[Federal Register Volume 77, Number 163 (Wednesday, August 22, 2012)]
[Notices]
[Pages 50745-50746]
[FR Doc No: 2012-20571]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67668; File No. SR-CBOE-2012-078]

 Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the CBOE Stock Exchange Fees Schedule

August 15, 2012.

    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 August 3, 2012, the Chicago Board Options Exchange,
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change, as
described in Items I, II, and III below, which Items have been prepared
by the Exchange. The Commission is publishing this notice to solicit
comment 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 amend the Fees Schedule of its CBOE Stock
Exchange (``CBSX''). The text of the proposed rule change is available
on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBSX recently moved its trading systems over to the Equinix NY4
facility (``NY4''). In addition to 1 Gigabit Ethernet network access,
NY4 has capacity to accommodate 10 Gigabit Ethernet network access. The
Exchange made such a connection available to CBSX market participants,
and wants to encourage market participants to connect to CBSX via a 10
Gigabit Network Access Port in order to receive higher-speed executions
(which is important in today's marketplace). Due to the newness of this
NY4 system to CBSX, the Exchange wishes to ensure that market
participants feel comfortable connecting to CBSX via the 10 Gigabit
Network Access Ports and assuage any kind of concerns CBSX market
participants may have regarding any kind of possible disruption in
access to CBSX via the 10 Gigabit Network Access Ports. Therefore, CBSX
now proposes to add a sentence to its Fees Schedule stating that
participants requesting a 10 Gigabit Network Access Port to access CBSX
are eligible to receive (upon request) one redundant 10 Gigabit Network
Access Port at no extra charge.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\3\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\4\ which provides that
Exchange rules may provide for the equitable allocation of reasonable
dues, fees, and other charges among its Trading Permit Holders and
other persons using its facilities. Providing CBSX market participants
who access the CBSX System via a 10 Gigabit Network Access Port on NY4
the opportunity to request a redundant 10

Gigabit Network Access Port to act as a backup is reasonable because
such market participants will receive a backup redundant 10 Gigabit
Network Access Port free of charge.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
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    Providing CBSX market participants who access the CBSX System via a
10 Gigabit Network Access Port on NY4 the opportunity to request a
redundant 10 Gigabit Network Access Port to act as a backup while not
providing the same opportunity to CBSX market participants who access
the CBSX System via a 1 Gigabit Network Access Port is equitable and
not unfairly discriminatory because providing such opportunity would
cause an increase in the price of accessing the CBSX System via a 1
Gigabit Network Access Port. Moreover, as faster access continues to
grow in importance to trading and CBSX continues to develop
technologies that provide faster access to CBSX, CBSX wants to
encourage the election to connect to CBSX via a higher-speed Network
Access Port in order to provide better trading opportunities on CBSX.
Further, while a 10 Gigabit Network Access Port connection is more
costly than a 1 Gigabit Network Access Port connection, considering the
fact that a 10 Gigabit Network Access Port provides a connection that
is ten times faster than a 1 Gigabit Network Access Port, a 10 Gigabit
Network Access Port actually provides a less expensive connection on a
per-Gigabit basis.\5\ Finally, any CBSX market participant may elect to
connect to CBSX via a 10 Gigabit Network Access Port (and therefore be
eligible to request a redundant 10 Gigabit Network Access Port).
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    \5\ See CBSX Fees Schedule, Section 8.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition 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 neither solicited nor received comments on the
proposed rule change.

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) \6\ of the Act and paragraph (f) of Rule 19b-4 \7\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f).
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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 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 email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2012-078 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2012-078. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet 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
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2012-078 and should be
submitted on or before September 12, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20571 Filed 8-21-12; 8:45 am]
BILLING CODE 8011-01-P


COMMENT AND RESPONSE DOCUMENT

Oil Pollution Prevention; SPCC Plan Requirements –

Compliance Date Amendments

40 CFR Part 112

October 7, 2010

U.S. Environmental Protection Agency

Office of Emergency Management

INTRODUCTION

Purpose of This Document

The purpose of this document is to provide complete responses to
comments on the 2010 proposed rule (40 CFR part 112) to revise the Oil
Pollution Prevention and Response rule, also known as the Spill
Prevention, Control, and Countermeasure (SPCC) rule (40 CFR part 112),
promulgated under the Federal Water Pollution Control  Act (FWPCA) or
Clean Water Act (CWA).

