 4(e) would assess one-half the applicable
membership application fee set forth in Section 4(e) of Schedule A to
the FINRA By-Laws. FINRA believes a partial fee waiver is appropriate
with respect to the review of a short-form application submitted by an
Eligible Firm because, as stated above, FINRA has substantial
information about and experience with these firms and is familiar with
their business and associated risks by virtue of the regulatory
services FINRA provides pursuant to RSAs with the national securities
exchanges of which the Eligible Firms are members. As such, FINRA will
not need to obtain the same amount of information from an Eligible Firm
that applies with the short-form application or dedicate the same
resources to evaluate such an application as it would in other cases.
However, as stated above, if FINRA determines that an Eligible Firm
must undergo the full application and interview process pursuant to
Rule 1013, such firm shall be assessed the full membership application
fee set forth in Section 4(e) of Schedule A to the FINRA By-Laws.\18\
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    \17\ Pursuant to Section 4(e) of Schedule A to the FINRA By-
Laws, the fees associated with a new FINRA membership application
can vary, including a one-time application fee ranging from $7,500
to $55,000, depending on the number of registered representatives
associated with a firm.
    \18\ See FINRA By-Laws, Schedule A, Section 4(e).
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    FINRA has filed the proposed rule change for immediate
effectiveness. FINRA will announce the implementation date of the
proposed rule change in a Regulatory Notice.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\19\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest, and must not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. FINRA
believes the proposed rule change would facilitate efficient and
expedited processing of membership applications from the Eligible
Firms, while maintaining investor protection by ensuring that these
firms meet the applicable standards for FINRA membership. As stated
above, the Eligible Firms have already undergone a membership
application and review process with at least one national securities
exchange to determine whether these firms were fit for membership. In
addition, FINRA has substantial information about and experience with
these firms and therefore is familiar with their businesses and
associated risks (e.g., operational risks, market risk, market
integrity risk) by virtue of the regulatory services FINRA provides
pursuant to the RSAs it has with the national securities exchanges of
which Eligible Firms are members. FINRA also retains the ability to
request additional documents or information from an Eligible Firm or to
require a firm to undergo the full application and interview process
pursuant to Rule 1013, which further protects investors and the public
interest.
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    \19\ 15 U.S.C. 78o-3(b)(6).
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    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\20\ which requires, among
other things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls. FINRA believes that the proposed partial waiver of the
membership application fee, which would be available to all Eligible
Firms that qualify to apply for new FINRA membership pursuant to
proposed IM-1013-3, is consistent with an equitable allocation of
reasonable fees. FINRA believes the proposed partial fee waiver
reflects an equitable allocation of reasonable fees considering the
streamlined review process contemplated in the short-form membership
application process. As discussed above, to facilitate this streamlined
membership application process, FINRA is able to leverage the
substantial information about and experience with these firms gained by
virtue of the regulatory services FINRA provides pursuant to RSAs with
the national securities exchanges of which these firms are members. As
such, FINRA would not need to obtain the same amount of information
from an Eligible Firm applicant that it would from a non-Eligible Firm
applicant. Moreover, the review process would also be streamlined for
an Eligible Firm applicant relative to a non-Eligible Firm applicant.
Thus, it is equitable to apply the fee waiver only to the Eligible
Firms.
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    \20\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Economic Impact Assessment
(a) Regulatory Need
    As discussed above, as a result of amendments to Exchange Act Rule
15b9-1, certain SEC-registered brokers or dealers that effect
securities transactions other than on a national securities exchange of
which they are a member will no longer qualify for an exemption from
Association membership. FINRA understands that as a result,
approximately 62 firms may seek to become FINRA members by the
compliance date of amended Exchange Act Rule 15b9-1.\21\ FINRA further
understands that most, if not all, of these firms meet the standards
for

