[Federal Register: June 28, 2011 (Volume 76, Number 124)]
[Notices]
[Page 37863-37866]
[DOCID:fr28jn11-115]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64719; File No. SR-ISE-2011-33]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change Relating to Appointments
to Competitive Market Makers

June 22, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\

notice is hereby given that on June 10, 2011, the International
Securities Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which items have been
prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to revise the manner in which Competitive
Market Makers are appointed to options classes. The text of the
proposed rule change is available on the Exchange's Web site http://
www.ise.com, at the principal office of the Exchange, 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 Exchange 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. The self-regulatory organization 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
    The ISE's membership is divided into three categories, Primary
Market Makers (``PMMs''), Competitive Market Makers (``CMMs'') and
Electronic Access Members. There are 10 PMM trading rights and 160 CMM
trading rights (collectively ``market maker rights''). In order to
access the Exchange as a market maker, a member must own or lease one
or more market maker rights. EAMs are not required to purchase a
membership right in order to access the Exchange. Under the current
structure, options traded on the Exchange are divided into 10 groups,
with one of the 10 PMM trading right and 16 of the 160 CMM trading
rights appointed to each group. Thus, each PMM and CMM trading right is
associated with a specific group of options. This structure has been in
place since ISE began operations in 2000. The purpose of this proposed
rule change is to change the manner in which the Exchange appoints
options classes with respect to CMM trading rights.
    The Exchange proposes to change the structure of CMM appointments
to give market makers more flexibility to choose the options classes to
which they are appointed. Under the current structure that associates
each membership with a particular group of options, a member generally
must own or lease multiple CMM trading rights in order to gain access
to the options classes in which it seeks to make markets. Moreover, the
structure requires market makers to provide continuous quotations in a
minimum number of options classed in each group, which results in some
market makers entering in some options classes continuous quotations
that are away from the national best bid and offer solely to satisfy
the minimum requirement. While such quotations do not add to the
quality of the ISE's market or the national market system, they place a
burden on the Exchange and its members with respect to the need to
maintain additional systems capacity to handle the quotation traffic.
    To address the issues created by the current CMM structure, the
Exchange proposes to allow CMMs to seek appointment in the options
classes listed on the Exchange across the groups of options assigned to
particular PMMs. Under the proposal, the Exchange will assign points to
each options class equal to its percentage of overall industry volume
(not including exclusively-traded index options), rounded down to the
nearest tenth of a percentage. A CMM will be able to seek appointments
to options classes that total: (i) 20 points for the first CMM trading
right it owns or leases; and (ii) 10 points for the second and each
subsequent CMM trading right it owns or leases.\3\ CMMs will be able to
change their appointments at any time upon advance notification to the
Exchange.\4\ This structure is similar to the way in which the Chicago
Board Options Exchange allows its market makers to choose options to
which they are appointed.\5\
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    \3\ Under the proposal, CMMs can select the options classes to
which they seek appointment, but the Exchange retains the authority
to make such appointments and to remove appointments from CMMs based
on their performance. In this respect, under the current rule, the
Board or a committee designated by the Board makes appointments to
market makers. In consideration of the new process for making CMM
appointments, the Exchange is proposing to allow the Exchange to
make appointments to market makers. Under the proposal, either the
Exchange or a committee designated by the Board will be permitted to
make appointments. The Board itself has never made market makers
appointments, and the Exchange does not believe such determinations
require Board-level consideration.
    \4\ The Exchange will notify CMMs of the procedure for
requesting changes to their appointments, including the length of
advance notification required. The Exchange will establish the
shortest advance notification period that is operationally feasible,
such as a specific time on the day prior to the intended
effectiveness of a change in a CMM's appointments, or by a specified
time prior to the opening on the same trading day.
    \5\ CBOE Rule 8.3 (Appointment of Market Makers).
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    The Exchange believes that this proposal strikes an appropriate
balance between the Exchange's goal of attracting additional market
makers to the Exchange and the interests of the current CMMs on the
Exchange. Under the existing structure, a member is required to own
and/or lease 10 CMM trading rights (one in each of the 10 options
groups) in order to have the ability to make markets in all of the
options classes traded on the Exchange. Moreover, because the number of
options classes contained in each group varies, CMM trading rights
currently represent 10 different levels of participation. Under the
proposal, the level of access gained by owning or leasing a CMM trading
right will be standardized. Finally, the proposal will make additional
memberships available, which will provide greater opportunity for more
market makers to join the Exchange.
    Specifically, by assigning 20 points to the first CMM trading right
owned or leased by a member and 10 points to each subsequent CMM
trading right owned or leased by the same member, only 9 CMM trading
rights will be required to cover the entire ISE market. Accordingly,
members that currently own or lease 10 CMM trading rights will be able
to sell or discontinue leasing one of their CMM trading rights.
Similarly, other market markers on the ISE also will be able to reduce
the number of CMM trading rights they need to gain access to the
options classes in which they want to make markets. Thus, the proposal
will reduce the cost of market making on the ISE and increase the
supply of available CMM trading rights, which will provide the
opportunity for more market makers to join the ISE. Moreover, assigning
the first CMM trading right that is owned or leased by a market maker
20 points and subsequent CMM trading rights 10 points takes into
consideration that the CMM trading rights currently are assigned to
groups with a varying number of options classes. This structure makes
it less likely that current market makers with CMM trading rights
primarily in the larger

