[Federal Register: April 5, 2007 (Volume 72, Number 65)]
[Notices]
[Page 16839-16841]
[DOCID:fr05ap07-139]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55559; File No. SR-NYSE-2005-03]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Amendment No. 3 to and Order Granting Accelerated
Approval of Proposed Rule Change, as Amended Related to Exchange Rule
325 (Capital Requirements for Member Organizations) and Rule 326
(Growth Capital Requirement, Business Reduction Capital Requirement,
Unsecured Loans and Advances)

 March 29, 2007.

I. Introduction

    On January 5, 2005, the New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or the ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the ``Exchange Act''),\1\ and Rule
19b-4 thereunder,\2\ the proposed rule change relating to Exchange
Rules 325 and 326. The NYSE filed Amendment No. 1 to the proposed rule
change on February 13, 2006. The NYSE filed Amendment No. 2 to the
proposed rule change on March 17, 2006.\3\ The proposed rule change was
published in the Federal Register on August 8, 2006.\4\ The Commission
received one comment on the proposal.\5\ On February 1, 2007, the
Exchange filed Amendment No. 3 to the proposed rule change.\6\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Partial Amendment No. 2 (``Amendment No. 2''), the
Exchange clarified the application of proposed amendments to NYSE
Rule 326 to make explicit the ability of the Exchange to restrict
the growth or business of a member organization, respectively, when
its tentative net capital declines below the early warning
notification amount required by the Exchange Act Rule 15c3-
1(a)(7)(ii).
    \4\ Exchange Act Release No. 54255 (July 31, 2006), 71 FR 45086
(August 8, 2006).
    \5\ See letter from Thomas Petrone, Managing Director, Citigroup
Global Markets, Inc. to Nancy M. Morris, Secretary, Commission,
dated September 13, 2006.
    \6\ See Partial Amendment No. 3 dated February 1, 2007 (``
Amendment No. 3''). Amendment No. 3 proposed amended language to
Rules 325 and 326 to add an early warning notification more
restrictive than Commission/CFTC requirements. The text of Amendment
No. 3 is available at the NYSE, the Commission's Public Reference
Room, and http://www.nyse.com.

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    This order provides notice of Amendment No. 3 to the proposed rule
change and approves the proposed rule change as amended on an
accelerated basis.

II. Description of the Proposal

    The proposed rule change consists of amendments to Rule 325 and
Rule 326 to reflect Commission amendments under the Exchange Act,
including amendments to Exchange Act Rule 15c3-1 that established an
alternative method of computing net capital for broker-dealers, and to
reflect amendments to Commodity Futures Trading Commission rules
(``CFTC'') under the Commodities Exchange Act \7\ with respect to
minimum net capital requirements for futures commission merchants.\8\
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    \7\ 7 U.S.C. 1 et seq.
    \8\ The CFTC rules became effective on September 30, 2004. See
69 FR 49784 (Aug. 12, 2004). The Commission also recently proposed
amendments to Exchange Act Rule 15c3-1 and Rule 17a-11 to conform
provisions of its net capital rule to the CTFC amendments. See
Exchange Act Release No. 54575 (October 5, 2006), 71 FR 60636
(October 13, 2006).
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    The Commission's net capital rule, Exchange Act Rule 15c3-1,
imposes minimum financial requirements on broker-dealers.\9\ To help
insure that broker-dealers maintain sufficient liquid assets to satisfy
promptly the claims of customers and cover potential market and credit
risks, the net capital rule requires broker-dealers to maintain
different minimum levels of capital based upon the nature of their
business and whether they handle customer funds or securities.
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    \9\ 17 CFR 240.15c3-1.
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    On June 8, 2004, the Commission adopted rule amendments under the
Exchange Act, including amendments to Exchange Act Rule 15c3-1, that
established a voluntary, alternative method of computing net capital
for certain large broker-dealers that are part of consolidated
supervised groups referred to as consolidated supervised entities
(``CSEs'').\10\ Under the Commission amendments, a broker-dealer may
use this alternative method only if its ultimate holding company agrees
to compute group-wide allowable capital and allowances for market,
credit, and operational risk in accordance with the standards adopted
by the Basel Committee on Banking Supervision, and consents to group-
wide Commission supervision. The alternative method of computing net
capital permits a broker-dealer to use