Organization of This Comment and Response Document

To develop this document, EPA reviewed the submissions made to public
docket number EPA-HQ-OPA-2009-0880. EPA organized the submission
comments based on the topics they addressed in the proposed rule, which
was published in the Federal Register on August 3, 2010 (75 FR 45572).
Comments submitted to the public docket for this rulemaking appear in
their entirety at http://www.regulations.gov, identified by Docket
number “EPA-HQ-OPA-2009-0880.”

EPA organized the comments into general categories and subcategories,
and responds to each in turn. Several comment excerpts are provided, in
addition to responses for each major issue. In most cases, comment
excerpts that simply state support for the proposed revisions are not
included. Instead, the Docket Number of the submission is listed in
parentheses in the Comments section for each category addressed. The
Federal Docket Management System (FDMS) assigns Document Numbers to each
submission based on the order they are received. Because of the
expedited nature of this action, the Agency did not consider comments
submitted electronically after the close of the comment period or
received via regular mail postmarked after the close of the comment
period.

Comment excerpts included in this document are taken verbatim from the
submissions received by FDMS. Comments that make similar statements are
grouped and one response is provided for the group. EPA responds to the
remaining comments individually.

The following table lists comments FDMS received by the close of the
comment period for docket EPA-HQ-OPA-2009-0880. The table also lists the
name and the organization that submitted each comment; late comments are
not included.