groups will be negatively impacted by the proposed change.\6\
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    \6\ The Exchange will provide members with a transition period
of 30 to 60 days following approval of the proposed rule change.
During the transition period, the Exchange will work with existing
market makers to restructure their appointments within the new
point-based structure.
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    The Exchange also proposes to adjust its CMM quotation requirements
to reflect the proposed elimination of specified groups of options
associated with CMM trading rights. Specifically, under the current
structure, CMMs are required to participate in the opening and provide
continuous quotations in a minimum number of options classes in each of
their assigned groups. Since CMMs will have the flexibility to choose
the options classes to which they are appointed rather than being
appointed to a pre-determined group of options, the Exchange proposes
to modify this requirement to limit the number of appointed options
classes in which a CMM can initiate intraday quoting to the number of
options classes in which it participates in the opening rotation.
    Under the current rules, a CMM is required to participate in the
opening in 60% of the options classes in its appointed group of options
or 40 options classes, whichever is lesser. If, for example, a CMM is
appointed to a group with 100 options classes, then it must participate
in the opening for 40 options classes and may initiate intra-day
quoting in 60 options classes. Under the proposed structure, a CMM
appointed to 100 options classes that participates in the opening in 40
options classes may only initiate intra-day quoting in 40 additional
classes. There is no minimum number of options classes in which a CMM
must quote because under the new structure, CMMs presumably will not
seek appointment to options classes unless they want to quote them.
Thus, the Exchange believes it is reasonable to adopt a structure that
is more restrictive with respect to entering quotes after the opening.
In addition, this requirement currently is in place for options classes
traded in the Exchange's Second Market,\7\ and the Exchange believes it
effectively encourages market makers to provide added liquidity during
the opening.
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    \7\ ISE Rule 904(a).
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    Additionally, under the proposal the Exchange will retain the
current requirement that once a CMM enters a quotation in an appointed
options class, it must maintain continuous quotations for that series
and at least 60% of the series of the options class until the close of
trading that day.\8\ If a CMM receives Preferenced Orders in an options
class, it will continue to be required to maintain continuous
quotations in at least 90% of the series in that class. Finally, the
Exchange will continue to have the ability under its rules to call upon
a CMM to submit quotations in one or more series of an options class to
which the CMM is appointed.\9\
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    \8\ CMMs will continue to be subject to the quotation
requirements contained in Rule 803 and 804.
    \9\ The proposal also amends Rule 805 to correct a cross-
reference to Rule 804, and amends rule 810 to replace a reference to
appointment to groups with a reference to appointed options.
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    Finally, the Exchange proposes to terminate its current CMM
inactivity fee. That fee currently imposes a charge of $25,000 a month
for CMM trading rights that are not active. The purpose of the fee is
to help recoup a portion of the income that the Exchange loses when
market makers do not operate their trading rights and generate
transaction-based revenue. Under the proposed CMM trading rights
structure, the Exchange does not believe that the inactivity fee is
appropriate or necessary, as CMMs will now be able to manage the number
of options classes to which they are appointed.\10\ Moreover, we
believe that there will be increased demand for CMM trading rights, and
that owners of such rights will have a financial incentive to sell or
lease any unused trading rights. If this does not turn out to be the
case, the Exchange will consider reinstituting some form of inactivity
fee that is appropriate for the new structure.
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    \10\ For example, under the current structure, a CMM that owns
or leases three CMM trading rights is obligated to continuously
quote a minimum of 120 options classes. Under the new structure, a
CMM with three trading rights could seek appointment for only three
options classes (one for each trading right), thus making the
inactivity fee ineffective.
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2. Basis
    The basis under the Act for this proposed rule change is found in
Section 6(b)(5),\11\ in that the proposed change is 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.
In particular, the proposal will provide more open access to the
Exchange for market makers. It will also permit broker-dealer members
of the ISE to use their CMM trading rights more efficiently, lowering
their costs of providing liquidity on the Exchange. At the same time,
because a PMM will continue to be appointed to each options class,
there will continue to be continuous, two-sided quotations in all
options listed on the Exchange.\12\ As further required under Section
6(b)(5) of the Exchange Act, the proposal will not result in unfair
discrimination between customers, issues, brokers or dealers. Indeed,
any and all potential market makers will be able to purchase or lease
newly available CMM trading rights.
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    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Pursuant to Rule 804(a)(2), PMMs have the obligation to
provide continuous quotations in all of the series of all of the
options to which they are appointed.
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    Pursuant to Section 6(b)(8) of the Exchange Act,\13\ the proposed
rule change is designed to foster competition, both with respect to
exchange competition and broker-dealer competition, as it will
encourage additional market maker participation. The additional market
making interest that this will attract to the ISE will make the ISE
more competitive with other exchanges that have a market making
structure which is less limited as the ISE's current structure. As to
broker-dealers, this proposal will permit more broker-dealers to join
the ISE and disseminate competitive quotations, which will enhance
competition among market makers.
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    \13\ 15 U.S.C. 78f(b)(8).
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    Finally, the proposal to eliminate the CMM inactivity furthers
Section 6(b)(4) of the Exchange Act \14\ in that it is an equitable
allocation of reasonable fees and other charges among Exchange members
and other persons using its facilities. The Exchange believes that
eliminating the inactivity will potentially lower costs for members
providing liquidity on the Exchange. Furthermore, it will apply equally
to all CMMs and thus is not discriminatory.
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    \14\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition
that is 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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-ISE-2011-33 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-ISE-2011-33. 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 such filing also will be available for
inspection and copying at the principal office of the ISE. 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-ISE-2011-33 and should be
submitted by July 19, 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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-16033 Filed 6-27-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Notices]
[Pages 71973-71977]
[FR Doc No: 2020-25006]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90368; File No. SR-DTC-2020-801]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of No Objection To Advance Notice To Amend Rule 4

November 6, 2020.
    On September 9, 2020, The Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') advance
notice SR-DTC-2020-801 (``Advance Notice'') pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled Payment, Clearing and Settlement
Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule
19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 1934
(``Exchange Act'') \3\ to amend Rule 4 of the Rules, By-Laws and
Organization Certificate of DTC (the ``Rules''). The Advance Notice was
published for comment in the Federal Register on October 20, 2020,\4\
and the Commission has not received comments regarding the changes
proposed in the Advance Notice. This publication serves as notice of no
objection to the Advance Notice.
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
    \4\ Securities Exchange Act Release No. 90169 (October 14,
2020), 85 FR 66666 (October 20, 2020) (SR-DTC-2020-801) (``Notice of
Filing'').
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I. The Advance Notice

A. Background

    DTC is the central securities depository (``CSD'') for
substantially all corporate and municipal debt and equity securities
available for trading in the United States.\5\ As a covered clearing
agency that provides CSD services,\6\ DTC provides a central

