[Federal Register Volume 87, Number 70 (Tuesday, April 12, 2022)]
[Notices]
[Pages 21648-21649]
[FR Doc No: 2022-07731]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 5362-000]

Kennebec Light and Power District; Notice of Authorization for
Continued Project Operation

    On March 31, 2021, Kennebec Light and Power District, licensee for
the Lower Mousam Hydroelectric Project No. 5362, filed an application
for Surrender of License. The Lower Mousam Hydroelectric Project is
located on the Mousam River in York County, Maine.

    The license for Project No. 5362 was issued for a period ending
March 31, 2022. Section 15(a)(1) of the FPA, 16 U.S.C. 808(a)(1),
requires the Commission, at the expiration of a license term, to issue
from year-to-year an annual license to the then licensee(s) under the
terms and conditions of the prior license until a new license is
issued, or the project is otherwise disposed of as provided in section
15 or any other applicable section of the FPA. If the project's prior
license waived the applicability of section 15 of the FPA, then, based
on section 9(b) of the Administrative Procedure Act, 5 U.S.C. 558(c),
and as set forth at 18 CFR 16.21(a), if the licensee of such project
has filed an application for a subsequent license, the licensee may
continue to operate the project in accordance with the terms and
conditions of the license after the minor or minor part license
expires, until the Commission acts on its application. If the licensee
of such a project has not filed an application for a subsequent
license, then it may be required, pursuant to 18 CFR 16.21(b), to
continue project operations until the Commission issues someone else a
license for the project or otherwise orders disposition of the project.
    If the project is subject to section 15 of the FPA, notice is
hereby given that an annual license for Project No. 5362 is issued to
the Kennebec Light and Power District for a period effective April 1,
2022 through March 31, 2023 or until the issuance of a new license for
the project or other disposition under the FPA, whichever comes first.
If issuance of a new license (or other disposition) does not take place
on or before March 31, 2023, notice is hereby given that, pursuant to
18 CFR 16.18(c), an annual license under section 15(a)(1) of the FPA is
renewed automatically without further order or notice by the
Commission, unless the Commission orders otherwise.
    If the project is not subject to section 15 of the FPA, notice is
hereby given that the Kennebec Light and Power District is authorized
to continue operation of the Lower Mousam Hydroelectric Project, until
such time as the Commission takes final action on the application for
Surrender of License.

    Dated: April 5, 2022.
Kimberly D. Bose,
Secretary.
[FR Doc. 2022-07731 Filed 4-11-22; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 209 (Tuesday, November 2, 2021)]
[Notices]
[Pages 60526-60528]
[FR Doc No: 2021-23814]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. DOT-OST-2021-0123]

Notice of Rights and Protections Available Under the Federal
Antidiscrimination and Whistleblower Protection Laws

AGENCY: Office of the Secretary, Department of Transportation.

ACTION: No FEAR Act notice.

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

SUMMARY: This Notice implements Title II of the Notification and
Federal Employee Antidiscrimination and Retaliation Act of 2002 (No
FEAR Act of 2002). In doing so, the Department of Transportation
notifies all employees, former employees, and applicants for Federal
employment of the rights and protections available to them under the
Federal Anti-discrimination and Whistleblower Protection Laws.

FOR FURTHER INFORMATION CONTACT: Yvette Rivera, Associate Director,
Equity and Access Division (S-32), Departmental Office of Civil Rights,
Office of the Secretary, U.S. Department of Transportation, 1200 New
Jersey Avenue SE, Room W78-306, Washington, DC 20590,<PHONE_NUMBER> or
by email at [email protected].

SUPPLEMENTARY INFORMATION:

Electronic Access

    You may retrieve this document online through the Federal Document
Management System at http://www.regulations.gov. Electronic retrieval
instructions are available under the help section of the website.

No FEAR Act Notice

    On May 15, 2002, Congress enacted the ``Notification and Federal
Employee Antidiscrimination and Retaliation Act of 2002,'' now
recognized as the No FEAR Act (Pub. L. 107-174). The No

FEAR Act was amended on January 1, 2021, by the ``Elijah E. Cummings
Federal Employee Antidiscrimination Act of 2020.'' One purpose of the
No FEAR Act is to ``require that Federal agencies be accountable for
violations of antidiscrimination and whistleblower protection laws.''
(Pub. L. 107-174, Summary). In support of this purpose, Congress found
that ``agencies cannot be run effectively if those agencies practice or
tolerate discrimination.'' (Pub. L. 107-174, Title I, General
Provisions, section 101(1)). The No FEAR Act also requires the United
States Department of Transportation (USDOT) to issue this Notice to all
USDOT employees, former USDOT employees, and applicants for USDOT
employment. This Notice informs such individuals of the rights and
protections available under Federal antidiscrimination and
whistleblower protection laws.

Antidiscrimination Laws

    A Federal agency cannot discriminate against an employee or
applicant with respect to the terms, conditions, or privileges of
employment because of race, color, religion, sex (including gender
identity and sexual orientation), national origin, age, disability,
marital status, genetic information, political affiliation, or in
retaliation for a protected activity. One or more of the following
statutes prohibit discrimination on these bases: 5 U.S.C. 2302(b)(1),
29 U.S.C. 631, 29 U.S.C. 633a, 29 U.S.C. 206(d), 29 U.S.C. 791, 42
U.S.C. 2000e-16 and 2000ff.
    If you believe you have experienced unlawful discrimination on the
bases of race, color, religion, sex (including gender identity and
sexual orientation), national origin, age, retaliation, genetic
information, and/or disability, you must contact a USDOT Equal
Employment Opportunity (EEO) counselor within 45 calendar days of the
alleged discriminatory action, or in the case of a personnel action,
within 45 calendar days of the effective date of the action to pursue
any legal remedy. A directory of USDOT EEO counselors is available on
the Departmental Office of Civil Rights website at http://www.transportation.gov/civil-rights; you can also contact the
Departmental Office of Civil Rights by phone at<PHONE_NUMBER> for more
information. Once you contact the EEO counselor, you will be offered
the opportunity to resolve the matter through the informal complaint
process; if you are unable to resolve the matter through the informal
complaint process, you can file a formal complaint of discrimination
with USDOT (See, e.g., 29 CFR part 1614). Parties who complete the
informal complaint process are provided with an electronic Individual
Complaint of Employment Discrimination Form. While the Federal
Government is on maximum telework, the Departmental Office of Civil
Rights is accepting the Form only electronically at https://secure.dot.gov/form/eeoc or by email at [email protected]. Once
the Federal Government is no longer on maximum telework status, you may
choose to submit the Form electronically, by mail to the EEO Complaints
and Investigations Division of the Departmental Office of Civil Rights
at 1200 New Jersey Avenue SE, W76-401, Washington, DC 20590, or by Fax
to<PHONE_NUMBER>. You may also contact the EEO Complaints and
Investigations Division, Departmental Office of Civil Rights by phone
at<PHONE_NUMBER> or by email at [email protected] if you need additional
assistance.
    If you believe you experienced unlawful discrimination based on
age, you must either contact an EEO counselor as noted above, or file a
civil action in a United States District Court under the Age
Discrimination in Employment Act against the head of the alleged
discriminating agency. If you choose to file a civil action, you must
give notice of intent to sue to the Equal Employment Opportunity
Commission (EEOC) within 180 days of the alleged discriminatory action,
and not less than 30 days before filing a civil action. You may file
such notice in writing with the EEOC via mail at P.O. Box 77960,
Washington, DC 20013, the EEOC Public Portal at https://www.eeoc.gov/employees/charge.cfm, hand delivery at 131 M St. NE, Washington, DC
20507, or Fax at<PHONE_NUMBER>.
    If you are alleging discrimination based on marital status or
political affiliation, you may file a written discrimination complaint
with the U.S. Office of Special Counsel (OSC) using Form OSC-14. Form
OSC-14 is available online for electronic submission at the OSC website
http://www.osc.gov, under the tab ``File a Complaint.'' While the
Federal Government is on maximum telework, OSC is accepting Form OSC-14
only electronically. When the Federal Government is no longer on
maximum telework, you may choose to submit the form electronically or
complete Form OSC-14 and mail it to the Complaints Examining Unit, U.S.
Office of Special Counsel at 1730 M Street NW, Suite 218, Washington,
DC 20036-4505. You can download Form OSC-14 from https://osc.gov/Resources/Pages/Forms.aspx. You also have the option to call the
Complaints Examining Unit at 1-800-872-9855 for additional assistance.
In the alternative (or in some cases, in addition), you may pursue a
discrimination complaint by filing a grievance through the USDOT
administrative or negotiated grievance procedures, if such procedures
apply and are available.
    If you are alleging compensation discrimination pursuant to the
Equal Pay Act, and wish to pursue your allegations through the
administrative process, you must contact an EEO counselor within 45
calendar days of the alleged discriminatory action, as such complaints
are processed under EEOC's regulations at 29 CFR part 1614.
Alternatively, you may file a civil action in a court of competent
jurisdiction within two years, or if the violation is willful, three
years of the date of the alleged violation, regardless of whether you
pursued any administrative complaint processing. The filing of a
complaint or appeal pursuant to 29 CFR part 1614 shall not toll the
time for filing a civil action.