models, such as ``value-at-risk'' (``VAR'') models and scenario
analysis, which are already part of its internal risk management
control system to calculate the market risk and derivatives-related
credit risk components of its net capital requirement. The deduction
for market risk calculated using internal models replaces the
traditional ``haircut'' approach to calculating net capital.\11\
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    \10\ Exchange Act Release No. 49830 (June 8, 2004), 69 FR 34425
(June 21, 2004).
    \11\ The ``haircut'' approach to computing net capital involves
reducing the value of firms' proprietary securities by pre-
determined percentages to allow for potential reductions in market
value. See paragraph (c)(2)(vi) of Rule 15c3-1.
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    In 2004, the CFTC amended Rule 1.17 and adopted certain new
``risked-based'' capital requirements applicable to futures commission
merchants.\12\ CFTC Rule 1.17, as amended, requires a futures
commission merchant to maintain adjusted net capital equal to a
specific percentage of the margin required to be collected under
exchange or clearing organization rules for positions carried in
customer and noncustomer accounts.\13\
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    \12\ See supra note 8.
    \13\ 17 CFR 1.17.
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    When NYSE member firms allow their net capital to decline below
certain levels, the firms risk non-compliance with the requirements of
Exchange Act Rule 15c3-1. NYSE Rules 325 and 326 are designed to alert
the Exchange before such problems occur, and to enable the Exchange to
prevent membership non-compliance by restricting the business
activities of any member organization whose net capital falls below
certain defined levels.

Proposed Amendment to NYSE Rule 325

    Rule 325, the Exchange's primary net capital rule, requires NYSE
member firms to comply with Exchange Act Rule 15c3-1 and imposes
additional requirements to ensure such compliance. Rule 325(b) requires
a member organization to notify the Exchange if its net capital falls
below certain percentages. The proposed amendments to Rule 325(b)(1)
reflect recent changes to the CFTC rules with respect to risk-based
capital requirements for futures commission merchants. The proposed
amendments conform Rule 325 to these CFTC rule changes.\14\
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    \14\ See supra note 8; see also 17 CFR 1.17.
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    In addition, the proposed amendments also add Rule 325(b)(3), which
would require a member organization to provide concurrently to the
Exchange a copy of any report or notification made to the Commission
pursuant to Exchange Act Rule 17a-11 \15\ or CFTC Rule 1.12.\16\ The
NYSE stated that this new requirement is necessary to help ensure that
the Exchange continues to receive timely notification of potential
violations of Exchange Act Rule 15c3-1, including the rule's CSE
provisions. Therefore, because CFTC Rule 1.12 requires notification by
any futures commission merchant that experiences a decline in net
capital below the CFTC's early warning levels, the Exchange will
continue to receive notification if a member organization acting as
futures commission merchant is in danger of violating CFTC minimum
capital requirements.
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    \15\ 17 CFR 240.17a-11.
    \16\ 17 CFR 1.12.
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Proposed Amendments to NYSE Rule 326

    NYSE Rule 326, which enables the Exchange to restrict a member
organization's business activities if its net capital falls below
certain defined levels, uses a two-step approach to preventing
membership non-compliance with Exchange Act Rule 15c3-1. First, Rule
326(a) allows the Exchange to prohibit a member organization from
expanding its business if its net capital falls below specified levels.
Second, if a member organization's net capital falls below lower,
specified levels, Rule 326(b) allows the Exchange to compel it to
reduce its existing business. To enable the Exchange to regulate its
membership proactively (that is, to act if a member or member
organization is in danger of violating Exchange Act Rule 15c3-1, rather
than waiting until Exchange Act Rule 15c3-1 has been violated), the
levels specified in NYSE Rule 326 are higher than those contained in
Exchange Act Rule 15c3-1.
    The proposed amendments would add language to provide minimum
tentative net capital \17\ and net capital levels for the Exchange to
use when prohibiting, under Rule 326(a), the expansion of business by a
member organization using the alternative method of computing net
capital under the Commission's CSE rules. The proposed amendments also
conform the rule language with respect to member organizations
registered as futures commission merchants to the CFTC rule amendments
regarding risk-based capital requirements.
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    \17\ ``Tentative net capital'' is defined in the CSE rules as
net capital before deductions for market and credit risk. See
Exchange Act Rule 15c3-1(c)(15).
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    The NYSE stated that the levels proposed in Rule 326(a) for CSE
firms (50 percent of the tentative net capital level that triggers
Commission notification or a net capital level of less than $1.25
billion) would not unduly restrict a member organization's business,
but would allow the Exchange, after evaluating a member organization's
financial condition, to use the disincentive of restricted business
expansion to encourage necessary corrective action by a member
organization whose net capital has fallen to levels that risk violation
of Exchange Act Rule 15c3-1.
    The Exchange also proposes to amend Rule 326(a) to require a
futures commission merchant to restrict its business activities during
any period in which its net capital is less than 120 percent of the
minimum risk-based capital requirements of CFTC Rule 1.17.
    The Exchange also proposes to amend Rule 326(b) to provide minimum
tentative net capital and net capital levels for the Exchange to use in
requiring a CSE firm to reduce its business pursuant to Rule 326(b).
The Exchange stated that the levels proposed in Rule 326 (40 percent of
the tentative net capital level that triggers Commission notification
or net capital of less than $1 billion) would not unduly restrict a
member organization's business, but would allow the Exchange, after
evaluating a member organization's financial condition, to use the
disincentive of mandatory business reduction to encourage necessary
corrective action by a member organization whose net capital has fallen
to levels that risk violation of Exchange Act Rule 15c3-1.
    The proposed rule changes to Rule 326(b) also would require a
member organization to reduce its business if its net capital falls
below 110 percent of the minimum capital requirements of CFTC Rule 1.17
(the same level that triggers notification to the CFTC under CFTC Rule
1.12). Therefore, the Exchange will retain the ability to compel a
member organization to reduce its business if its net capital falls to
levels that may violate CFTC minimum capital requirements.
    The Exchange also proposed rule amendments to Rules 326(c) and (d)
to reflect the CFTC rule amendments with respect to risk-based capital
requirements for futures commission merchants. These proposed rules
amendments are parallel to the proposed changes to Rules 326(a) and
(b), respectively.
    Finally, the proposed rule amendments contain proposed language
changes to renumber certain paragraphs and other non-substantive
changes.