location in which securities may be immobilized, and interests in those
securities are reflected in accounts maintained for its Participants,
which are financial institutions such as brokers or banks.\7\ DTC does
not provide central counterparty services and therefore does not become
party to its Participants' transactions or guarantee settlement on
behalf of its Participants.\8\
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    \5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in DTC's rules, including, but not
limited to, the Rules, By-Laws and Organization Certificate of DTC
(the ``Rules'') and the DTC Settlement Service Guide (the
``Settlement Guide''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx. The Settlement Guide is a Procedure of DTC
filed with the Commission that, among other things, operationalizes
and supplements the DTC Rules that relate to settlement.
    \6\ A covered clearing agency is defined as a registered
clearing agency that provides the services of a central counterparty
(``CCP'') or CSD. See 17 CFR 240.17Ad-22(a)(5). CSD services means
services of a clearing agency that is a securities depository as
described in Section 3(a)(23)(A) of the Exchange Act. See 17 CFR
240.17Ad-22(a)(3). Specifically, the definition of a clearing agency
includes, in part, ``any person, such as a securities depository
that (i) acts as a custodian of securities in connection with a
system for the central handling of securities whereby all securities
of a particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred, loaned, or
pledged by bookkeeping entry without physical delivery of securities
certificates, or (ii) otherwise permits or facilitates the
settlement of securities transactions or the hypothecation or
lending of securities without physical delivery of securities
certificates.'' 15 U.S.C. 78c(a)(23)(A).
    \7\ See, e.g., Securities Exchange Act Release No. 20221
(September 23, 1983), 48 FR 45167, 45168 (October 3, 1983) (File No.
600-1) (``A securities depository is a ``custodial'' clearing agency
that operates a centralized system for the handling of securities
certificates. Depositories accept deposits of securities from
broker-dealers, banks, and other financial institutions; credit
those securities to the depositing participants (sic) accounts; and,
pursuant to participant's (sic) instructions, effect book-entry
movements of securities. The physical securities deposited with a
depository are held in a fungible bulk; each participant or pledgee
having an interest in securities of a given issue credited to its
account has a pro rata interest in the physical securities of the
issue held in custody by the securities depository in its nominee
name. Depositories collect and pay dividends and interest to
participants for securities held on deposit. Depositories also
provide facilities for payment by participants to other participants
in connection with book-entry deliveries of securities. . . .'').
    \8\ A clearing agency that provides central counterparty
services interposes itself between the counterparties to securities
transactions, acting functionally as the buyer to every seller and
the seller to every buyer. 17 CFR 240.17Ad-22(a)(2).
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    DTC provides settlement services for virtually all broker-to-broker
equity and listed corporate and municipal debt securities transactions
in the U.S., as well as institutional trades, money market instruments
and other financial obligations. For end-of-day net funds settlement,
the DTC settlement system records money debits and credits to
Participant settlement accounts throughout a Business Day.\9\ At the
end of a Business Day, a Participant's settlement account will have a
net debit (i.e., the sum of all money charges to a Participant's
account exceeds the sum of all money credits), net credit (i.e., the
sum of all money credits to a Participant's account exceeds the sum of
all money charges), or zero balance. This final balance will determine
whether the Participant has an obligation to pay or to be paid as part
of the process of DTC completing settlement on that Business Day. A
Participant that fails to pay its net debit balance and therefore
defaults on its settlement obligations on a Business Day will not have
paid for the securities processed for delivery versus payment, and the
securities will not be credited to its account.
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    \9\ Credits to a Participant settlement account arise from
deliveries versus payment, receipt of payment orders, principal and
interest distributions in respect of securities held, intraday
settlement progress payments and any other items or transactions
that give rise to a credit. Debits to a Participant settlement
account are primarily due to receives versus payment, as well as
other types of charges to the account permitted under the Rules. See
Notice of Filing, supra note 4, 85 FR at 66667.
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    DTC represents that there may be circumstances in which the amount
of settlement payments received or available to DTC on a Business Day
is not sufficient to pay all Participants with an end-of-day net credit
balance on that Business Day (a ``settlement gap'').\10\ A settlement
gap could occur on a Business Day as a result of a Participant Default,
where a Participant fails to pay its settlement obligation (a ``default
gap''). A settlement gap could also occur on a Business Day as a result
of causes other than a Participant Default (a ``non-default gap'').
Examples of a non-default gap could include a scenario in which the
funds required to complete settlement are not available to DTC due to
an operational or data issue arising at DTC or at a Participant or
Settling Bank, a cyber incident, or other business disruption.\11\
According to DTC, its failure to complete settlement on a given
Business day could cause significant market-wide effects.\12\
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    \10\ See id.
    \11\ DTC is subject to a number of regulatory requirements
related to its operational and cyber risks, including Rule 17Ad-
22(e)(17) and Regulation Systems Compliance and Integrity. DTC's
overall approach to operational risk is summarized in its Disclosure
Framework, available at https://www.dtcc.com/legal/policy-and-compliance. Among other things, DTC manages its operational risk
pursuant to the Clearing Agency Operational Risk Management
Framework, which the Commission approved in a separate rule filing.
See Securities Exchange Act Release No. 81745 (September 28, 2017),
82 FR 46332 (October 4, 2017) (SR-DTC-2017-014).
    \12\ See Notice of Filing, supra note 4, 85 FR at 66667 (citing,
e.g., Rule 9(B), supra note 5, which states: ``Each Participant and
the Corporation shall settle the balance of the Settlement Account
of the Participant on a daily basis in accordance with these Rules
and the Procedures. Except as provided in the Procedures, the
Corporation shall not be obligated to make any settlement payments
to any Participants until the Corporation has received all of the
settlement payments that Settling Banks and Participants are
required to make to the Corporation.'').
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B. The Participants Fund and Rule 4

    The Participants Fund is prefunded and represents the aggregate of
the deposits that each DTC Participant is required to make under DTC's
Rules.\13\ The Rules provide for a minimum deposit to the Participants
Fund, and Participants with higher levels of activity that impose
greater liquidity risk to the DTC settlement system have proportionally
larger required deposits.\14\ DTC has stated that the Participants Fund
is a mutualized pre-funded liquidity and loss resource, and that DTC
does not have an obligation to repay the Participants Fund and the
application of the Participants Fund does not convert to a loss.\15\
Once DTC applies the Participants Fund, the Participants are required,
upon the demand of DTC, to replenish their shares of the Participants
Fund to satisfy their minimum deposits.\16\ DTC further represents that
the principal purpose of the Participants Fund is to be one of the
foundational liquidity resources available to DTC to fund a shortfall
in order to complete settlement on a Business Day.\17\
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    \13\ See Rule 4 (Participants Fund and Participants Investment),
supra note 5.
    \14\ See id.
    \15\ Securities Exchange Act Release No. 83950 (August 27,
2018), 83 FR 44393 (August 30, 2018) (SR-DTC-2017-804).
    \16\ See Section 4 of Rule 4 (Participants Fund and Participants
Investment), supra note 5.
    \17\ See Notice of Filing, supra note 4, 85 FR at 66668 (citing
DTC's Settlement Guide which provides that the Participants Fund
creates liquidity and collateral resources to support the business
of DTC and to cover losses and liabilities incident to that
business).
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    Currently, Section 4 of Rule 4 provides that, if there is a
Defaulting Participant and the amount charged to the Actual
Participants Fund Deposit of the Defaulting Participant pursuant to
Section 3 of Rule 4 \18\ is not sufficient to complete settlement, DTC
may apply the Actual Participants Fund Deposits of Participants other
than the Defaulting Participant (each, a ``non-defaulting
Participant''), and apply such other liquidity resources as may be
available to DTC, including, but not limited to, the End-of-Day Credit
Facility.\19\ DTC recognizes that currently, certain provisions of Rule
4 might be construed to narrow the scope of use of the Participants
Fund (and any other liquidity resources) for settlement to a