FDMS ID	First Name	Last Name	Organization

0002	Jesse S.	Barr	Louisiana Cotton and Grain Association

0003	Pamela F.	Faggert	Dominion Resources Services, Inc.

0004	Charles J. 	Spencer	GROWMARK, Inc.

0005	W. Harrison 	Ashley	National Cotton Ginners’ Association

0006	Casey	Creamer	California Cotton Ginners Association

0007	Casey	Creamer	Western Agricultural Processors Association (WAPA)

0008	Clay	Detlefsen	International Dairy Foods Association (IDFA)

0009	Tim	Crouch	Indiana Statewide Association of Rural Electric
Cooperatives, Inc.

0010	Lee	Fuller	Independent Petroleum Association of America (IPAA)

 0011	Roger E.	Claff	American Petroleum Institute (API)

 0012	James F.	Carroll	Dairy Farmers of America, Inc. (DFA)

 0013	Jamie	Jonker	National Milk Producers Federation (NMPF)

 0014	Steve	Hensley	USA Rice Federation (USA Rice)

 0015	Angie	Burckhalter	Oklahoma Independent Petroleum Association
(OIPA)

 0016	James R.	Roewer	Utility Sold Waste Activities Group (USWAG)

 0017	Gregory D.	Russell	Ohio Oil and Gas Association (OOGA)

 0018	 Lisa	Kelley	Agriculture Coalition on the SPCC rule (‘The
Coalition’)

 0019	Leslie J.	Kaufman	Kansas Cooperative Council (KCC)

 0020	Nancy N.	Young	Air Transport Association (ATA)

 0021	David A.	Fairfield	National Grain and Feed Association (NGFA)

 0022	Evan A.	Teague	Arkansas Farm Bureau Federation

 0023	Anne	Coan	North Carolina Farm Bureau Federation (‘NCFB’ or
‘Farm Bureau’)

 0024	Steven P.	Rowe	Northwest Dairy Association (NDA)

 0025	Richard C.	Lutz	Williams Gas Pipeline (WGP)

 0026	Ryan K. 	Miltner	Dairy Producers of New Mexico (DPNM)

 0027	Nancy 	Erickson	Illinois Farm Bureau

 0029	Steve	Rudloff	Missouri Limestone Producers Association (MLPA)

 0030	Meghan

Matt	McDonald

Stewart	Lafarge North America, Aggregate & Concrete

 0031	John S.	Hayden	National Stone, Sand & Gravel Association (NSSGA)

 0032	Terry D.	Weckerly	North Dakota Grain Growers Association (NDGGA)

 0033	Jesse	Robbins	Washington State Dairy Federation (WSDF)

 0034	Doug	Goehring	State of North Dakota, Department of Agriculture

 0035	John	Cowan	Texas Association of Dairymen (TAD)

 0038	Stephanie	Everett-Johnson	PECO Energy Company – An Exelon
Company

I. Extension of Compliance Date by One Year

Issue: EPA proposed to amend the SPCC rule to revise the date by which
certain facilities must prepare or amend their SPCC Plans and implement
those Plans by one year to November 10, 2011. “Certain facilities”
include facilities subject to 40 CFR part 112, but exclude: drilling,
production and workover facilities that are offshore or that have an
offshore component, and all onshore facilities required to have and
submit Facility Response Plans (FRPs). Production facilities in this
group that begin operations after November 10, 2011, must prepare and
implement a Plan within six months after beginning operations.

COMMENTS

Support Proposal

Full Support. All comments expressed strong support for the proposed
compliance date extension to prepare, amend and implement SPCC Plans for
certain facilities from November 10, 2010 until November 10, 2011 (0002,
0003, 0004, 0005, 0006, 0007, 0008, 0009, 0010, 0011, 0015, 0016, 0017,
0018, 0019, 0020, 0021, 0022, 0023, 0024, 0025, 0027, 0029, 0030, 0031,
0032, 0034, and 0038). Some comments expressed difficulty in clearly
understanding the SPCC rule and compliance date as the rule went through
development, delay and revision (0003, 0004). The general consensus
stated that the one-year extension will provide enough time for affected
facilities to thoroughly comprehend the rule and be better prepared to
develop a plan prior to November 10, 2011. Several comments also
mentioned that the extension will provide an opportunity for EPA to
amend its SPCC Guidance for Regional Inspectors, which has not been
updated for almost 5 years (0003, 0011, 0016, 0021, and 0025).

Oppose Proposal

Withdraw Footnote 3 from the preamble. Despite overall support for the
proposal, one comment objected to EPA’s assertion in footnote 3 of the
preamble that requires owners or operators of facilities in operation
before August 16, 2001, to continue to maintain their existing SPCC
Plans in order to be eligible for the compliance extension. The comment
argued that there is nothing in the regulatory text itself that
conditions eligibility for the compliance extension with continued
compliance with pre-2001 regulatory obligations. Therefore, the
statement only serves to confuse the regulated community (0016). One
comment argued that FRP facilities have always been included in
compliance date extensions in the past, and that this time should be no
exception (0011).

Alternative Approaches

Extend compliance date by more than a year. Although one comment
expressed support for the compliance date extension, it argued that the
deadline will still be challenging to meet considering the limitations
in both physical and professional resources (0010). Another comment
argued that in the event of EPA’s inability to promptly publish the
appropriate changes to its SPCC Guidance for Regional Inspectors, EPA
should consider adding additional time to the compliance extension
(0011). A third comment argued in its support for the proposal that
“at least” a one-year extension was needed to amend the SPCC Plans,
implying that the compliance date could be extended by adding more time
(0021). There was another comment who also argued that the deadline
extension “still may not be sufficient time” for the regulated
community (0025).

Extend compliance date by more than one year for the agricultural
community. Several commenters believed that the compliance deadline
should be extended to November 10, 2014 (an additional four years)
instead of November 10, 2011 (0014, 0018, and 0023). According to the
comments, challenges unique to the agriculture sector, such as, unclear
ownership issues, difficulty in hiring of Professional Engineers to
assist with SPCC rule, and lack of guidance, all add significant time to
the compliance schedule thereby making the November 10, 2011 deadline
difficult to meet for the agricultural community.

Extend the compliance date for agriculture producers in operation before
August 16, 2002 and for those who do not have a SPCC Plan.  According to
one comment, many agricultural producers are still unaware of the SPCC
regulations, and those that are aware are uncertain regarding the
rule’s applicability to their situation. The comment argued that the
extension of compliance will allow EPA time to do greater outreach and
allow agriculture producers to better assess their situation and
determine if they need to implement a SPCC plan (0034).