Eligible Firms as defined above. FINRA can, in most cases, effectively
determine whether an Eligible Firm meets the membership standards in
Rule 1014 without requiring submission of a Form NMA or subjecting such
a firm to the other application and interview requirements of Rule
1013.\22\
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    \21\ The Commission estimated that, as of April 2023, there were
64 firms that were SEC-registered broker-dealers and exchange
members but not FINRA members, and that such firms have forgone
FINRA membership presumably in reliance on Exchange Act Rule 15b9-1.
See Securities Exchange Act Release No. 98202 (August 23, 2023), 88
FR 61850, 61853-54 (September 7, 2023) (Exemption for Certain
Exchange Members; Final Rule). The actual number of firms that may
ultimately seek FINRA membership due to the narrowed exemption may
change based on several factors. For example, since the Commission's
estimate in April 2023, some firms have terminated their status as
an SEC-registered broker-dealer or have already become FINRA
members.
    \22\ The full membership application process may be required in
some cases. See supra note 14.
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    The proposed rule change to implement the short-form membership
application process would allow FINRA to review membership applications
from Eligible Firms efficiently while maintaining investor protection.
The partial membership application fee waiver is aligned with the
proposed short-form membership application process and the related
streamlined review process.
(b) Economic Baseline
    The economic baseline for the proposed rule change includes the
full application and interview process provided in Rule 1013, the
membership application fee set forth in Section 4(e) of Schedule A to
the FINRA By-Laws, and the recent amendments to Exchange Act Rule 15b9-
1. FINRA understands that approximately 62 firms may seek to become
FINRA members by the compliance date for amended Exchange Act Rule
15b9-1.
(c) Economic Impacts
i. Anticipated Benefits
    Eligible Firms that successfully become FINRA members through the
short-form membership application process would benefit from financial
and non-financial cost savings given that these firms would not be
required to provide documents and other information that are required
under the full application and interview process. Eligible Firms would
also receive a financial benefit from paying only one-half of the
membership application fee. Becoming FINRA members more quickly would
also resolve earlier any uncertainty firms may have about being able to
join FINRA by the Commission's compliance date for its amendments to
Exchange Act Rule 15b9-1.
ii. Anticipated Costs
    Relative to the baseline, FINRA anticipates little or no additional
risks to market integrity or investors. FINRA will obtain additional
information or documents or require a firm to go through the regular
NMA process if such is in the public interest and for the protection of
investors. A firm that seeks to materially expand or change its
business operations when applying would be required to apply for FINRA
membership pursuant to all requirements under Rule 1013. A firm that is
approved for FINRA membership and subsequently contemplates a business
expansion to include activities beyond the scope underlying the new
membership approval or a material change in business operations would
be required to apply for approval for a change in business operations
pursuant to Rule 1017 and be subject to the appropriate fee pursuant to
Schedule A to the FINRA By-Laws.
iii. Anticipated Competitive Effects
    Relative to the baseline in which Eligible Firms would go through
the full application and interview process and pay the full membership
application fee, FINRA anticipates minimal competitive effects, if any.
A streamlined membership application process for Eligible Firms would
provide them certainty that they will be able to continue their
business in compliance with amended Exchange Act Rule 15b9-1. Such
certainty would mitigate any concerns regarding their ability to
compete in the security markets without interruption.
    In addition, Eligible Firms that successfully become FINRA members
through the short-form membership application process would retain the
resources that they would have otherwise spent on the full application
and interview process and would pay only one-half of the membership
application fee. These firms may use these resources for operational or
investment purposes. Regarding the membership application fee, however,
FINRA anticipates that the median amount waived would be $6,250.\23\
FINRA does not believe that this amount would significantly impact an
Eligible Firm's business. Similarly, with respect to firms that seek
FINRA membership but do not meet the proposed definition of ``Eligible
Firm'' and therefore are not able to avail themselves of the short-form
membership application and partial fee waiver, FINRA does not
anticipate that the existence of the proposal would deter such firms
from applying for FINRA membership or place them at a significant
disadvantage relative to Eligible Firms. Thus, FINRA expects that the
effect of the proposed rule change on industry structure and
competition would be insignificant.
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    \23\ The average amount waived is anticipated to be $6,840 and
ranges from $3,750 to $15,000.
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(d) Alternatives Considered
    FINRA considered charging the full membership application fee for
Eligible Firms. However, FINRA believes a partial membership
application fee waiver is appropriate because, as stated above, FINRA
would not need to obtain the same amount of information from an
Eligible Firm applicant or dedicate the same resources to evaluate such
applicant as it would for a typical new applicant because FINRA is able
to leverage the substantial information about and experience with these
firms gained by virtue of the regulatory services FINRA provides
pursuant to the RSAs with the national securities exchanges of which
the Eligible Firms are members.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \24\ and Rule 19b-
4(f)(6) \25\ thereunder.
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
FINRA has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\27\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. FINRA proposes to make
the proposed rule change operative on the

date of filing to allow Eligible Firms to apply for FINRA membership
pursuant to proposed IM-1013-3 beginning on, or as close as possible
to, the November 6, 2023 effective date of amended Exchange Act Rule
15b9-1. FINRA stated that while under the proposed rule change Eligible
Firms must apply for membership at least 120 days before the September
6, 2024 compliance date of amended Exchange Act Rule 15b9-1, some firms
have already inquired about beginning the application process. For
those firms that wish to apply close to the effective date, this will
also provide FINRA with additional time to process such Eligible Firms'
applications and provide more certainty that they will be able to
continue their business in compliance with amended Exchange Act Rule
15b9-1. For these reasons, the Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and
the public interest. Therefore, the Commission hereby waives the
operative delay and designates the proposal operative upon filing.\28\
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    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ 17 CFR 240.19b-4(f)(6)(iii).
    \28\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-FINRA-2023-014 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-FINRA-2023-014. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2023-014 and should be submitted
on or before November 30, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-24759 Filed 11-8-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Notices]
[Pages 2158-2160]
[FR Doc No: 2011-439]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63651; File No. SR-CBOE-2011-002]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Establish a $5 Strike Price Program