III. Summary of Comment Received

    The Commission received one comment letter to the proposed rule
change.\18\ The commenter supported prompt implementation of the
proposal and commented specifically on the proposed changes to NYSE
Rule 431(e). The NYSE, however, deleted this proposed paragraph in
Amendment No. 3, and determined to proceed with the proposed rule
change addressing amendments to NYSE Rules 325 and 326 only. No
specific comments were received with respect to the proposed amendments
to these rules.
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    \18\ See supra note 5.
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IV. Discussion and Commission Findings

    The Commission has carefully reviewed the proposed rule change and
comment letter and finds that the proposed rule change is consistent
with the requirements of Section 6(b)(5) \19\ of the Exchange Act,
which requires that the rules of the Exchange be designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public
interest.\20\
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    \19\ 15 U.S.C. 78f(b)(5).
    \20\ In approving the proposed rule change, as amended, the
Commission notes that it has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    The Commission believes that the proposed amendments are consistent
with the requirements of Section 6(b)(5) of the Act in that they align
the language in Rules 325 and 326 to reflect the Commission amendments
to Rule 15c3-1 with regard to the alternative method of computing net
capital for broker-dealers and they incorporate the CFTC rule
amendments for NYSE member firms registered as futures commission
merchants.
    NYSE has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of Amendment No. 3 in the Federal
Register. The Commission notes that the proposal, as modified by
Amendment Nos. 1 and 2, was published for notice and comment,\21\ and
that the Commission received one comment letter.\22\ In Amendment No.
3, NYSE made proposed changes to NYSE Rules 325 and 326 to make
conforming changes to CFTC early warning requirements for futures
commission merchants and determined not to proceed with amendments to
Rule 431(e).\23\ Accordingly, the Commission does not believe that
Amendment No. 3 raises any new or novel issues. Based on the above, the
Commission finds good cause to accelerate approval of the proposed rule
change, as amended.
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    \21\ See supra note 4.
    \22\ See supra note 5.
    \23\ The CFTC rules became effective on September 30, 2004. See
69 FR 49784 (Aug. 12, 2004).
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V. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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-NYSE-2005-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSE-2005-03. 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 inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of NYSE.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\24\ that the proposed rule change (SR-NYSE-2005-03), as amended,
be, and hereby is, approved on an accelerated basis.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-6311 Filed 4-4-07; 8:45 am]

BILLING CODE 8010-01-P


MEMORANDUM
SUBJECT: May 11, 2016, meeting with Portland Cement Association (PCA) to discuss alternative HCl testing procedures under the Portland cement NESHAP
FROM: Mike Laney, RTI
TO: Sharon Nizich, US EPA
DATE: May 12, 2016
ATTENDEES:
                                      PCA
                                      EPA
                                      RTI
Jim Peeler, Emissions Measurement
Michael Schon, PCA
Keith Barnett
Stef Johnson
Sharon Nizich
Robin Segall
Mike Laney

SUMMARY:
We discussed the following:
1. The HCl alternative monitoring method.
2. The Hg alternate calibration gas QA method.
3. The upcoming Risk and Technology Review proposal for the Portland Cement Subpart LLL rule.
4. Rescheduling of the EPA site visit to the best-in-class Portland cement facility as part of EPA's technology review. PCA identified the week of June 13 as a suitable time for EPA to conduct a site visit to the Cemex, Balcones plant in New Braunfels, TX.