default gap only.\20\ In order to ensure that DTC may use the
Participants Fund and other liquidity resources to fund a settlement
gap regardless of its cause, DTC has proposed revising Rule 4, as
discussed below.
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    \18\ Section 3 of Rule 4 provides that if a Participant is
obligated to DTC pursuant to the Rules and the Procedures and fails
to satisfy any such obligation, DTC shall, to the extent necessary
to eliminate such obligation, apply some or all of the Actual
Participants Fund Deposit of such Participant to such obligation to
satisfy the Participant Default. See Section 3 of Rule 4, supra note
5.
    \19\ Section 2 of Rule 4 provides that ``End-of-Day Credit
Facility'' is any credit facility maintained by DTC for the purpose
of funding the end-of-day settlement of transactions processed
through the facilities of DTC. See Section 2 of Rule 4, supra note
5. Also see Securities Exchange Act Release No. 80605 (May 5, 2017),
82 FR 21850 (May 10, 2017) (SR-DTC-2017-802; NSCC-2017-802)
(renewing the committed revolving credit facility of DTC and
National Securities Clearing Corporation).
    \20\ See Notice of Filing, supra note 4, 85 FR at 66668.
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C. Description of Proposed Changes

    DTC states that Section 4 of Rule 4 does not address the use of the
Participants Fund to complete settlement when there is a non-default
gap and could be construed as limiting the pro rata application of the
Participants Fund to fund a settlement gap to default scenarios.\21\
DTC further represents that, on each Business Day, settlement occurs
during a tight timeframe, in conjunction with the Federal Reserve's
National Settlement Service and Fedwire.\22\ If there is a delay with
the receipt or disbursement of funds for settlement, DTC would need to
address those problems quickly in order to complete settlement on that
Business Day.\23\
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    \21\ See Notice of Filing, supra note 4, 85 FR at 66669.
    \22\ See id.; see also, Settlement Guide at 19-20, supra note 5.
    \23\ See Notice of Filing, supra note 4, 85 FR at 66669.
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    In the Advance Notice, DTC describes the proposed changes to
address this situation and expressly ensure that the Participants Fund
could be used to complete settlement in the event of a non-default gap.
First, DTC proposes to amend Section 4 of Rule 4 to state that (i) the
Participants Fund, (ii) the existing retained earnings or undivided
profits of DTC, and (iii) any other liquidity resources as may be
available (including, but not limited to, the End-of-Day Credit
Facility), would be available to DTC as liquidity resources to fund
settlement on a Business Day, regardless of whether the settlement gap
is a default gap or a non-default gap. The proposal would state that
DTC may apply its available resources to fund settlement, in such order
and in such amounts as it determines, in its sole discretion. Second,
DTC proposes to provide that a determination to apply the Participants
Fund shall be made by either the Chief Executive Officer, Chief Risk
Officer, Chief Financial Officer, a member of any management committee,
Treasurer or any Managing Director as may be designated by the Chief
Risk Officer from time to time. The proposal also states that the Board
of Directors (or an authorized Committee thereof) shall be promptly
informed of the determination.\24\ Third, DTC proposes to make certain
clarifying and conforming changes, including to clarify that a
Participant's pro rata share of an application of the Participants Fund
would be the same whether there is a default gap or a non-default gap,
and to make minor changes for conformity and readability.
---------------------------------------------------------------------------

    \24\ The requirement that DTC would also promptly notify the
Commission in the event that the Participants Fund were used to
complete settlement would remain unchanged.
---------------------------------------------------------------------------

II. Discussion and Recommendation

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, the stated purpose of the Clearing
Supervision Act is instructive: To mitigate systemic risk in the
financial system and promote financial stability by, among other
things, promoting uniform risk management standards for systemically
important financial market utilities (``SIFMUs'') and strengthening the
liquidity of SIFMUs.\25\
---------------------------------------------------------------------------

    \25\ See 12 U.S.C. 5461(b).
---------------------------------------------------------------------------

    Section 805(a)(2) of the Clearing Supervision Act authorizes the
Commission to prescribe regulations containing risk management
standards for the payment, clearing, and settlement activities of
designated clearing entities engaged in designated activities for which
the Commission is the supervisory agency.\26\ Section 805(b) of the
Clearing Supervision Act provides the following objectives and
principles for the Commission's risk management standards prescribed
under Section 805(a): \27\
---------------------------------------------------------------------------

    \26\ 12 U.S.C. 5464(a)(2).
    \27\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     To promote robust risk management;
     To promote safety and soundness;
     To reduce systemic risks; and
     To support the stability of the broader financial system.
    Section 805(c) provides, in addition, that the Commission's risk
management standards may address such areas as risk management and
default policies and procedures, among others areas.\28\
---------------------------------------------------------------------------

    \28\ 12 U.S.C. 5464(c).
---------------------------------------------------------------------------

    The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act and Section 17A of the
Exchange Act (the ``Clearing Agency Rules'').\29\ The Clearing Agency
Rules require, among other things, each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures that are reasonably designed to meet certain minimum
requirements for its operations and risk management practices on an
ongoing basis.\30\ As such, it is appropriate for the Commission to
review advance notices against the Clearing Agency Rules and the
objectives and principles of these risk management standards as
described in Section 805(b) of the Clearing Supervision Act. As
discussed below, the Commission believes the proposal in the Advance
Notice is consistent with the objectives and principles described in
Section 805(b) of the Clearing Supervision Act,\31\ and in the Clearing
Agency Rules, in particular Rule 17Ad-22(e)(1), (e)(2)(i) and (v), and
(e)(7).\32\
---------------------------------------------------------------------------

    \29\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release No.
68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-08-11).
See also Securities Exchange Act Release No. 78961 (September 28,
2016), 81 FR 70786 (October 13, 2016) (S7-03-14) (Standards for
Covered Clearing Agencies). DTC is a ``covered clearing agency,'' as
defined in Rule 17Ad-22(a)(5). See supra note 6.
    \30\ Id.
    \31\ 12 U.S.C. 5464(b).
    \32\ 17 CFR 240.17Ad-22(e)(1) and (e)(2)(i).
---------------------------------------------------------------------------