Change compliance date for natural gas pipeline facilities to one year
after finalization of the EPA/DOT jurisdictional issues. One comment
requested EPA clarification on the ambiguity concerning how natural gas
pipeline facilities are classified, and on the designation of
“transportation” and “non transportation” facilities. The
comment also recommended a compliance date for natural gas pipeline
facilities one year after finalization of the EPA/DOT jurisdictional
issues (0025).

Increase the above ground oil containment threshold to greater than
10,000 gallons in the SPCC regulations. One comment argued that 1,320
gallons of oil storage in the aggregate is far too low a threshold and
subjects many agricultural operations that do not pose any threat to
undue regulatory burden under SPCC (0032).

Exempt oil storage of 55 gallons or less from SPCC regulation. One
comment requested changing the spill requirements for oil in containers
of 55 gallons or less. According to the comment, these containers are
commonly housed away from the main storage; therefore, spill containment
requirements for these containers cause major logistical concerns for
producers while not providing much environmental benefit (0032).

RESPONSE

EPA agrees with the comments that an extension of the compliance date
for certain facilities is necessary, because it provides the owner or
operator of a facility the opportunity to fully understand the
regulatory amendments offered by the revisions to the SPCC rule
promulgated on December 5, 2008 (73 FR 74236) and November 13, 2009 (74
FR 58784). Furthermore, this extension will allow the regulated
community time to understand all of the regulatory amendments offered by
revisions to the SPCC rule promulgated since July 2002. Therefore, the
Agency is promulgating a one-year extension of the compliance dates for
certain facilities, but is excluding from the extension drilling,
production and workover facilities that are offshore or that have an
offshore component, or onshore facilities that are required to have and
submit an FRP. EPA believes that a one-year extension of the compliance
dates to November 10, 2011 is appropriate for certain facilities for a
number of reasons, particularly since the owners and operators of
SPCC-regulated facilities have had at least a year to understand the
final SPCC amendments.

EPA disagrees with the comments that suggest the compliance deadline
should be extended beyond the one-year extension. The SPCC compliance
dates have been delayed since the promulgation of amendments in July
2002; during this time, new facilities (those that have become
operational after the effective date of the July 2002 amendments) have
not yet been required to prepare and implement an SPCC Plan. Therefore,
EPA believes that any compliance date beyond the extension finalized in
this action would be inappropriate and not environmentally protective.

EPA disagrees with the comment that suggests that Footnote 3 in the
proposed rule clarifying how the compliance date extension applies to
facilities in operation prior to August 16, 2002 is incorrect.
Facilities in operation prior to the effective date of the July 2002
amendments are required to maintain their SPCC Plans and have had ample
time to schedule and conduct facility modifications (as necessary) to
comply with these amendments. Additionally, because the SPCC amendments
published in December 2008 and November 2009 primarily streamlined the
rule requirements, facilities should not require extensive modifications
in order to comply with these regulatory amendments.  EPA established
initial compliance dates in the July 2002 final rule (67 FR 47042) and
clarified in the preamble how the compliance dates apply to facilities
in operation prior to the effective date of the rule (see 67 FR 47082,
July 17, 2002). The examples provided in the July 2002 preamble were
consistent with and illustrated the accompanying regulatory text that
established the initial compliance dates. The Agency has indicated in
each Federal Register notice announcing the subsequent extension to the
compliance dates that facilities in operation prior to August 16, 2002
must maintain an SPCC Plan. If a facility has no SPCC Plan to maintain,
then the date by which the facility has to amend the Plan to comply with
the SPCC regulatory revisions promulgated since 2002 does not apply and
the owner or operator is not eligible for the extension. The footnote
discussed here is wholly consistent with the Agency’s preamble
examples in the July 2002 final rule and the regulatory text extending
compliance dates since 2002.