January 6, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on January 3, 2011, the Chicago Board Options Exchange,
Incorporated (``CBOE''or the ``Exchange'') filed with the Securities
and Exchange Commission (``SEC'' or ``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    CBOE proposes to amend Interpretation and Policy .01 to Rule 5.5 to
allow CBOE to list and trade series in intervals of $5 or greater where
the strike price is more than $200 in up to five option classes on
individual stocks. The text of the rule proposal is available on the
Exchange's Web site (http://www.cboe.org/legal), at the Exchange's
principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to modify
Interpretation and Policy .01 to Rule 5.5 to allow the Exchange to list
and trade series in intervals of $5 or greater where the strike price
is more than $200 in up to five option classes on individual stocks
(``$5 Strike Price Program'') to provide investors and traders with
additional opportunities and strategies to hedge high priced
securities.
    Currently, Interpretation and Policy .01(e) to Rule 5.5 permits
strike price intervals of $10 or greater where the strike price is
greater than $200.\5\ The

Exchange is proposing to add the proposed $5 Strike Program as an
exception to the $10 or greater program language in Rule 5.5.01(e). The
proposal would allow the Exchange to list series in intervals of $5 or
greater where the strike price is more than $200 in up to five option
classes on individual stocks. The Exchange specifically proposes to
create new subparagraph (f) to Rule 5.5.01 to provide:

    \5\ Interpretation and Policy .01(d) permits strike intervals of
$2.50 or greater where the strike price is $25 or less and
Interpretation and Policy .01(c) permits strike price intervals of
$5 or greater where the strike price is greater than $25.

    The Exchange may list series in intervals of $5 or greater where
the strike price is more than $200 in up to five (5) option classes
---------------------------------------------------------------------------
on individual stocks.

    The Exchange believes the $5 Strike Price Program would offer
investors a greater selection of strike prices at a lower cost. For
example, if an investor wanted to purchase an option with an expiration
of approximately one month, a $5 strike interval could offer a wider
choice of strike prices, which may result in reduced outlays in order
to purchase the option. By way of illustration, using Google, Inc.
(``GOOG'') as an example, if GOOG were trading at $610 \6\ with
approximately one month remaining until expiration, the front month
(one month remaining) at-the-money call option (the 610 strike) might
trade at approximately $17.50 and the next highest available strike
(the 620 strike) might trade at approximately $13.00. By offering a 615
strike, an investor would be able to trade a GOOG front month call
option at approximately $15.25, thus providing an additional choice at
a different price point.
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    \6\ The prices listed in this example are assumptions and not
based on actual prices. The assumptions are made for illustrative
purposes only using the stock price as a hypothetical.
---------------------------------------------------------------------------

    Similarly, if an investor wanted to hedge exposure to an underlying
stock position by selling call options, the investor may choose an
option term with two months remaining until expiration. An additional
$5 strike interval could offer additional and varying yields to the
investor. For example if Apple, Inc. (``AAPL'') were trading at $310
\7\ with approximately two months remaining until expiration, the
second month (two months remaining) at-the-money call option (the 310
strike) might trade at approximately $14.50 and the next highest
available strike (the 320) strike might trade at $9.90. If at
expiration the price of AAPL closed at $310, the 310 strike call would
have yielded a return of 4.68% and the 320 strike call would have
yielded a return of 3.19% over the holding period. If the 315 strike
call were available, that series might be priced at approximately
$12.10 (a yield of 3.90% over the holding period) and would have had a
lower risk of having the underlying stock called away at expiration
than that of the 310 strike call.
---------------------------------------------------------------------------

    \7\ The prices listed in this example are assumptions and not
based on actual prices. The assumptions are made for illustrative
purposes only using the stock price as a hypothetical.
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    With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority have the necessary systems capacity
to handle the potential additional traffic associated with the listing
and trading of classes on individual stocks $5 Strike Price Program.
The proposed $5 Strike Price Program would provide investors increased
opportunities to improve returns and manage risk in the trading of
equity options that overlie high priced stocks. In addition, the
proposed $5 Strike Price Program would allow investors to establish
equity options positions that are better tailored to meet their
investment, trading and risk management requirements.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act \8\ and the rules and regulations thereunder and, in
particular, the requirements of Section 6(b) of the Act.\9\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirements that the rules of
an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest. The Exchange believes the $5 Strike Price Program
proposal will provide the investing public and other market
participants increased opportunities because a $5 series in high priced
stocks will provide market participants additional opportunities to
hedge high priced securities. This will allow investors to better
manage their risk exposure, and the Exchange believes the proposed $5
Strike Price Program would benefit investors by giving them more
flexibility to closely tailor their investment decisions in a greater
number of securities. While the $5 Strike Price Program will generate
additional quote traffic, the Exchange does not believe that this
increased traffic will become unmanageable since the proposal is
limited to a fixed number of classes. Further, the Exchange does not
believe that the proposal will result in a material proliferation of
additional series because it is limited to a fixed number of classes
and the Exchange does not believe that the additional price points will
result in fractured liquidity.
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    \8\ 15 U.S.C. 78s(b)(1).
    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to that of
another exchange that has been approved by the Commission.\13\
Therefore, the Commission designates the proposal operative upon
filing.\14\
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    \13\ See Securities Exchange Act Release No. 63654 (January 6,
2011) (SR-Phlx-2010-158) (order approving establishment of a $5
Strike Price Program).
    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).