A. Consistency With Section 805(b) of the Clearing Supervision Act

    The Commission believes that the Advance Notice is consistent with
the stated objectives and principles of Section 805(b) of the Clearing
Supervision Act,\33\ because the changes proposed in the Advance Notice
are consistent with promoting robust risk management, promoting safety
and soundness, reducing systemic risks, and supporting the broader
financial system.
---------------------------------------------------------------------------

    \33\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

    First, the Commission believes that the proposal is consistent with
promoting robust risk management. DTC proposes to amend Section 4 of
Rule 4 to provide expressly for the pro rata application of the
Participants Fund, retained earnings, and any other liquidity
resources, including DTC's credit facility, to any settlement gap,
including a non-default gap. As noted above, settlement occurs during a
tight timeframe on each Business Day. If there is a delay with the
receipt or disbursement of funds for settlement, it would need to be
addressed quickly in order to complete settlement on that Business Day.
The proposal would clarify which resources DTC can access and use in
the most time-efficient and effective manner to ensure settlement.\34\

Moreover, the proposal would specify the particular DTC personnel whose
approval could authorize the use of the Participants Fund to finance a
settlement gap. The Commission believes that the proposal is designed
to allow DTC to take timely and effective action to fund a settlement
gap, regardless of whether it is a default or non-default gap, and
therefore complete settlement, by identifying and applying appropriate
liquidity resources, which is consistent with the promotion of robust
risk management.
---------------------------------------------------------------------------

    \34\ The Commission further believes that use of the
Participants Fund may be the most efficient method of completing
settlement at the end of a Business Day on a tight timeframe, as it
generally consists of cash which, pursuant to DTC's Investment
Policy, must be held in demand deposit, savings or checking bank
accounts that provide same day access to funds. See Exchange Act
Release No. 88513 (March 30, 2020), 85 FR 19047, 19048 (April 3,
2020). The Commission observes that, as a general matter, it likely
could take more time to access retained earnings or draw down on the
credit facility.
---------------------------------------------------------------------------

    Second, the Commission believes that the proposal is consistent
with the promotion of safety and soundness of DTC and, by extension,
the broader financial system. As stated above, the proposal would
expressly provide that DTC may use the Participants Fund and other
specified resources as a liquidity resources in the event of a
settlement gap. With this proposal, DTC would expressly state how it
would manage the potential liquidity risk that may arise from both the
default of a Participant as well as a non-default event, including
operational issues at DTC, a Participant, or a Settling Bank. With the
proposal, DTC would be better positioned to timely complete settlement
if a default or non-default gap arises. Accordingly, the Commission
believes that the proposal is consistent with the promotion of safety
and soundness.
    Finally, the Commission believes that the proposal is consistent
with reducing systemic risks and supporting the stability of the
broader financial system. With clear authority to use the Participants
Fund and other resources to address both a default and non-default
settlement gap, DTC should be better positioned to access sufficient
liquidity, and thus be better able to manage its liquidity risks in the
event of a settlement gap. DTC is a SIFMU and serves as the only
central securities depository in the United States, settling virtually
all broker-to-broker equity and listed corporate and municipal debt
securities transactions in the United States, as well as institutional
trades, money market instruments and other financial obligations. This
access to liquidity during a stress event would help mitigate any risk
to settlement finality due to DTC having insufficient funds to meet
payment obligations to its Participants. As such, access to this
liquidity would help to strengthen the liquidity of DTC and mitigate
potential risks to settlement finality, thereby reducing systemic risks
and supporting the stability of the broader financial system.
    For the reasons stated above, the Commission believes the changes
proposed in the Advance Notice are consistent with Section 805(b) of
the Clearing Supervision Act.\35\
---------------------------------------------------------------------------

    \35\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(1)

    Rule 17Ad-22(e)(1) under the Act requires that DTC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to provide for a well-founded, clear, transparent,
and enforceable legal basis for each aspect of its activities in all
relevant jurisdictions.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, current Section 4 of Rule 4 does not address
the use of the Participants Fund or other liquidity resources to
complete settlement when there is a non-default gap, and DTC is
concerned that it could be construed as limiting the pro rata
application of the Participants Fund to fund a settlement gap to
default scenarios. The proposal would amend Rule 4 to expressly state
that the Participants Fund, DTC's retained earnings, and other
liquidity resources may be used by DTC to fund a settlement gap to
complete settlement on a Business Day, whether the settlement gap is
the result of a Participant Default or otherwise. In addition, the
proposal makes clarifying and conforming changes and provides
governance regarding the application of the Participants Fund.
    The Commission believes that the above changes are designed to
ensure greater certainty in the Rules regarding what resources would be
available to DTC to complete settlement in the event of a settlement
gap. The proposal would provide a clear, transparent and enforceable
legal basis for DTC to apply the Participants Fund, retained earnings,
or other liquidity resources to any settlement gap. It would also
clarify that a Participant's pro rata share of an application of the
Participants Fund would be the same whether there is a default gap or a
non-default gap, and expressly state that DTC may apply its available
resources to fund settlement, in such order and in such amounts as it
determines, in its sole discretion.
    Therefore, the Commission believes the proposal is designed to help
ensure that DTC's Rules remain well-founded, transparent, and legally
enforceable in all relevant jurisdictions, consistent with Rule 17Ad-
22(e)(1) under the Act.\37\
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(2)(i) and (v)

    Rule 17Ad-22(e)(2) under the Act requires, in part, that DTC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide for governance arrangements
that (i) are clear and transparent, and (v) specify clear and direct
lines of responsibility.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
---------------------------------------------------------------------------

    As discussed above, the proposal would provide that a determination
to apply the Participants Fund shall be made by either the Chief
Executive Officer, Chief Risk Officer, Chief Financial Officer, a
member of any management committee, Treasurer or any Managing Director
as may be designated by the Chief Risk Officer from time to time. The
proposal would also provide that the Board of Directors (or an
authorized Committee thereof) shall be promptly informed of the
determination. With this proposal, the Rules would expressly define who
would be responsible for making the determination to apply the
Participants Fund to a settlement gap and would require that the Board
of Directors (or its authorized Committee) would be informed of such
determination promptly.
    Therefore, the Commission believes the proposal is designed to
provide for governance arrangements regarding the use of the
Participants Fund to complete settlement that are clear and transparent
and specify clear and direct lines of responsibility, consistent with
Rule 17Ad-22(e)(2)(i) and (v) under the Act.\39\
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