Whistleblower Protection Laws

    A USDOT employee with authority to take, direct others to take,
recommend, or approve any personnel action must not use that authority
to take, or fail to take, or threaten to take a personnel action
against an employee or applicant because of a disclosure of information
by that individual that is reasonably believed to evidence violations
of law, rule, or regulation; gross mismanagement; gross waste of funds;
an abuse of authority; or a substantial and specific danger to public
health or safety, unless the disclosure of such information is
specifically prohibited by law and such information is specifically
required by Executive Order to be kept secret in the interest of
national defense or the conduct of foreign affairs.

    Retaliation against a USDOT employee or applicant for making a
protected disclosure is prohibited (5 U.S.C. 2302(b)(8)). If you
believe you are a victim of whistleblower retaliation, you may file a
written complaint with the U.S. Office of Special Counsel using Form
OSC-14. While the Federal Government is on maximum telework, OSC is
accepting Form OSC-14 only electronically. When the Federal Government
is no longer on maximum telework, you may choose to submit the form
electronically or complete Form OSC-14 and mail it to the Complaints
Examining Unit, U.S. Office of Special Counsel at 1730 M Street NW,
Suite 218, Washington, DC 20036-4505. You may also contact the USDOT
Office of Inspector General Hotline by phone at 1-800-424-8071, by
email at [email protected], or online at https://www.oig.dot.gov/hotline. In addition, when the Federal Government is no longer on
maximum telework, you may also contact the USDOT Office of Inspector
General by mail at 1200 New Jersey Avenue SE, West Bldg 7th Floor,
Washington, DC 20590.

Retaliation for Engaging in Protected Activity

    A Federal agency cannot retaliate against an employee or applicant
because that individual exercises his or her rights under any of the
Federal antidiscrimination or whistleblower protection laws listed
above. If you believe that you are the victim of retaliation for
engaging in protected activity, you must follow, as appropriate, the
procedures described in the Antidiscrimination Laws and Whistleblower
Protection Laws sections or, if applicable, the administrative or
negotiated grievance procedures in order to pursue any legal remedy.

Disciplinary Actions

    Under existing laws, USDOT retains the right, where appropriate, to
discipline a USDOT employee who engages in conduct that is inconsistent
with Federal Antidiscrimination and Whistleblower Protection laws up to
and including removal from Federal service. If USDOT takes an adverse
action under 5 U.S.C. 7512 against an employee for a discriminatory
act, it must include a notation of the adverse action and the reason
for the action in the employee's personnel record. If OSC initiates an
investigation under 5 U.S.C. 1214, USDOT must seek approval from the
Special Counsel to discipline employees for, among other activities,
engaging in prohibited retaliation (5 U.S.C. 1214). Nothing in the No
FEAR Act alters existing laws or permits an agency to take unfounded
disciplinary action against a USDOT employee, or to violate the
procedural rights of a USDOT employee accused of discrimination.

Additional Information

    For more information regarding the No FEAR Act regulations, refer
to 5 CFR part 724, as well as the appropriate office(s) within your
agency (e.g., EEO/civil rights offices, human resources offices, or
legal offices). You can find additional information regarding Federal
antidiscrimination, whistleblower protection, and retaliation laws at
the EEOC website at http://www.eeoc.gov and the OSC website at http://www.osc.gov.

Existing Rights Unchanged

    Pursuant to section 205 of the No FEAR Act, neither the No FEAR Act
nor this notice creates, expands, or reduces any rights otherwise
available to any employee, former employee, or applicant under the laws
of the United States, including the provisions of law specified in 5
U.S.C. 2302(d).

    Issued in Washington, DC, on October 26, 2021.
Irene Marion,
Director, Departmental Office of Civil Rights, U.S. Department of
Transportation.
[FR Doc. 2021-23814 Filed 11-1-21; 8:45 am]
BILLING CODE 4910-9X-P


[Federal Register Volume 80, Number 175 (Thursday, September 10, 2015)]
[Notices]
[Page 54657]
[FR Doc No: 2015-22790]

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

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2015-0082]

Petition for Waiver of Compliance

    In accordance with part 211 of Title 49 of the Code of Federal
Regulations (CFR), this document provides the public notice that by a
document dated July 27, 2015, the Norfolk Southern Corporation (NS) has
petitioned the Federal Railroad Administration (FRA) for a waiver of
compliance from certain provisions of the Federal railroad safety
regulations contained at 49 CFR part 236, Applicability, minimum
requirements, and penalties. FRA assigned the petition Docket Number
FRA-2015-0082.
    This request is for relief from the mechanical locking requirements
of 49 CFR 236.312, Movable bridge, interlocking of signal appliances
with bridge devices, to the extent that NS not be required to install
bridge lockings on either end of the lift bridge, Control Point (CP)
509, located at Milepost 509.9 on the Chicago Line, Chicago, IL.
    The design of the CP 509 bridge dates to its commissioning in 1911
and features circuitry and locking mechanisms installed in 1930. The
design called for surface detection of the rails and circuit
controllers on all four corners of the movable span to detect when the
movable span is properly seated. Unlike the test requirements of 49 CFR
236.312, which state that the locking member must be within one inch of
proper alignment before a permissive signal governing movements can be
lined, NS adjusts the span circuit controllers to three-eighths of an
inch before a permissive signal can be lined. The regulation calls for
a single point of mechanical locking on each end of the movable span,
but the NS design has four points of detection to ensure the entire
movable span is properly seated.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulations.gov and in person at the U.S. Department of
Transportation's (DOT) Docket Operations Facility, 1200 New Jersey
Avenue SE., W12-140, Washington, DC 20590. The Docket Operations
Facility is open from 9 a.m. to 5 p.m., Monday through Friday, except
Federal Holidays.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.

Communications received by October 26, 2015 will be considered by FRA
before final action is taken. Comments received after that date will be
considered as far as practicable.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the document,
if submitted on behalf of an association, business, labor union, etc.).
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its processes. DOT posts these comments,
without edit, including any personal information the commenter
provides, to www.regulations.gov, as described in the system of records
notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.
See also http://www.regulations.gov/#!privacyNotice for the privacy
notice of regulations.gov.

    Issued in Washington, DC on September 1, 2015.
Ron Hynes,
Director, Office of Technical Oversight.
[FR Doc. 2015-22790 Filed 9-9-15; 8:45 am]
 BILLING CODE 4910-06-P


[Federal Register: February 7, 2008 (Volume 73, Number 26)]
[Proposed Rules]
[Page 7449-7455]
[DOCID:fr07fe08-21]

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

Part III

Securities and Exchange Commission

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

17 CFR Parts 210, 228, 229 and 249

Internal Control Over Financial Reporting in Exchange Act Periodic
Reports of Non-Accelerated Filers; Proposed Rule

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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 228, 229 and 249

[Release Nos. 33-8889; 34-57258; File No. S7-06-03]
RIN 3235-AJ64

Internal Control Over Financial Reporting in Exchange Act
Periodic Reports of Non-Accelerated Filers

AGENCY: Securities and Exchange Commission.

ACTION: Proposed amendments of temporary rules.

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

SUMMARY: We are proposing to amend temporary rules that were published
on December 21, 2006, in Release No. 33-8760 [71 FR 76580]. These
temporary rules require companies that are non-accelerated filers to
include in their annual reports, pursuant to rules implementing Section
404(b) of the Sarbanes-Oxley Act of 2002, an attestation report of
their independent auditor on internal control over financial reporting
for fiscal years ending on or after December 15, 2008. Under the
proposed amendments, a non-accelerated filer would be required to
provide the auditor's attestation report on internal control over
financial reporting in an annual report filed for fiscal years ending
on or after December 15, 2009.

DATES: Comments should be received on or before March 10, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml.
);     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number S7-06-03 on the subject line; or
     Use the Federal Rulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

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 S7-06-03. This file number
should be included on the subject line if e-mail is used. To help us
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/other.shtml). Comments are

also available for public inspection and copying 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. All
comments received will be posted without change; we do not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Sean Harrison, Special Counsel, Office
of Rulemaking, Division of Corporation Finance, at<PHONE_NUMBER>, U.S.
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-3628.