EPA disagrees with the comment that argues development of new guidance
or jurisdictional clarifications between EPA and other federal agencies
are a basis for further extending the compliance date. Since
promulgating the July 2002 amendments to the SPCC rule, the Agency has
and will continue to provide outreach and compliance assistance to SPCC
regulated facilities so that a compliance extension for certain
facilities to November 10, 2011 should be sufficient. Finally, the
Agency is not addressing comments regarding the current SPCC rule
applicability thresholds because these issues are outside the scope of
this action.

II. Exception to the Compliance Date Extension

Issue: EPA proposed not to extend the compliance date for drilling,
production and workover facilities that are offshore or that have an
offshore component; or for onshore facilities required to have and
submit FRPs. This subset of SPCC-regulated facilities must amend or
prepare and implement SPCC Plans by November 10, 2010. Oil production
facilities in this group that begin operations after November 10, 2010
continue to have six months after beginning operations to prepare and
implement a Plan.

COMMENTS

Support Proposal

Support. Three comments supported EPA’s proposed compliance date
extension including the language to not extend the compliance date for
drilling, production and workover facilities that are offshore or that
have an offshore component, or onshore facilities required to have and
submit FRPs (0003, 0016, and 0021). One comment supported the proposed
compliance date extension but took no position on the question of
whether EPA should exclude offshore facilities or those onshore
facilities required to have FRPs (0020).

Oppose Proposal

Include onshore facilities required to have and submit FRP in the
one-year compliance date extension. According to one comment, FRP
facilities have always been included in compliance date extensions in
the past, and that this time should be no exception. The Agency’s
decision to exclude these facilities based on their concerns about
“increasing the potential to cause substantial harm if a discharge
were to occur” is unwarranted as they have EPA-approved FRPs that are
in place to address this very concern. The comment argues that onshore
FRP facilities need the one year compliance date extension, to November
10, 2011, for the same reasons that other onshore facilities do.
Moreover, the comment states that the extension is all the more
necessary for FRP facilities as they are “larger, more complex, and
more costly to address under the SPCC Rule” (0011).

Alternative Approaches

Add additional time to the compliance date extension if updates to the
SPCC Guidance for Regional Inspectors are delayed. One comment mentioned
that in case the publishing of SPCC Guidance for Regional Inspectors is
delayed, more time will need to be added in addition to the one-year
extension (0011).

RESPONSE

	EPA does not agree that onshore facilities that are required to have
and submit FRPs should be eligible for the one-year extension. The
Agency is concerned with the threat for immediate environmental impacts
resulting from oil spills from these facilities because of their large
oil storage capacities and their potential to cause substantial harm in
the event of a discharge as identified under the FRP regulation (40 CFR
112.20). The comment correctly indicates that many of these facilities
are implementing FRPs that are approved by the Agency; however, these
plans serve to identify response capability in the event of a discharge
to navigable waters or adjoining shorelines and do not specifically
include requirements that serve to prevent these discharges. For
example, implementation of a tank integrity testing program and brittle
fracture evaluations are SPCC requirements and not FRP requirements.
Many of the SPCC requirements promulgated since July 2002 serve to
enhance prevention of oil spills and EPA does not believe it is
environmentally protective to extend the date by which these
requirements are addressed and implemented at FRP-regulated facilities.
The Agency recognizes that some facilities excluded from the extension
of the compliance date (i.e., drilling, production or workover
facilities that are offshore or that have an offshore component, or an
onshore facility that is required to have and submit an FRP) may require
additional time to amend or prepare their SPCC Plans as a result of
either non-availability of qualified personnel, or delays in
construction or equipment delivery beyond the control and without the
fault of the owner or operator. If so, the owner or operator of the
facility may submit a written request for additional time to amend or
prepare an SPCC Plan to the Regional Administrator in accordance with
§112.3(f).