D. Consistency With Rule 17Ad-22(e)(7)(i)

    Rule 17Ad-22(e)(7)(i) under the Act requires, in part, that a
covered clearing agency, like DTC, establish, implement, maintain and
enforce written policies and procedures reasonably designed to
effectively measure, monitor, and manage the liquidity risk that arises
in or is borne by the covered clearing agency, including measuring,
monitoring, and managing its settlement and funding flows on an ongoing
and timely basis, and its use of intraday liquidity, by maintaining
sufficient liquid resources to effect same-day settlement of payment
obligations with a high degree of confidence under a wide range of
foreseeable stress scenarios.\40\
---------------------------------------------------------------------------

    \40\ 17 CFR 240.17Ad-22(e)(7)(i).
---------------------------------------------------------------------------

    As described above, the proposal would clarify that the
Participants Fund and other resources may be applied by

DTC to fund settlement in the event of a default or non-default gap.
The proposed change is designed to help ensure that DTC is able to
manage its settlement and funding flows on a timely basis and effect
same day settlement of payment obligations in certain foreseeable
stress scenarios.
    Therefore, the Commission believes that the proposal is reasonably
designed to help DTC effectively manage liquidity risk in a timely
manner to complete settlement, and accordingly is consistent with Rule
17Ad-22(e)(7)(i).\41\
---------------------------------------------------------------------------

    \41\ Id.
---------------------------------------------------------------------------

III. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act, that the Commission does not object to
Advance Notice (SR-DTC-2020-801) and that DTC is authorized to
implement the proposed change as of the date of this notice or the date
of an order by the Commission approving proposed rule change SR-DTC-
2020-011, whichever is later.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25006 Filed 11-10-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Notices]
[Pages 50379-50381]
[FR Doc No: 2015-20380]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

Denial of Motor Vehicle Defect Petition, DP15-003

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Denial of petition for a defect investigation.

-----------------------------------------------------------------------

SUMMARY: This notice states the reasons for denying a petition (DP 15-
003) submitted to NHTSA under 49 U.S.C. 30162, 49 CFR part 522,
requesting that the agency open an investigation into delamination or
separation of the back glass from the convertible top material on model
year 2005 Chrysler Crossfire vehicles.

FOR FURTHER INFORMATION CONTACT: Mr. John Abbott, Office of Defects
Investigation (ODI), NHTSA; 1200 New Jersey Avenue SE., Washington, DC
20590. Telephone:<PHONE_NUMBER>. Email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Introduction

    Interested persons may petition NHTSA requesting that the Agency
initiate an investigation to determine whether a motor vehicle or item
of replacement equipment does not comply with an applicable motor
vehicle safety standard or contains a defect that relates to motor
vehicle safety. 49 U.S.C. 30162(a) (2): 49 CFR 522.1. Upon receipt of a
properly filed petition, the agency conducts a technical review of the
petition, material submitted with the petition, and any additional
information. 49 U.S.C. 30162(c); 49 CFR 552.6. After considering the
technical review and taking into account appropriate factors, which may
include, among others, allocation of agency resources, agency

priorities, and the likelihood of success in litigation that might
arise from a determination of noncompliance or a defect related to
motor vehicle safety, the agency will grant or deny the petition. 49
U.S.C. 30162(d): 49 CFR 552.8.

II. Petition Background Information

    In a letter dated June 14, 2014, Mr. Wayne DeVries petitioned NHTSA
to, ``. . . hold a hearing on whether this manufacturer [Chrysler] has
reasonably met its obligation to notify and/or remedy a safety defect
or noncompliance with a Federal Motor Vehicle Safety Standard.'' The
petition request was in reference to model year (MY) 2005 Chrysler
Crossfire Roadster vehicles in which the convertible top back glass can
delaminate or separate from its adhesive bond to the convertible top
material.
    Part 557 of Title 49 of the Code of Federal Regulations (CFR),
establishes the procedures for conducting a hearing to determine
whether a manufacturer has reasonably met its obligation to notify
owners of a safety related defect and provide a remedy for that defect.
Before the agency can hold such a hearing, a determination that a
defect exists must be made either by the manufacturer or the agency.
Because a safety related defect has not been determined by either
Chrysler, or the agency, regarding the convertible top back glass in MY
2005 Crossfire Roadster vehicles, ODI interpreted Mr. DeVries letter as
a request for a Defect Petition. In accordance with Title 49 CFR part
522, Petitions for Rulemaking, Defects, and Noncompliance Orders, NHTSA
conducted a review of the petition and other information to decide
whether to open a formal investigation to determine if a safety related
defect exists in MY 2005 Crossfire Roadsters.

III. ODI Analysis of the Defect Petition Request

    To assess the petitioner's request and his complaint as to whether
separation of the convertible top back glass in MY 2005 Crossfire
Roadster vehicles demonstrates or presents an unreasonable risk to
motor vehicle safety, ODI reviewed and analyzed the following
information and conducted telephone interviews with complainants:
     A review of all of the petitioner's letters and VOQ's;
     A review of the petitioner's vehicle experience;
     A review of a Chrysler warranty policy extension;
     A review of all potentially related VOQs for all model
year Crossfire Roadsters;
     Telephone interviews with complainants;
     A review of Federal Motor Vehicle Safety Standards
(FMVSS); and,
     A review and analysis of complaint, claim, field report,
and warranty information from Chrysler LLC. (Chrysler), and Fiat
Chrysler Automobiles US, LLC. (FCA) provided in response to an ODI
information request.

Petitioner's Complaint

    Between May 2013 and August 2014, the petitioner sent five letters
to NHTSA, and filed an additional five Vehicle Owner Questionnaires
(VOQ), concerning the convertible top back glass in MY 2005 Crossfire
Roadster vehicles. The petitioner's concern is that the adhesive that
bonds the back glass to the inside of the convertible top fails. When
the adhesive fails, the glass falls inside the vehicle and, if it
separates completely from the top, will no longer be attached to any
structure that controls movement. His correspondence offers many varied
and different scenarios of possible consequences from delamination or
separation of the glass from the convertible top. The petitioner
believes that the design, construction, and attachment of any window is
critical to the safe operation of the vehicle as intended, under any
conditions such as inclement weather, highway speeds, etc., and that
the separation of the rear glass in the subject vehicles poses an
unreasonable risk to motor vehicle safety. Finally, the petitioner
suggests that Chrysler's limited extended warranty policy covering the
glass is ``unreasonable'' because it is limited to vehicles that were
originally sold in certain states.