SUPPLEMENTARY INFORMATION: We are proposing to amend the following
forms and temporary rules: Rule 2-02T of Regulation S-X,\1\ Item 308T
of Regulation S-K,\2\ and S-B,\3\ Item 4T of Form 10-Q,\4\ Item 3A(T)
of Form 10-QSB,\5\ Item 9A(T) of Form 10-K,\6\ Item 8A(T) of Form 10-
KSB,\7\ Item 15T of Form 20-F,\8\ and Instruction 3T of General
Instruction B.(6) of Form 40-F.\9\
---------------------------------------------------------------------------

    \1\ 17 CFR 210-2.02T.
    \2\ 17 CFR 229.308T.
    \3\ 17 CFR 228.310T.
    \4\ 17 CFR 249.308a.
    \5\ 17 CFR 249.308b.
    \6\ 17 CFR 249.310.
    \7\ 17 CFR 249.310(b).
    \8\ 17 CFR 249.220f.
    \9\ 17 CFR.249.240f.
---------------------------------------------------------------------------

I. Background

    On December 15, 2006,\10\ we extended the dates by which non-
accelerated filers \11\ must begin to comply with the internal control
over financial reporting (``ICFR'') requirements mandated by Section
404 of the Sarbanes-Oxley Act of 2002.\12\ Specifically, we postponed
for five months, from fiscal years ending on or after July 15, 2007 to
fiscal years ending on or after December 15, 2007, the date by which
non-accelerated filers must begin to comply with the management report
requirement in Item 308(a) of Regulation S-K.\13\ We also postponed to
fiscal years ending on or after December 15, 2008 the date by which
non-accelerated filers must begin to comply with the auditor
attestation report requirement in Item 308(b) of Regulation S-K.\14\ We
indicated that we would consider further postponing the auditor
attestation report compliance date after considering the anticipated
revisions to the Public Company Accounting Oversight Board's
(``PCAOB'') Auditing Standard No. 2 (``AS No. 2'').
---------------------------------------------------------------------------

    \10\ See Release No. 33-8760 (December 15, 2006) [71 FR 76580]
(the ``2006 Release'').
    \11\ Although the term ``non-accelerated filer'' is not defined
in our rules, we use it throughout this release to refer to an
Exchange Act reporting company that does not meet the Rule 12b-2
definition of either an ``accelerated filer'' or a ``large
accelerated filer.''
    \12\ 15 U.S.C. 7262.
    \13\ 17 CFR 229.308(a). We effected the postponement, in part,
by adding temporary Item 308T to Regulation S-K. We similarly added
temporary Item 308T to Regulation S-B, but the Commission recently
adopted amendments that will eliminate Regulation S-B effective
March 15, 2009. See Release No. 33-8876 (December 19, 2007) [73 FR
934].
    \14\ 17 CFR 229.308(b).
---------------------------------------------------------------------------

    In the 2006 Release, we cited two primary reasons for deferring
implementation of the auditor attestation report requirement for an
additional year after implementation of the management report
requirement. First, we stated that the deferred implementation would
afford non-accelerated filers and their auditors the benefit of
anticipated changes by the PCAOB to AS No. 2, subject to Commission
approval, as well as any implementation guidance that the PCAOB issued
for auditors of smaller public companies.
    Second, we expected a deferred implementation of the auditor
attestation requirement to save non-accelerated filers the full
potential costs associated with the auditor's initial attestation to,
and report on, management's assessment of ICFR during the period that
changes to AS No. 2 were being considered and implemented, and the
PCAOB was formulating guidance specifically for auditors of smaller
public companies. Public commenters previously have asserted that the
ICFR compliance costs are likely to be disproportionately higher for
smaller public companies than larger ones, and that the auditor's fee
represents a large percentage of those costs.\15\
---------------------------------------------------------------------------

    \15\ See, for example, letters of American Electronics
Association, International Association of Small Broker-Dealers and
Advisers, Small Business Entrepreneurship Council, and the Silicon
Valley Leadership Group, Committee on Capital Markets Regulation on
Release No. 33-8762 (December 20, 2006) [71 FR 77635], File No. S7-
24-06.
---------------------------------------------------------------------------

    Furthermore, we have learned from commenters, including those
participating in our roundtables on implementation of the ICFR
requirements, that while companies incur increased internal costs in
the first year of compliance, some of which are due to ``deferred
maintenance'' items (for example, documentation, remediation, etc.),
these costs may

decrease in the second year.\16\ Therefore, we anticipated that
postponing the costs resulting from the auditor's attestation report
until the second year would help non-accelerated filers to smooth the
cost spike that many accelerated filers experienced in their first year
of compliance with the Section 404 requirements.
---------------------------------------------------------------------------

    \16\ Materials related to the Commission's 2005 Roundtable
Discussion on Implementation of Internal Control Reporting
Provisions and 2006 Roundtable on Second-Year Experiences with
Internal Control Reporting and Auditing Provisions, including the
archived roundtable broadcasts, are available at http://www.sec.gov/spotlight/soxcomp.htm
.

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

    The compliance date extensions that we granted in 2006 were part of
a series of actions that the Commission and PCAOB each announced that
they intended to take to improve implementation of the internal control
over financial reporting requirements.\17\ These actions included:
---------------------------------------------------------------------------

    \17\ See SEC Press Release 2006-75 (May 17, 2006), ``SEC
Announces Next Steps for Sarbanes-Oxley Implementation'' and PCAOB
Press Release (May 17, 2006), ``Board Announces Four-Point Plan to
Improve Implementation of Internal Control Reporting Requirements.''
---------------------------------------------------------------------------

     Issuance by the Commission of interpretive guidance for
management to assist management in complying with the ICFR evaluation
and disclosure requirements;
     Consideration of efforts by COSO to provide more guidance
on how the COSO framework on internal control can be applied to smaller
public companies;
     The PCAOB's issuance, with Commission approval, of
Auditing Standard No. 5 (``AS No. 5''), which replaced AS No. 2;
     Reinforcement of auditor efficiency through PCAOB
inspections and Commission oversight of the PCAOB's audit firm
inspection program;
     Development, or facilitation of development, of
implementation guidance for auditors of smaller public companies; and
     Continuation of PCAOB forums on auditing in the small
business environment.
    On June 20, 2007, we approved the issuance of interpretive
guidance\18\ and adopted rule amendments\19\ to help public companies
strengthen their ICFR evaluations while reducing unnecessary costs. The
interpretive release provided guidance for management on how to conduct
an evaluation of the effectiveness of a company's ICFR. The guidance
sets forth an approach by which management can conduct a top-down,
risk-based evaluation of ICFR.
---------------------------------------------------------------------------

    \18\ Release No. 33-8810 (Jun. 20, 2007) [72 FR 35324].
    \19\ Release No. 33-8809 (Jun. 20, 2007) [72 FR 35310]. The rule
amendments, among other things, provided that an evaluation that
complies with our interpretive guidance is one way to satisfy the
annual ICFR evaluation requirement in Exchange Act Rules 13a-15(c)
and 15d-15(c) [17 CFR 240.13a-15(c) and 240.15d-15(c)].
---------------------------------------------------------------------------

    As discussed above, on July 25, 2007, we approved the PCAOB's AS
No. 5, which replaced AS No. 2. The new standard sets forth the
professional standards and related performance guidance for independent
auditors to attest to, and report on, management's assessment of the
effectiveness of ICFR. Our management guidance, in combination with AS
No. 5, was intended to make ICFR audits and management evaluations of
ICFR more cost-effective by being risk-based and scalable to a
company's size and complexity. Although the PCAOB issued AS No. 5, and
we approved it, according to our planned timetables, there still are
some additional actions that the Commission and PCAOB intend to take
that give us reason to propose a further extension of the auditor
attestation report compliance date for non-accelerated filers.
    One of these actions is the PCAOB's issuance of final staff
guidance on auditing ICFR of smaller public companies. On October 17,
2007, the PCAOB published preliminary staff guidance that demonstrates
how auditors can apply the principles described in AS No. 5 and
provides examples of approaches to particular issues that might arise
in the audits of smaller, less complex public companies.\20\ Topics
discussed in the PCAOB's guidance include: Entity-level controls, risk
of management override, segregation of duties and alternative controls,
information technology controls, financial reporting competencies, and
testing controls with less formal documentation. The PCAOB sought
public comment on this guidance, and the comment period ended on
December 17, 2007.\21\
---------------------------------------------------------------------------

    \20\ See ``An Audit of Internal Control that is Integrated with
an Audit of the Financial Statements: Guidance for Auditors of
Smaller Companies,'' (October 17, 2007), available at
http://www.pcaobus.org.