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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2011-002 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-002. This file
number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2011-002 and should be
submitted on or before February 2, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-439 Filed 1-11-11; 8:45 am]
BILLING CODE 8011-01-P


For arsenic, the maximum reported concentration was undetected at a value of 0.05 mg/L, a value slightly higher than the maximum allowable TCLP concentration of 0.042 mg/L. The EPA's review of the corresponding laboratory reports indicate that the laboratory reported sample results from the 7/31/2017 characterization sampling round as non-detect based on a practical quantitation limit of 0.05. Subsequent laboratory reports for the 8/31/2017 and 10/4/2017 characterization rounds reported TCLP arsenic results as non-detect at a level of 0.001 mg/L based on a lower method detection limit rather a practical quantitation limit. Since the total arsenic results for all characterization samples are both low and consistent, ranging from 2.02 to 4.77 mg/kg, the EPA believes that the TCLP arsenic results for the 7/31/2017 results are not likely to be materially different than lower non-detect results for the 8/31/2017 and 10/4/2017 sample results. Therefore, the EPA concludes that even though the TCLP arsenic data from the 7/31/2018 laboratory report does not explicitly document satisfaction of the 0.042 mg/L TCLP arsenic delisting criterion, the overall data set clearly supports a conclusion that the TCLP arsenic results do not exceed the maximum allowable concentration of 0.042 mg/L from any of the characterization sampling rounds. The EPA further concludes that the non-detect value of 0.05 mg/L for TCLP arsenic based on a laboratory practical quantitation limit is not a sufficient basis to disqualify Sandvik's waste from being delisted. Sandvik must, of course, ensure that should the EPA grant the requested delisting any required periodic verification sampling and analysis must have appropriate data quality that addressed this issue.


September 3, 2004 MEMORANDUM FROM: Steven Silverman, Attorney, EPA TO: Hazardous Waste Combustor MACT Rule Docket ( OAR 2004 0022)

RE: Meeting with David Case, Environmental Technology Council On September 3, 2004, I met with David Case, Director of the Environmental Technology Council. We discussed the ETC's comments to the April 20 proposed rule, and also discussed comments submitted by Earthjustice/ Sierra Club. Among issues we discussed were floor methodologies, the function of a PM standard, whether feed control is suitable for raw material inputs into hazardous waste combustion devices, and how EPA arrived at the proposed variability factors. We also discussed ETC's alternative methodology for deriving MACT floors, and whether ETC had verified the identities of the sources that would be screened out under the ETC approach.


[Federal Register Volume 77, Number 26 (Wednesday, February 8, 2012)]
[Notices]
[Page 6557]
[FR Doc No: 2012-2858]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER11-4628-000]

PJM Interconnection, L.L.C.; Supplemental Notice for Staff
Technical Conference

    Take notice that the staff technical conference in the above
captioned proceeding, to be held on February 14, 2012, will include a
listen-only call-in line for participants who are unable to attend in
person. If you need a listen-only line, please email Sarah McKinley
<EMAIL_ADDRESS>by 5 p.m. (EST) on Friday, February 10, with
your name, email, and phone number, in order to receive the call-in
information the day before the conference. Please use the following
text for the subject line, ``ER11-4628-000 listen-only line
registration.''
    FERC conferences are accessible under section 508 of the
Rehabilitation Act of 1973. For accessibility accommodations please
send an email to<EMAIL_ADDRESS>or call toll free (866) 208-
3372 (voice) or<PHONE_NUMBER> (TTY), or send a fax to<PHONE_NUMBER>
with the required accommodations.
    Parties will be provided an opportunity to file comments after the
conference. The Commission will announce the comment period on or after
the day of the conference.
    Parties seeking additional information regarding this conference
should contact Tristan Cohen at<EMAIL_ADDRESS>or (202) 502-
6598.

    Dated: February 2, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-2858 Filed 2-7-12; 8:45 am]
BILLING CODE 6717-01-P