Petitioner's Vehicle Experience

    The petitioner owns a MY 2005 Crossfire Roadster and resides in
California. His vehicle was not included in Chrysler's extended
warranty as his vehicle was originally sold in California. According to
the petitioner, he noted the convertible top back glass was starting to
delaminate/separate from the convertible top at the driver's side lower
corner. As a precaution, and to prevent it from separating completely,
the glass was propped-up from the inside of the vehicle and taped to
the convertible top material on the outside of the vehicle. The
petitioner's attempts to have the vehicle's convertible top replaced at
Chrysler's expense were unsuccessful. According to the petitioner,
replacement of the entire convertible top is the only viable remedy
offered by Chrysler once the rear glass separates from the top.
Ultimately, the petitioner paid to have the top replaced.

Summary of Chryslers Extended Warranty

    In September 2011 Chrysler notified its dealer network via
``Warranty Bulletin'' that it would extend the warranty for convertible
top back glass adhesion in MY 2005 Crossfire Roadsters. The warranty
extension covers these vehicles for 10 years or 100,000 miles,
whichever occurs first, for vehicles shipped to dealers in the states
of Alabama, Florida, Georgia, Louisiana, Missouri, North Carolina,
South Carolina, Tennessee, and Texas. No other Crossfire Roadsters were
included in the extended warranty. For vehicles subject to this
extended warranty, Chrysler will replace the entire convertible top if
the rear glass separates from the top within 10 years or 100,000 miles.

Summary of Related VOQ Reports

    ODI reviewed all VOQ reports in its database relating to
convertible top back glass separation in all MY Crossfire Roadsters.
The review encompassed VOQ reports received from June 23, 2008 through
July 8, 2015. As noted in Table 1, ODI analyzed 273 VOQ reports
alleging some degree of rear glass separation. None of the VOQs alleged
that rear glass separation was related to crashes, injuries, or
fatalities. Out of the 273 VOQ's ODI reviewed, four alleged that the
back glass separated from the vehicle onto the roadway.\1\ Table 1
provides a summary count of the VOQ reports by model year.
---------------------------------------------------------------------------

    \1\ ODI spoke with 47 of the complainants including three that
alleged a roadway incident. Two of the roadway complainants had
experienced previous glass bonding issues prior to separation. There
is no factual evidence (police accident reports, photos, repair
invoices, etc.) for the roadway reports that confirms these
allegations.

                                  Table 1--Crossfire VOQ Reports by Model Year
----------------------------------------------------------------------------------------------------------------
           Model year                 Reports         Crashes        Injuries       Fatalities        Roadway
----------------------------------------------------------------------------------------------------------------
2005............................             211               0               0               0               3
2006............................              44               0               0               0               1
2007............................               9               0               0               0               0
2008............................               9               0               0               0               0
                                 -------------------------------------------------------------------------------
    Total.......................             273               0               0               0               4
----------------------------------------------------------------------------------------------------------------

FMVSS No. 212; Windshield Mounting

    This standard establishes the retention requirements for
windshields in motor vehicle crashes. The purpose of the standard is to
reduce injuries and fatalities in crashes by providing retention of a
vehicles windshield during a crash by utilizing the penetration-
resistance and injury-avoidance properties of the windshield glazing
material and preventing occupant ejection from the vehicle. This
standard does not apply to the back glass at issue in this petition. No
other FMVSS establishes a minimum level of performance for back glass
retention in either convertible or hard top vehicles.

IV. ODI's Assessment

    The adhesive bond of the convertible top back glass to the top
material can lose its bonding properties over time. From complainant
descriptions, it appears that separation of the glass generally starts
in a small area, possibly at a lower corner. Over time, the separation
can progress around the glass to a point at which the glass is visibly
and physically loose from the top material and in some cases can
separate completely from the top. Because of the angle at which the
glass is installed in the top it will tend to fall inside of the
vehicle onto the tonneau cover, behind the only two available seats for
the vehicle occupants. In addition, the glass panel in question is
larger than the rear window opening in the convertible top. Therefore,
the glass would have to rotate and move in several planes of motion to
pass through the rear window opening after detaching from the top.
    ODI has also previously examined rear window separation in the
subject vehicles. Based on 11 VOQs reporting some degree of rear glass
separation, ODI first examined rear glass separation in MY 2005
Chrysler Crossfire Roadsters in late 2009. Soon thereafter, ODI
contacted Chrysler seeking complaint information concerning the issue.
Chrysler provided a confidential response to ODI on January 29, 2010.
Chrysler's response did not contain any information indicating that the
separation of the rear glass in the subject vehicles posed an
unreasonable risk to safety. However, Chrysler subsequently provided a
limited extended warranty to some owners.
    As part of this petition analysis, ODI sent an information request
\2\ to FCA requesting information for any reports that resulted in any
injury or fatality to any person either in the vehicle or outside of
the vehicle; a vehicle crash or loss of control incident; or a back
glass leaving the confines of the vehicle top. FCA's response to this
request provided one report in which it was alleged that the back glass
went off the back of the vehicle while being driven. FCA's response
letter \3\ explains that the Company believes that the back glass did
not separate and fall off the back of the vehicle as alleged by the
individual submitting the complaint to FCA. ODI also notes that FCA's
May 19, 2015 response letter answering our information request for this
petition erroneously concludes that ODI previously found that no safety
defect existed when we reviewed information submitted by Chrysler on
January 29, 2010. ODI's decision not to take further action at that
time is not, as Chrysler suggests, a finding that no safety defect
existed.
---------------------------------------------------------------------------

    \2\ Please see ODI's April 27, 2015 letter to FCA in file DP15-
003.
    \3\ See FCA DP15-003 response letter of May 19, 2015 in file
DP15-003.
---------------------------------------------------------------------------

    ODI's analysis, our second examination of Crossfire Roadster rear
window separations, indicates that there are not any crashes, deaths or
injuries related to this issue. The configuration of the window opening
and the size of the window glass itself indicate that it is unlikely
that the glass would pass through the window opening once the rear
glass has completely separated from the convertible top. Further,
although the petitioner states that Chrysler's extended warranty policy
for these vehicles is unreasonable, the question that ODI must answer
is whether the separation of the rear glass from the convertible top
results in an unreasonable risk to safety. The evidence revealed by our
analysis does not presently support such a finding.

V. Conclusion

    For the reasons presented in the petition analysis, and after
thorough assessment of the potential risks to safety, it is unlikely
that an order concerning the notification and remedy of a safety-
related defect would be issued as a result of granting Mr. Devries
petition. After full consideration of the potential for finding a
safety related defect in these vehicles and in view of the need to
allocate and prioritize NHTSA's limited resources to best accomplish
the agency's mission, the petition is respectfully denied.
    This action does not constitute a finding by NHTSA that a safety-
related defect does not exist. The Agency will take further action if
warranted by future circumstances.