    \21\ The PCAOB has not announced when it plans to finalize this
guidance.
---------------------------------------------------------------------------

    Another action involves a study that we are undertaking to
determine whether the Section 404(b) auditor attestation requirement of
the Sarbanes-Oxley Act is being implemented in a manner that will be
cost-effective for smaller reporting companies. The study will pay
special attention to those small companies that are complying with the
ICFR requirements for the first time.
    This study of costs and benefits will include a Web-based survey of
companies that are subject to the ICFR requirements as well as in-depth
interviews with a subset of these companies. Our plan is to gather data
from a large cross-section of companies about the costs and benefits of
compliance with the ICFR requirements and to evaluate whether the new
management guidance and AS No. 5 are having the intended effect of
facilitating more cost-effective ICFR evaluations and audits. Because
we intend to collect data based on companies' experiences, this study
will be taking place in the coming months as companies for the first
time prepare their financial statements and undergo external audits
under the new AS No. 5 and/or conduct their internal ICFR evaluations
with the aid of the new management guidance. We anticipate that the
study and analysis of the results will be completed no earlier than the
summer of 2008.
    We also note that others have expressed concerns about the orderly
and efficient implementation of the ICFR requirements.\22\
---------------------------------------------------------------------------

    \22\ See, for example, the May 8, 2007, letter to Chairman
Christopher Cox and Chairman Mark Olson from Senator John Kerry,
Chairman, Senate Committee on Small Business and Entrepreneurship,
and Senator Olympia Snowe, Ranking Member, Senate Committee on Small
Business and Entrepreneurship, available at http://sbc.senate.gov/lettersout/070508-SEC-PCAOB-HearingFollowUp.pdf
; hearing on

``Sarbanes-Oxley Section 404: New Evidence on the Costs for Small
Businesses,'' House Committee on Small Business (December 12, 2007);
and the July 12, 2007, letter from Sharon Haeger, America's
Community Bankers, on Release No. 34-55876 [72 FR 32340], File No.
PCAOB 2007-02, available at http://www.sec.gov/comments/pcaob-2007-02/pcaob200702.shtml
.

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

    If we do not adopt the proposed amendments, non-accelerated filers
will have to begin complying with the auditor attestation requirement
for fiscal years ending on or after December 15, 2008. To accomplish
this, in 2008, many non-accelerated filers would need to engage their
independent auditors to perform integrated audits of their financial
statements and ICFR. Without an extension, these companies may begin to
incur costs before we have an opportunity to observe whether further
action to improve the effectiveness and efficiency of Section 404
implementation is warranted. Therefore, we believe that an additional
one-year deferral of the auditor attestation requirement would be
appropriate so that these companies do not incur unnecessary compliance
costs before we have the benefit of the study. An additional one-year
deferral will allow the PCAOB additional time during 2008 to promulgate
its guidance for ICFR audits of smaller public companies, as well as
additional time for the auditors

of non-accelerated filers to incorporate such guidance in their
planning and conduct of their ICFR audits during 2009.

II. Proposed Extension of Auditor Attestation Compliance Date for Non-
Accelerated Filers

    We propose to amend Item 308T of Regulation S-K, Rule 2-02T of
Regulation S-X, and Forms 10-Q, 10-K, 20-F and 40-F to require non-
accelerated filers to provide their auditor's attestation in their
annual reports filed for fiscal years ending on or after December 15,
2009. If we adopt the proposed amendments, a non-accelerated filer
would continue to be required to state in its management report on ICFR
that the company's annual report does not include an auditor
attestation report.\23\
---------------------------------------------------------------------------

    \23\ See Item 308T(a)(4) of Regulation S-K, Item 15T(b)(4) of
Form 20-F and General Instruction B.(6)(3T) of Form 40-F.
---------------------------------------------------------------------------

    In the 2006 Release, we also adopted a temporary amendment that
provided that the management report included in a non-accelerated
filer's annual report that did not contain the auditor's attestation
report would be deemed ``furnished'' rather than ``filed'' and not be
subject to liability under Section 18 of the Exchange Act.\24\ We
acknowledged in that release non-accelerated filers filing only a
management report during their first year of compliance with the
Section 404(a) requirements may become subject to more second-guessing
as a result of separating the management report from the auditor's
attestation. As proposed, the amendments would maintain this
distinction.
---------------------------------------------------------------------------

    \24\ Section 18 of the Exchange Act [15 U.S.C. 78r] imposes
liability on any person who makes or causes to be made in any
application or report or document filed under the Act, or any rule
thereunder, any statement that ``was at the time and in the light of
the circumstances under which it was made false or misleading with
respect to any material fact.'' As a result of the temporary Item
308T of Regulation S-K and S-B and the temporary amendments to Forms
20-F and 40-F, however, during the applicable periods, management's
report would be subject to liability under this section only in the
event that a non-accelerated filer specifically states that the
report is to be considered ``filed'' under the Exchange Act or
incorporates it by reference into a filing under the Securities Act
or the Exchange Act.
---------------------------------------------------------------------------

Request for Comment

    We request and encourage any interested person to submit comments
regarding the proposed amendments to extend the auditor attestation
report compliance date described above. In particular, we solicit
comment on the following questions:
     Is it appropriate to provide a further extension of the
auditor attestation requirement for non-accelerated filers as proposed?
If so, should we postpone this requirement for an additional year as
proposed, or would a longer or shorter timeframe be more appropriate?
     How would the proposed extension affect investors in non-
accelerated filers?
     Would the proposed additional deferral of the auditor's
attestation report requirement make the application of the Section 404
requirements more or less efficient and effective for non-accelerated
filers?
     Should management's report on ICFR be ``filed'' rather
than ``furnished'' during the second year of the non-accelerated
filer's compliance with the ICFR requirements under Section 404(a) if
we adopt the proposed extension?

III. Paperwork Reduction Act

    In connection with our original proposal and adoption of the rules
and amendments implementing the Section 404 requirements, we submitted
cost and burden estimates of the collection of information requirements
of the amendments to the Office of Management and Budget (``OMB''). We
published a notice requesting comment on the collection of information
requirements in the proposing release for the rule amendments. We
submitted these requirements to the OMB for review in accordance with
the Paperwork Reduction Act of 1995 (``PRA'') \25\ and received
approval of these estimates. We do not believe that the proposed
extension will result in any change in the collection of information
requirements of the amendments implementing Section 404. Therefore, we
are not revising our PRA burden and cost estimates submitted to the
OMB.
---------------------------------------------------------------------------

    \25\ 44 U.S.C. 3501 et seq. and 5 CFR 1320.11.
---------------------------------------------------------------------------

IV. Cost-Benefit Analysis

A. Benefits

    The proposed amendments would postpone for one year the date by
which a non-accelerated filer would be required to include in its
annual report an auditor attestation report on management's assessment
of internal control over financial reporting. As a result, all non-
accelerated filers would be required to complete only management's
assessment in their first and second year of their compliance with the
Section 404 requirements.
    We plan to conduct a study to assess whether the Section 404(b)
auditor attestation requirement of the Sarbanes-Oxley Act is being
implemented in a manner that will be cost-effective for smaller
reporting companies. Our management guidance and the new auditing
standard were designed to make management evaluations and ICFR audits
more cost-effective. We believe that an additional one-year deferral of
the auditor attestation report requirement would benefit non-
accelerated filers by helping smaller companies avoid incurring
unnecessary compliance costs as we determine whether further action to
improve the effectiveness and efficiency of Section 404 implementation
is warranted. In addition, we believe that non-accelerated filers may
experience the following additional benefits from the proposed
extension:
     Auditors of non-accelerated filers would have
significantly more time to conform their ICFR audit approach to meet
the requirements of AS No. 5, and to consider the PCAOB's guidance for
auditors of smaller public companies; and
     Non-accelerated filers would have additional time to focus
on their approach for evaluating and reporting on the effectiveness of
ICFR. This may facilitate their efforts to develop best practices and
efficiencies in preparing the management report prior to becoming
subject to the auditor attestation report requirement.

B. Costs

    If we adopt the proposed amendments, investors in non-accelerated
filers will have to wait longer than they would in the absence of the
proposed extension for the assurances provided by the attestation
report by the companies' auditor on management's report on ICFR and the
added investor confidence that could result. The proposed amendments
may increase the risk that, without the auditor's attestation, some
non-accelerated filers may erroneously conclude that the company's ICFR
is effective, when an ICFR audit might reveal that it is not. In
addition, some companies may conduct an assessment that is not as
thorough, careful and as appropriate to the company's circumstances as
they would perform if the auditor were also conducting an audit of
ICFR. The proposed amendments may also increase the risk that
weaknesses in a company's ICFR will go undetected for a longer period
of time.
    We request data to quantify the potential costs and benefits
described above. We seek estimates of these costs and benefits, as well
as any costs and benefits that we have not identified that may result
from the adoption of these proposed amendments. We also request

qualitative feedback on the nature of the potential benefits and costs
described above and any benefits and costs we may have overlooked.