The Agency does not agree ongoing outreach activities; updates to
existing guidance documents; further regulatory clarifications; or
development of new guidance or jurisdictional clarifications between EPA
and other federal agencies are a basis for further extending the
compliance date. Since promulgating the July 2002 amendments to the SPCC
rule, the Agency has and will continue to provide outreach and
compliance assistance to SPCC regulated facilities so that a compliance
extension for certain facilities to November 10, 2011 should be
sufficient. EPA intends to continue to conduct outreach and provide
guidance and clarification on the SPCC requirements (as appropriate),
but does not believe that facilities should wait to amend or prepare and
implement their SPCC Plans because these are ongoing activities. EPA
also does not agree that the extension or additional time for compliance
should be provided to revise the SPCC Guidance for Regional Inspectors.
While EPA plans to revise the guidance document, most of the
modifications to the SPCC regulation are already explained and discussed
in the preamble to the final rules.  Thus, there are very few necessary
revisions to the guidance to address any new regulatory burden, as the
past several actions on the SPCC rule were for the purposes of
regulatory streamlining. EPA did not propose an extension to the
compliance date with a rationale based on completion of the guidance for
the reasons stated above.

III. Delayed Compliance Date for Facilities with Milk Containers,
Associated Piping and Appurtenances

Issue: EPA proposed to delay the compliance date by which facilities
with milk containers, associated piping and appurtenances that are
constructed according to the current applicable 3-A Sanitary Standards,
and subject to the current applicable Grade “A” Pasteurized Milk
Ordinance (PMO) or a State dairy regulatory requirement equivalent to
the current applicable PMO must prepare or amend their SPCC Plans, and
implement those Plans. This delay is for one year from the effective
date of a final rule addressing SPCC requirements specifically for these
milk containers, associated piping and appurtenances, or as specified by
a rule that otherwise establishes a compliance date for these
facilities.

COMMENTS

Support Proposal

Support: Several comments expressed support for delaying the compliance
date of the SPCC rule for facilities with milk containers, associated
piping and appurtenances until one year after EPA finalizes a rule for
these facilities (0008, 0012, 0013, 0018, 0019, 0023, 0024, 0026, 0027,
0034, and 0035). One comment emphasized that EPA should not consider
establishing a new compliance date that would be less than one-year
after the bulk milk exemption is finalized (0035).

Oppose Proposal

No comments were submitted on this topic.

Alternative Approaches

Extend compliance date for all facilities with bulk milk storage
regardless of their date of commencing operations. Several comments
complained that the different compliance deadlines for dairy facilities
based on their start date are confusing and unnecessarily complex. The
comments requested EPA extend the compliance date to one year after
finalization of the bulk milk storage exemption to all facilities,
regardless of start date (0012, 0013, 0026, 0033, and 0035).

Clarify the treatment of farms and establish one compliance deadline for
all agriculture sectors. One comment expressed that given the lack of
knowledge, exposure and understanding of the SPCC rule within the
agriculture sector, and the Agency’s lack of a communication plan, the
Agency should establish one compliance deadline for all agricultural
sectors that are impacted by the rule to avoid any confusion (0014).
Three other comments also expressed concern regarding EPA’s bifurcated
compliance dates for the agriculture sector based on start dates and
those with milk containers and those without, which has led to much
confusion within the sector (0018, 0019, and 0023).

Clarify the compliance date language for farm operations with both
petroleum and bulk milk storage. Three comments complained that the
compliance date language is ambiguous for farm operations with both
petroleum and bulk milk storage and encourages the Agency to clarify the
treatment of farms and seeks a simplified compliance deadline that is
appropriate for all farms. The comments specifically asked if the
original plan just pertains to the petroleum storage or if it would it
also cover bulk milk storage. Additionally, when updating the original
plan, would the farm have to update the plan as it pertains to petroleum
storage to be in compliance with SPCC requirements by November 10, 2011,
or would their deadline be predicated on the Agency finalizing the bulk
milk storage exemption that will come into effect later? (0018, 0019,
and 0023)

Take action on proposal to exempt milk containers, associated piping and
appurtenances. Several comments urged EPA to finalize the proposed
exemption for milk containers, associated piping and appurtenances as
soon as possible. (0008, 0012, 0013, 0018, 0019, 0023, 0024, 0026, 0027,
0033, and 0035)

Clarify that the extension and future exemption will apply to milk and
milk products. Two comments requested that EPA clarify that the
extension and future exemption will apply to milk and milk products.
(0008 and 0024) Two comments argued that the extension and future
exemption should apply to milk and milk products, including but not
limited to such products as cheese, cream, yogurt and ice cream mix.
(0008 and 0013)