    Authority: 49 U.S.C. 30162(d); delegations of authority at CFR
1.95 and 501.8.

Frank S. Borris, II,
Acting Associate Administrator for Enforcement.
[FR Doc. 2015-20380 Filed 8-18-15; 8:45 am]
 BILLING CODE 4910-59-P


[Federal Register: August 4, 2010 (Volume 75, Number 149)]
[Notices]
[Page 47057-47059]
[DOCID:fr04au10-108]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62590; File No. SR-NASDAQ-2010-090]

Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto Relating to Fees for Routing to Away
Markets

July 29, 2010.
    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 July 20, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Exchange submitted Amendment Nos. 1 and 2 to the proposed
rule change on July 28, 2010.\3\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as amended,
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment Nos. 1 and 2 make technical corrections to the
rule text.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to modify Rule 7050 governing pricing for
NASDAQ members using the NASDAQ Options Market (``NOM''), NASDAQ's
facility for executing and routing standardized equity and index
options.
    The text of the proposed rule change is set forth below. Proposed
new text is underlined and deleted text is in [brackets].

7050. NASDAQ Options Market

    The following charges shall apply to the use of the order execution
and routing services of the NASDAQ Options Market for all securities.
    (1)-(3) No Change.
    (4) Fees for routing contracts to markets other than the NASDAQ
Options Market shall be assessed as provided below. The current fees
and a historical record of applicable fees shall be posted on the
NasdaqTrader.com website.

------------------------------------------------------------------------
             Exchange                Customer       Firm          MM
------------------------------------------------------------------------
BATS.............................        $0.36        $0.55        $0.55
BOX..............................         0.06         0.55         0.55
CBOE.............................         0.06         0.55         0.55
ISE..............................         0.06         0.55         0.55
ISE Select Symbols * of 100 or            0.26         0.55         0.55
 more contracts..................
NYSE Arca Penny Pilot............         0.50         0.55         0.55
NYSE Arca Non Penny Pilot........         0.06         0.55         0.55
NYSE AMEX........................         0.06         0.55         0.55

PHLX (for all options other than          0.06         0.55         0.55
 PHLX Select Symbols)............
PHLX Select Symbols **...........         0.30         0.55         0.55
------------------------------------------------------------------------
* These fees are applicable to orders routed to ISE that are subject to
  Rebates and Fees for Adding and Removing Liquidity in Select Symbols.
  See ISE's Schedule of Fees for the complete list of symbols that are
  subject to these fees.
** These fees are applicable to orders routed to PHLX that are subject
  to Rebates and Fees for Adding and Removing Liquidity in Select
  Symbols. See PHLX's Fee Schedule for the complete list of symbols that
  are subject to these fees.

* * * * *
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqomx.cchwallstreet.com, at the principal
office of the Exchange, 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 Exchange 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. The Exchange 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
    NASDAQ is proposing to modify Rule 7050 governing the fees assessed
for options orders entered into NOM but routed to and executed on away
markets (``routing fees''). The Exchange proposes to assess the
following fees for orders routed to the International Securities
Exchange LLC (``ISE'') in Select Symbols for orders of 100 or more
contracts: $.26 per contract for customers and $0.55 per contract for
Firms \4\ and Market Makers.\5\ All other orders that are routed to
ISE, including orders that are less than 100 contracts, will be
assessed the rates labeled ``ISE''.\6\
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    \4\ Firm is an order that clears as ``Firm'' with the Options
Clearing Corporation (``OCC''). This fee of $0.55 is a fixed routing
fee for routing orders for the account(s) of Firms.
    \5\ This fee of $0.55 is a fixed routing fee for routing orders
for the account(s) of Market Makers. The Exchange notes that some
other options exchanges include Market Maker transaction and
clearing fees as ``broker-dealer'' fees.
    \6\ The current rates to route an order to ISE are $.06 for
customers and $0.55 for Firms and Market Makers. This would not
include ISE Select Symbols, which have different fees and are the
subject of this filing.
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    NASDAQ Options Services LLC (``NOS''), a member of the Exchange, is
the Exchange's exclusive order router. Each time NOS routes to away
markets NOS is charged a $0.06 clearing fee and, in the case of certain
exchanges, a transaction fee is also charged in certain symbols, which
are passed through to the Exchange. The Exchange is proposing to amend
Rule 7050 to title these fees ``ISE Select Symbols of 100 or more
contracts.''
    The Exchange is proposing this amendment in order to recoup
clearing and transaction charges incurred by the Exchange when orders
are routed to ISE in the ISE Select Symbols and the order is for 100 or
more contracts. Each destination market's transaction charge varies and
there is a standard clearing charge for each transaction incurred by
the Exchange. The Exchange proposes this fee change to account for an
increase in cost for routing to ISE relative to the fees in the ISE
Select Symbols.\7\
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    \7\ ISE assesses a taker fee of $0.20 for priority customers for
orders for 100 or more contracts in its rebates and fees for adding
and removing liquidity in select symbols. See Securities Exchange
Act Release No. 61869 (April 7, 2010), 75 FR 19449 (April 14, 2010)
(SR-ISE-2010-25).
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2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\8\ in general, and with Section
6(b)(4) of the Act,\9\ in particular, in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
members and issuers and other persons using any facility or system
which NASDAQ operates or controls. The Exchange believes that this fee
is reasonable because it seeks to recoup costs that are incurred by the
Exchange when routing customer orders to ISE in the select symbols of
100 or more contracts on behalf of its members. The Exchange also
believes that the proposed fee change for customer orders routed to ISE
in the select symbols is equitable because it will be uniformly applied
to all customers with orders of 100 or more contracts.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    NASDAQ is one of eight options market in the national market system
for standardized options. Joining NASDAQ and electing to trade options
is entirely voluntary. Under these circumstances, NASDAQ's fees must be
competitive and low in order for NASDAQ to attract order flow, execute
orders, and grow as a market. NASDAQ thus believes that its fees are
fair and reasonable and consistent with the Exchange Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \10\ and paragraph (f)(2) of Rule 19b-4 \11\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission may summarily abrogate 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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IV. 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-NASDAQ-2010-090 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-NASDAQ-2010-090. 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. 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-NASDAQ-2010-090 and should be submitted on or before
August 25, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19111 Filed 8-3-10; 8:45 am]
BILLING CODE 8010-01-P