V. Consideration of Impact on the Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \26\ we solicit data to determine whether
the proposals constitute a ``major'' rule. Under SBREFA, a rule is
considered ``major'' where, if adopted, it results or is likely to
result in:
---------------------------------------------------------------------------

    \26\ 5 U.S.C. 603.
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    We request comment on the potential impact of the proposals on the
economy on an annual basis. Commenters are requested to provide
empirical data and other factual support for their views if possible.
    Section 23(a)(2) of the Exchange Act \27\ also requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. Section 23(a)(2) prohibits us from
adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. In addition, Section 2(b) \28\ of the Securities Act and Section
3(f) \29\ of the Exchange Act require us, when engaging in rulemaking
where we are required to consider or determine whether an action is
necessary or appropriate in the public interest, to also consider
whether the action will promote efficiency, competition, and capital
formation.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78w(a).
    \28\ 15 U.S.C. 77b(b).
    \29\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    We believe that taking additional time to evaluate how efficiently
the Section 404(b) process is being implemented reduces the
possibilities of needless inefficiencies and transition costs for non-
accelerated filers. Further, if the costs incurred by companies are
unnecessarily high, companies may find it difficult to grow and may
experience barriers to capital formation. We expect that this
additional one-year delay of the auditor attestation report requirement
will make the implementation process more efficient and less costly for
non-accelerated filers, which should promote efficiency and capital
formation.
    It is possible that a competitive impact could result from the
differing treatment of non-accelerated filers and larger companies that
already have been complying with the Section 404 requirements, but we
do not expect that the extension will have any measurable effect on
competition. We solicit public comment that will assist us in assessing
the impact that the proposed amendments could have on competition,
efficiency and capital formation.

VI. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis (``IRFA'') has been
prepared in accordance with the Regulatory Flexibility Act.\30\ This
IRFA involves proposed amendments to temporary rules Item 308T of
Regulation S-K and S-B, Rule 2-02T of Regulation S-X, Item 4T of Form
10-Q, Item 3A(T) of Form 10-QSB, Item 9A(T) of Form 10-K, Item 8A(T) of
Form 10-KSB, Item 15T of Form 20-F, and Instruction 3T of General
Instruction B.(6) of Form 40-F. A non-accelerated filer is currently
required to start providing its auditor's attestation report on ICFR in
its annual report for fiscal years ending on or after December 15,
2008. We propose to amend these forms and temporary rules to require a
non-accelerated filer to start providing its auditor's attestation
report on ICFR in annual reports for fiscal years ending on or after
December 15, 2009.
---------------------------------------------------------------------------

    \30\ 5 U.S.C. 601.
---------------------------------------------------------------------------

A. Reasons for the Proposed Amendments

    The Commission plans to complete a study of the costs and benefits
of companies' Section 404 implementation. We are proposing to defer the
implementation of the auditor attestation report requirement for non-
accelerated filers for an additional year for the following reasons,
among others discussed above:
     To enable non-accelerated filers more time to prepare and
gain efficiencies in the review and evaluation of the effectiveness of
internal control over financial reporting;
     To provide the Commission with time to review the findings
of its study and to consider whether further action to improve the
effectiveness and efficiency of Section 404 implementation is
warranted;
     To provide the PCAOB additional time to promulgate its
guidance for ICFR audits of smaller public companies; and
     To provide the auditors of non-accelerated filers
additional time to consider such guidance.

B. Objectives

    The proposed amendments aim to further the goals of the Sarbanes-
Oxley Act to enhance the quality of public company disclosure
concerning the company's internal control over financial reporting and
increase investor confidence in the financial markets.

C. Legal Basis

    We are issuing the proposals under the authority set forth in
Section 19 of the Securities Act, Sections 3, 12, 13, 15, 23 and 36 of
the Exchange Act, and Sections 3(a) and 404 of the Sarbanes-Oxley Act.

D. Small Entities Subject to the Proposed Amendments

    The proposed changes would affect some issuers that are small
entities. Exchange Act Rule 0-10(a) \31\ defines an issuer, other than
an investment company, to be a ``small business'' or ``small
organization'' if it had total assets of $5 million or less on the last
day of its most recent fiscal year. We estimate that there are
approximately 1,100 issuers, other than registered investment
companies, that may be considered small entities. The proposed
amendments would apply to any small entity that is subject to reporting
under either Section 13(a) or 15(d) of the Exchange Act.
---------------------------------------------------------------------------

    \31\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

E. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed amendments would alleviate reporting and compliance
burdens by postponing by an additional year the date by which non-
accelerated filers must begin to comply with the auditor attestation
report on ICFR in their annual reports.

F. Duplicative, Overlapping, or Conflicting Federal Rules

    The ICFR requirements do not duplicate, overlap, or conflict with
other federal rules.

G. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed amendments, we considered the following alternatives:

     Establishing different compliance or reporting
requirements or timetables that take into account the resources
available to small entities;
     Clarifying, consolidating or simplifying compliance and
reporting requirements under the rules for small entities;
     Using performance rather than design standards; and
     Exempting small entities from all or part of the
requirements.
    The proposed amendments would establish a different compliance and
reporting timetable for small entities. We believe that the proposed
amendments would promote the primary goal of enhancing the quality of
reporting and increasing investor confidence in the fairness and
integrity of the securities markets. Therefore we do not believe
exempting small entities from the proposed amendments would be
appropriate.

H. Solicitation of Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     The number of small entity issuers that may be affected by
the proposed amendments;
     The existence or nature of the potential impact of the
proposed amendments on small entity issuers discussed in the analysis;
and
     How to quantify the impact of the proposed amendments.
    Commenters are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if we adopt the proposed amendments, and will be
placed in the same public file as comments on the proposed amendments
themselves.

VII. Statutory Authority and Text of the Proposed Amendments

    The amendments described in this release are being proposed under
the authority set forth in Section 19 of the Securities Act, Sections
3, 12, 13, 15, 23 and 36 of the Exchange Act, and Sections 3(a) and 404
of the Sarbanes-Oxley Act.

List of Subjects

17 CFR Part 210

    Accountants, Accounting, Reporting and recordkeeping requirements,
Securities.

17 CFR Part 228

    Reporting and recordkeeping requirements, Securities, Small
businesses.

17 CFR Parts 229 and 249

    Reporting and recordkeeping requirements, Securities.

Text of Proposed Amendments

    For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF
1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT
COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY
POLICY AND CONSERVATION ACT OF 1975

    1. The authority citation for part 210 continues to read as
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77aa(25), 77aa(26), 78c, 78j-1, 78l, 78m, 78n, 78o(d), 78q, 78u-5,
78w(a), 78ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30, 80a-31, 80a-
37(a), 80b-3, 80b-11, 7202, 7218 and 7262, unless otherwise noted.

    2. Section 210.2-02T is amended by:
    a. Removing paragraphs (a) and (b), and redesignating paragraphs
(c) and (d) as paragraphs (a) and (b);
    b. Revising the date ``December 15, 2008'' in newly redesignated
paragraph (a) to read ``December 15, 2009''; and
    c. Revising newly redesignated paragraph (b).
    The revision reads as follows:

Sec.  210.2-02T  Accountants' reports and attestation reports on
internal control over financial reporting.

* * * * *
    (b) This section expires on June 30, 2010.

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

    2. The authority citation for part 228 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn,
77sss, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-29,
80a-30, 80a-37, 80b-11, and 7201 et seq., and 18 U.S.C. 1350.
* * * * *

Sec.  228.308T  [Amended]

    3. Section 228.308T is amended by revising the date ``December 15,
2008'' in the ``Note to Item 308T'' to read ``March 15, 2009''.

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

    4. The authority citation for part 229 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll,
78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-
38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless
otherwise noted.
* * * * *

Sec.  228.309T  [Amended]

    5. Section 229.308T is amended by:
    a. Revising the date ``December 15, 2008'' in the ``Note to Item
308T'' to read ``December 15, 2009''; and
    b. Revising the date ``June 30, 2009'' in paragraph (c) to read
``June 30, 2010''.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    6. The general authority citation for part 249 is revised to read
as follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
    7. Form 20-F (referenced in Sec.  249.220f), Part II, Item 15T is
amended by:
    a. Revising the date ``December 15, 2008'' in paragraph (2) to the
``Note to Item 15T'' to read ``December 15, 2009''; and
    b. Revising the date ``June 30, 2009'' in paragraph (d) to read
``June 30, 2010''.

    Note: The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

    8. Form 40-F (referenced in Sec.  249.240f) is amended by:
    a. Revising the date ``December 15, 2008'' in ``Instruction 3T(2)''
to the ``Instructions to paragraphs (b), (c), (d) and (e) of General
Instruction B.(6)'' to read ``December 15, 2009''; and
    b. Revising the date ``June 30, 2009'' in the paragraph following
``Instruction 3T'' to the ``Instructions to paragraphs (b), (c), (d)
and (e) of General Instruction B.(6)'' to read ``June 30, 2010''.

    Note: The text of Form 40-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

    9. Form 10-Q (referenced in Sec.  249.308a) is amended by revising
Item 4T to Part I to read as follows:

    Note: The text of Form 10-Q does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-Q

* * * * *

Part I--Financial Information

* * * * *
Item 4T. Controls and Procedures
    (a) If the registrant is neither a large accelerated filer nor an
accelerated filer as those terms are defined in Sec.  240.12b-2 of this
chapter, furnish the information required by Items 307 and 308T(b) of
Regulation S-K (17 CFR 229.307 and 229.308T(b)) with respect to a
quarterly report that the registrant is required to file for a fiscal
year ending on or after December 15, 2007 but before December 15, 2009.
    (b) This temporary Item 4T will expire on June 30, 2010.
* * * * *
    10. Form 10-QSB (referenced in Sec.  249.308b) is amended by
revising Item 3A(T) to Part I to read as follows:

    Note: The text of Form 10-QSB does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-QSB

* * * * *

Part I--Finanacial Information

* * * * *
Item 3A(T). Controls and Procedures
    (a) Furnish the information required by Items 307 and 308T(b) of
Regulation S-B (17 CFR 228.307 and 228.308T(b)) with respect to a
quarterly report that the small business issuer is required to file for
a fiscal year ending on or after December 15, 2007 but before October
31, 2008.
* * * * *
    11. Form 10-K (referenced in Sec.  249.310) is amended by:
    a. Revising the date ``December 15, 2008'' in paragraph (a) to Item
9A(T) to Part II to read ``December 15, 2009''; and
    b. Revising the date ``June 30, 2009'' in paragraph (b) to Item
9A(T) to Part II to read ``June 30, 2010''.

    Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

    12. Form 10-KSB (referenced in Sec.  249.310b) is amended by
revising the date ``December 15, 2008'' in paragraph (a) to Item 8A(T)
to Part II to read ``March15, 2009''.

    Note: The text of Form 10-KSB does not, and this amendment will
not, appear in the Code of Federal Regulations.

    By the Commission.

    Dated: February 1, 2008.
Nancy M. Morris,
Secretary.
[FR Doc. E8-2211 Filed 2-6-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 250 (Monday, December 31, 2012)]
[Notices]
[Page 77152]
[FR Doc No: 2012-31239]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68521; File No. SR-NYSEMKT-2012-58]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of
Designation of a Longer Period for Commission Action on Proposed Rule
Change Deleting NYSE MKT Rules 95(c) and (d)--Equities and Related
Supplementary Material

December 21, 2012.
    On October 26, 2012, NYSE MKT LLC (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to delete NYSE MKT
Rules 95(c) and (d)--Equities and related Supplementary Material. The
proposed rule change was published for comment in the Federal Register
on November 15, 2012.\3\ The Commission received no comment letters on
the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 68186 (November 8,
2012), 77 FR 68191.
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \4\ provides that within 45 days of the
publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
45th day for this filing is December 30, 2012. The Commission is
extending this 45-day time period.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission finds it appropriate to designate a longer period
within which to take action on the proposed rule change so that it has
sufficient time to consider this proposed rule change, which would
delete NYSE MKT Rules 95(c) and (d)--Equities and related Supplementary
Material, and the potential issues raised by this proposal.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\5\ designates February 13, 2013 as the date by which the
Commission should either approve or disapprove, or institute
proceedings to determine whether to disapprove, the proposed rule
change (File No. SR-NYSEMKT-2012-58).
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(31).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-31239 Filed 12-28-12; 8:45 am]
BILLING CODE 8011-01-P


FIFRA SCIENTIFIC ADVISORY PANEL ( SAP) OPEN MEETING March 14  15, 2006 FIFRA SAP WEB SITE http:// www. epa. gov/ scipoly/ sap/ OPP Docket Telephone: ( 703) 305 5805 Docket Number: OPP 2006 0035 Holiday Inn  National Airport 2650 Jefferson Davis Highway Arlington, VA 22202 Telephone: ( 703) 684 7200 EVENT MIR604 MODIFIED Cry3A PROTEIN Bt CORN  PLANTINCORPORATED PROTECTANT Tuesday, March 14, 2006 C 8: 30 A. M. Introduction and Identification of Panel Members  Kenneth M. Portier, Ph. D. ( FIFRA SAP Session Chair)

C 8: 40 A. M. Administrative Procedures by Designated Federal Official  Mr. Joseph E. Bailey C 8: 50 A. M. Welcome and Opening Remarks   Janet Andersen, Ph. D. ( Director, Biopesticide and Pollution Prevention Division, Office of Pesticide Programs, EPA)

C 9: 00 A. M. Introduction and Background  Mr. Mike Mendelsohn ( Senior Regulatory Specialist, Biopesticides and Pollution Prevention), Office of Pesticide Programs, EPA)

C 9: 30 A. M Overview of Ecological Risk Assessment  Tessa Milofsky, M. S. ( Biopesticide and Pollution Prevention Division, Office of Pesticide Programs, EPA).

C 10: 30 A. M. BREAK C 10: 45 A. M Overview of Human Health Risk Assessment  Ms. Annabel Fellman, ( Biopesticide and Pollution Prevention d Division, Office of Pesticide Programs, EPA).

C 11: 45 A. M. LUNCH C 1: 00 P. M. Public Comments C 2: 00 P. M. Question to the Panel on Ecological Risk Assessment The weight of evidence from the reviewed data indicates that therewill not be a hazard to wildlife from the commercialization of Event MIR604 corn. Although the mCry3A protein expressed by Event MIR604 corn is known to affect only coleopteran insect species, EPA assessed the potential risks, to a wide variety of non target organisms ( i. e. mammals, birds, fish, invertebrates and plants), that could potentially result from exposure to this Bt protein. The emphasis of this non target risk assessment, however, was on invertebrate species that dominate corn agroecosystems. The Agency also evaluated a soil fate study that was intended to provide information on the persistence and rate of degradation of mCry3A protein in the soil environment. After reviewing data submitted in support of the Event MIR604 Bt corn registration, EPA concluded that aquatic and terrestrial wildlife, including soil organisms, were not likely to be adversely affected and that this Bt corn product is not likely to threaten the long term survival of any non target wildlife populations.

The Panel is requested to comment on the Agency's analysis of the currently available data on the potential impacts of Event MIR604 corn on non target species.

C 3: 30 P. M. BREAK C 3: 45 P. M. Question to Panel on Human Health Risk Assessment ( 1) Previously submitted studies for Event MIR604 demonstrated the equivalence of the plantand bacterial produced test substances by showing similar molecular weights, purity of 90.3%, a lack of post translational glycosylation of mCry3A from either source, and comparable toxicities toward western corn rootworm ( WCRW). However, two forms of mCry3A ( designated as mCry3A sf and mCry3A lf) were found in the bacterial produced test material ( MCRY3A 0102). The molecular weights of the short and long form of mCry3A were 67.5 kDa and 69.1 kDa, respectively, determined via SDS PAGE and MALDI TOF Mass spectrometry. The lesser of the two components, with the lower molecular weight, corresponded to the intended mCry3A protein with 598 amino acids. The other component contained the same 598 amino acids as the first component but also contained an additional 16 amino acids at the N  terminal end of the protein. Both mCry3A forms were insecticidally active against WCRW. On this basis, and taking into account the high degree of structural homology ( 97.4% amino acid identity), the two forms of mCry3A in test material MCRY3A 0102 were considered to be equivalent.

Please comment on the Agency's conclusion that the mCry3A proteins from corn event MIR604 and from recombinant E. coli are substantially the same for the purpose of the Agency's risk assessment; and that the equivalence is confirmed for the two forms of the bacterial produced mCry3A test material ( MCRY3A 0102).

C 5: 00 P. M. Adjournment Please be advised that agenda times are approximate; when the discussion for one topic is completed, discussions for the next topic will begin. For further information, please contact the Designated Federal Official for this meeting, Mr. Joseph Bailey, via telephone: ( 202) 564 2045; fax: ( 202) 564 8382; or email: bailey. joseph@ epa. gov FIFRA SCIENTIFIC ADVISORY PANEL ( SAP) OPEN MEETING March 14  15, 2006 FIFRA SAP WEB SITE http:// www. epa. gov/ scipoly/ sap/ OPP Docket Telephone: ( 703) 305 5805 Docket Number: OPP 2006 0035 Holiday Inn  National Airport 2650 Jefferson Davis Highway Arlington, VA 22202 Telephone: ( 703) 684 7200 EVENT MIR604 MODIFIED Cry3A PROTEIN Bt CORN  PLANTINCORPORATED PROTECTANT Wednesday, March 15, 2006 C 8: 30 A. M. Introduction and Identification of Panel Members  Kenneth M. Portier, Ph. D. ( FIFRA SAP Session Chair)

C 8: 40 A. M. Administrative Procedures by Designated Federal Official  Mr. Joseph E. Bailey C 8: 45 A. M. Continuation of Questions to the Panel on Human Health Risk Assessment Previously submitted studies demonstrated the lack of toxicity of the mCry3A protein following acute oral high dose exposure to mice, rapid degradation of mCry3A upon exposure to simulated mammalian gastric fluid, and the lack of significant amino acid sequence homology of the mCry3A protein to proteins known to be mammalian toxins or human allergens. Moreover, little to no human dietary exposure to mCry3A protein is expected to occur via transformed corn. Therefore, dietary exposure to mCry3A is not anticipated to pose any dietary risk to the U. S. population.

Please comment on the Agency's conclusions regarding the lack of mammalian toxicity and allergenicity of mCry3A.

C10: 30 A. M. Adjournment Please be advised that agenda times are approximate; when the discussion for one topic is completed, discussions for the next topic will begin. For further information, please contact the Designated Federal Official for this meeting, Mr. Joseph Bailey, via telephone: ( 202) 564 2045; fax: ( 202) 564 8382; or email: bailey. joseph@ epa. gov


[Federal Register Volume 82, Number 176 (Wednesday, September 13, 2017)]
[Notices]
[Pages 43054-43056]
[FR Doc No: 2017-19375]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81545; File No. SR-NSCC-2017-804]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of No Objection to an Advance Notice To Expand the
Application of the Family-Issued Securities Charge

September 7, 2017.
    On July 10, 2017, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') advance notice SR-NSCC-2017-804 (``Advance Notice'')
pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act entitled the 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\ The Advance Notice was
published for comment in the Federal Register on August 8, 2017.\4\ The
Commission did not receive any comments on the Advance Notice. This
publication serves as notice that the Commission does not object to the
changes set forth in the Advance Notice.
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 5465(e)(1). The Financial Stability Oversight
Council designated NSCC a systemically important financial market
utility on July 18, 2012. See Financial Stability Oversight Council
2012 Annual Report, Appendix A, http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf. Therefore, NSCC is
required to comply with the Clearing Supervision Act and file
advance notices with the Commission. See 12 U.S.C. 5465(e).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78s(b)(1).
    \4\ Securities Exchange Act Release No. 81286 (August 2, 2017),
82 FR 37141 (August 8, 2017) (SR-NSCC-2017-804) (``Notice''). NSCC
also filed a related proposed rule change with the Commission
pursuant to Section 19(b)(1) of the Exchange Act and Rule 19b-4
thereunder, seeking approval of changes to its rules necessary to
implement the Advance Notice. 15 U.S.C. 78s(b)(1) and 17 CFR
240.19b-4, respectively. The proposed rule change was published in
the Federal Register on July 31, 2017. Securities Exchange Act
Release No. 81203 (July 25, 2017), 82 FR 35563 (July 31, 2017) (SR-
NSCC-2017-010). The Commission did not receive any comments on that
proposal.
---------------------------------------------------------------------------

I. Description of the Advance Notice

    The Advance Notice is a proposal by NSCC to further address
specific wrong-way risk \5\ that is present when NSCC acts as central
counterparty to a transaction with an NSCC member (``Member'') where
the underlying securities are securities issued by such Member or an
affiliate of such Member (``family-issued securities'').\6\ Currently,
NSCC applies a targeted margin charge to address the specific wrong-way
risk of family-issued securities transactions (``FIS Charge'') where
the Member is on NSCC's Watch List.\7\ NSCC believes that Members on
the Watch List present a higher credit risk (i.e., a greater risk of
defaulting on their settlement obligations), compared to Members not on
the Watch List. As such, the family-issued securities of Members on the
Watch List currently receive a FIS Charge because of the increased
credit risk presented by such Members. As described in detail below,
NSCC proposes in the Advance Notice to expand the application of the
FIS Charge to all Members, regardless of a Member's Watch List status,
but still maintain a higher FIS Charge for Members that present a
greater credit risk to NSCC, such as Members on the Watch List.
---------------------------------------------------------------------------

    \5\ Specific wrong-way risk is the risk that an exposure to a
counterparty is highly likely to increase when the creditworthiness
of that counterparty is deteriorating. See Principles for financial
market infrastructures, issued by the Committee on Payment and
Settlement Systems and the Technical Committee of the International
Organization of Securities Commissions 47 n.65 (April 2012),
available at http://www.bis.org/publ/cpss101a.pdf.
    \6\ As part of this proposal, NSCC proposes to define in its
rules that, for a given Member, a family-issued security is a
security that was issued by such Member or an affiliate of such
Member.
    \7\ As part of its ongoing monitoring of its membership, NSCC
utilizes an internal credit risk rating matrix to rate its risk
exposures to its Members based on a scale from 1 (the strongest) to
7 (the weakest). Members that fall within the weakest three rating
categories (i.e., 5, 6, and 7) are placed on NSCC's ``Watch List''
and, as provided under NSCC's Rules and Procedures (``Rules''), may
be subject to enhanced surveillance or additional margin charges.
See Section 4 of Rule 2B and Section I(B)(1) of Procedure XV of
NSCC's Rules, available at http://dtcc.com/~/media/Files/Downloads/
legal/rules/nscc_rules.pdf.
---------------------------------------------------------------------------

    Currently, in calculating a Watch List Member's overall margin
charge (i.e., a Watch List Member's required deposit to NSCC's clearing
fund), NSCC excludes the Member's net, unsettled long position in
family-issued securities from the volatility component of the margin
calculation (``VaR Charge''). Instead, for such unsettled long
positions, NSCC calculates the required margin (i.e., the FIS Charge)
by multiplying the position value by a set percentage, which is
determined based on a Member's rating on NSCC's internal credit risk
rating matrix.\8\ NSCC applies this separate margin calculation to deal
with specific wrong-way risk that arises from these positions because
NSCC has to liquidate the unsettled family-issued security long
positions in the Member's portfolio to manage the default.\9\ Given
that the Member's default would likely adversely affect NSCC's ability
to liquidate such positions at full value (because the value of the
family-issued securities will decline in response to the Member's
default), NSCC applies the FIS Charge to try to address the risk of a
shortfall. According to NSCC, the FIS Charge constitutes a more
conservative approach to collecting margin on family-issued security
positions than what may be achieved by applying the VaR Charge, which
does not recognize the relationship between the Member and the family-
issued securities.
---------------------------------------------------------------------------

    \8\ More specifically, fixed-income securities that are family-
issued securities are charged a rate of no less than 80 percent for
firms that are rated 6 or 7 on the credit risk rating matrix, and no
less than 40 percent for firms that are rated 5 on the credit risk
rating matrix. Equity securities that are family-issued securities
are charged a rate of 100 percent for firms that are rated 6 or 7 on
the credit risk rating matrix, and no less than 50 percent for firms
that are rated 5 on the credit risk rating matrix.
    \9\ In a default scenario, NSCC would receive the family-issued
securities from a Member's guaranteed long transactions and would
have to liquidate the holding to unwind NSCC's position.
---------------------------------------------------------------------------

    Although the risk of default by Members that are not on the Watch
List is lower than Members on the Watch List, NSCC believes that it is
appropriate to apply the FIS Charge to all Members because all Members'
long positions in family-issued securities present specific wrong-way
risk. However, the proposal would still maintain the relation between
the FIS Charge and the Member's risk of default (i.e., the Member's
credit risk), while at the same time addressing the difference in risk
posed by equity and fixed-income securities. As such, NSCC proposes in
the Advance Notice to apply the FIS Charge to fixed-income securities
that are family-issued securities of non-Watch List Members at a rate
of no less than 40 percent, and to equities that are family-issued
securities of non-Watch

List Members at a rate of no less than 50 percent.\10\
---------------------------------------------------------------------------

    \10\ According to NSCC, it calibrated the FIS Charge rates based
on historical corporate-issue recovery-rate data. The rate
applicable to equities is higher than the rate applicable to fixed-
income securities because NSCC determined that equities present a
greater risk than fixed-income securities of having a value at or
near zero when a Member defaults. The Commission understands that
NSCC calculated the 40 and 50 percent rates based on a weighted
value of the probability of a Member defaulting and the potential
loss that NSCC may realize when liquidating family-issued securities
after a Member default.
---------------------------------------------------------------------------

II. Discussion and Commission Findings

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, its stated purpose 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 and
strengthening the liquidity of systemically important financial market
utilities.\11\ Section 805(a)(2) of the Clearing Supervision Act \12\
authorizes the Commission to prescribe 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. Section 805(b) of the Clearing Supervision Act
\13\ provides the following objectives and principles for the
Commission's risk management standards prescribed under Section 805(a):
---------------------------------------------------------------------------

    \11\ See 12 U.S.C. 5461(b).
    \12\ 12 U.S.C. 5464(a)(2).
    \13\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     Promote robust risk management;
     promote safety and soundness;
     reduce systemic risks; and
     support the stability of the broader financial system.
    The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act \14\ and Section 17A of the
Exchange Act (``Rule 17Ad-22'').\15\ Rule 17Ad-22 requires registered
clearing agencies to establish, implement, maintain, and enforce
written policies and procedures that are reasonably designed to meet
certain minimum requirements for their operations and risk management
practices on an ongoing basis.\16\ Therefore, it is appropriate for the
Commission to review proposed changes in advance notices against the
objectives and principles of these risk management standards as
described in Section 805(b) of the Clearing Supervision Act \17\ and
against Rule 17Ad-22.\18\
---------------------------------------------------------------------------

    \14\ 12 U.S.C. 5464(a)(2).
    \15\ 15 U.S.C. 78q-1.
    \16\ 17 CFR 240.17Ad-22.
    \17\ 12 U.S.C. 5464(b).
    \18\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------

    The Commission believes the proposal in the Advance Notice is
consistent with the objectives and principles described in Section
805(b) of the Act,\19\ and Rule 17Ad-22, in particular Rule 17Ad-
22(e)(4)(i) \20\ and Rule 17Ad-22(e)(6)(i) and (v) \21\ under the
Exchange Act, as described in detail below.
---------------------------------------------------------------------------

    \19\ 12 U.S.C. 5464(b).
    \20\ 17 CFR 240.17Ad-22(e)(4)(i).
    \21\ 17 CFR 240.17Ad-22(e)(6)(i) and (v).
---------------------------------------------------------------------------

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

    As discussed below, the Commission believes that the changes
proposed in the Advance Notice are consistent with Section 805(b) of
the Clearing Supervision Act because they: (i) Are designed to reduce
systemic risk; (ii) are designed to support the stability of the
financial system; (iii) are designed to promote robust risk management;
and (iv) are consistent with promoting safety and soundness.
    The Commission believes that the proposal is designed to help
promote robust risk management. As described above, the FIS Charge is
calculated and collected to help mitigate NSCC's loss exposure to
specific wrong-way risk that NSCC may face when liquidating family-
issued security positions that are depreciating in value in response to
a Member's default. By expanding the FIS Charge to family-issued
security transactions presented to NSCC by all Members, the proposal
would assist NSCC in collecting margin and maintaining a clearing fund
amount that more accurately reflects NSCC's overall risk exposure to
its Members. Therefore, the proposal is designed to help better promote
robust risk management at NSCC by reducing NSCC's loss exposure to the
specific wrong-way risk that NSCC faces from Member transactions in
family-issued securities.
    The Commission also believes that the proposal is designed to
promote safety and soundness, as well as support the stability of the
financial system, and reduce systemic risk. By providing for the
collection by NSCC of margin amounts that contemplate and help address
the specific wrong-way risk presented by all Members, the proposal
would assist NSCC in helping to ensure that it maintains sufficient
margin in the event that a Member holding family-issued securities
defaults and such positions significantly decrease in value. Without
this increased margin, NSCC is at a greater risk of not having enough
margin to offset potential losses from the reduced value of family-
issued securities in a default scenario. Such losses could threaten
NSCC's ability to continue operations of its critical clearance and
settlement services. Because the proposal would generally increase the
level of financial resources available to NSCC, better enabling NSCC to
continue operating in default scenarios, the proposal would help NSCC
operate more safely and soundly and reduce the systemic risk associated
with NSCC not providing critical clearance and settlement services in
the event of a Member default. Therefore, the Commission believes that
the changes proposed in the Advance Notice are consistent with Section
805(b) of the Clearing Supervision Act.\22\
---------------------------------------------------------------------------

    \22\ Id.
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(4)(i)

    The Commission believes that the changes proposed in the Advance
Notice are consistent with Rule 17Ad-22(e)(4)(i) under the Exchange
Act, which requires, in part, that NSCC establish, implement, maintain
and enforce written policies and procedures reasonably designed to
effectively identify, measure, monitor, and manage its credit exposures
to participants and those arising from its payment, clearing, and
settlement processes, including by maintaining sufficient financial
resources to cover its credit exposure to each participant fully with a
high degree of confidence.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------

    As described above, NSCC is exposed to specific wrong-way risk
where it acts as central counterparty for its Members for transactions
in family-issued securities. The expanded application of the FIS Charge
to all Members would help further mitigate NSCC's loss exposure to this
risk. The charge is calculated and imposed based on the value and type
of family-issued securities in each Member's portfolio and in
consideration of the Members' credit rating, as calculated by NSCC's
internal credit risk matrix. Although the FIS Charge may not fully
reflect the recovery rate on a family-issue security when a Member
defaults, the Commission understands that expanding the FIS Charge to
non-Watch List Members, as proposed, would enable NSCC to collect more
margin on such positions than would a VaR Charge, more accurately
reflecting the risks those positions present. Thus, the

expanded FIS Charge is designed to help NSCC collect sufficient
financial resources to help cover the specific risk exposure, with a
high degree of confidence, which is presented by all Members seeking to
clear and settle transactions in family-issued securities. Therefore,
the Commission believes that the proposal to expand the FIS Charge to
all Members is consistent with Rule 17Ad-22(e)(4)(i) under the Exchange
Act.\24\
---------------------------------------------------------------------------

    \24\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(6)(i) and (v)

    The Commission believes that the changes proposed in the Advance
Notice are consistent with Rule 17Ad-22(e)(6)(i) and (v) under the
Exchange Act, which require, in part, that NSCC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to cover its credit exposures to its participants by
establishing a risk-based margin system that, at a minimum considers,
and produces margin levels commensurate with, the risks and particular
attributes of each relevant product, portfolio, and market; and uses an
appropriate method for measuring credit exposure that accounts for
relevant product risk factors and portfolio effects across
products.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 240.17Ad-22(e)(6)(i) and (v).
---------------------------------------------------------------------------

    As described above, NSCC faces specific wrong-way risk where it
acts as central counterparty to Member transactions in family-issued
securities. To help address this risk, NSCC applies the FIS Charge in
calculating the Member's required margin. Specifically, the FIS Charge
is a component of the margin that NSCC calculates and collects using a
risk-based margin methodology that is designed to help maintain the
coverage of NSCC's credit exposures to its Members at a confidence
level of at least 99 percent. The FIS Charge is tailored to consider
both the value and type of family-issued securities held by the Member,
as well as the credit risk presented by the Member, as calculated by
NSCC.
    However, currently, the FIS Charge is assessed only against Members
on the Watch List because of the additional credit risk presented by
such Members. Nevertheless, all Members, not just Members on the Watch
List, present specific wrong-way risk. As such, NSCC proposes to expand
the FIS Charge to all Members, while maintaining the relation between
the FIS Charge and the Member's credit risk. Specifically, NSCC
proposes to apply the FIS Charge to fixed-income securities that are
family-issued securities of non-Watch List Members at a rate of no less
than 40 percent, and to equities that are family-issued securities of
non-Watch List Members at a rate of no less than 50 percent. Although
NSCC proposes to apply a lesser percentage rate to non-Watch List
Members than some Watch List Members, the proposed rate is designed to
more accurately reflect the risks posed than what is reflected in a VaR
Charge.
    Because the expanded FIS Charge also would be a tailored component
of the margin that NSCC collects from non-Watch List Members to help
cover NSCC credit exposure to such Members, as the charge would be
based on different product risk factors with respect to equity and
fixed-income securities, as described above, the Commission believes
that the proposed changes in the Advance Notice are consistent with
Rule 17Ad-22(e)(6)(i) and (v) under the Exchange Act.\26\
---------------------------------------------------------------------------

    \26\ Id.
---------------------------------------------------------------------------

III. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act,\27\ that the Commission does not object to
Advance Notice (SR-NSCC-2017-804) and that NSCC is authorized to
implement the proposed change as of the date of this notice or the date
of an order by the Commission approving the proposed rule change (SR-
NSCC-2017-010) that reflects rule changes that are consistent with this
Advance Notice, whichever is later.
---------------------------------------------------------------------------

    \27\ 12 U.S.C. 5465(e)(1)(I).

    By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19375 Filed 9-12-17; 8:45 am]
 BILLING CODE 8011-01-P