Provide further clarification on the definition of oil and oil mixtures.
Several comments urged EPA to further clarify the definition of oil and
oil mixtures to address outstanding questions regarding liquid product
that have oils in a concentration as little as 1 percent or less in the
finished mix. EPA should define mixtures, where the properties of oil
are no longer actively present due to their minimal concentration, as
exempt from SPCC regulation. (0014, 0018, 0019, 0021, and 0023)

RESPONSE

EPA agrees with comments that supported a delay of the compliance date
by which facilities must address milk containers, associated piping and
appurtenances that are constructed according to the current applicable
3-A Sanitary Standards, and subject to the current applicable Grade
“A” PMO or a State dairy regulatory requirement equivalent to the
current applicable PMO. The Agency is moving forward to take final
action on the proposed rulemaking that addresses those milk containers
as expeditiously as possible. Additionally, the Agency is considering
whether to exempt milk product containers, piping and appurtenances that
are subject to the same 3-A Sanitary Standards and Grade “A” PMO
specified for milk containers, associated piping and appurtenances.
Therefore, the Agency is clarifying that the delay applies to both milk
and milk product containers, associated piping and appurtenances
constructed according to the current applicable 3-A Sanitary Standards,
and subject to the current applicable Grade “A” PMO or a State dairy
regulatory requirement equivalent to the current applicable PMO. The
Agency is further clarifying this delay does not apply to any product
container that is not subject to PMO or State regulatory equivalent. The
compliance date delay by which the owner or operator of a facility must
address milk and milk product containers described above will provide
time to complete this action.

EPA agrees that a single date by which the owners or operators of
facilities must address milk and milk product containers associated
piping and appurtenances that are constructed according to the current
applicable 3-A Sanitary Standards, and subject to the current applicable
Grade “A” PMO or a State dairy regulatory requirement equivalent to
the current applicable PMO in the facility’s SPCC Plan would offer
clarity. A date will be established in a FR notice in the future and
will be one year from the effective date of a final rule addressing the
SPCC requirements specifically for these milk and milk product
containers, associated piping and appurtenances, or as specified by a
rule that otherwise establishes a compliance date for these facilities.
During the delay, the owner or operator of the facility excludes milk
and milk product containers, associated piping and appurtenances that
are constructed according to the current applicable 3-A Sanitary
Standards, and subject to the current applicable Grade “A” PMO or a
State dairy regulatory requirement equivalent to the current applicable
PMO from the facility’s aggregate oil storage capacity calculations,
and does not include these containers in the SPCC Plan.

EPA is clarifying that, when there are other oil storage containers
(petroleum containers, such as diesel tanks and lube oil drums) at a
facility that has milk and milk product containers, associated piping
and appurtenances as described above and the facility meets the
aggregate oil storage capacity thresholds of §112.1 (excluding the
capacity of the milk and milk product containers), then the owner or
operator of the facility must maintain and amend, or prepare an SPCC
Plan to address these other oil containers at the facility in accordance
with §112.3(a)(1) by November 10, 2011.

The Agency is not addressing comments regarding the current SPCC rule
applicability to oil and oil mixtures because these issues are outside
the scope of this action.

IV. Alternative Approach to the Proposed Compliance Date Extension

Issue: EPA also requested comment on whether it would be appropriate to
consider a shorter compliance date extension, such as either six or nine
months. The alternative approach would extend the compliance date for
facilities to either May 10, 2011 or August 10, 2011, for all SPCC
regulated facilities, except for: drilling, production and workover
facilities that are offshore or that have an offshore component, or for
onshore facilities required to have and submit an FRP, which must comply
by November 10, 2010. This alternative approach does not impact the
Agency’s proposal to delay the compliance date for facilities with
milk containers, associated piping and appurtenances that are
constructed according to the current applicable 3–A Sanitary
Standards, and subject to the current applicable Grade ‘‘A’’ PMO
or a State dairy regulatory requirement equivalent to the current
applicable PMO.

COMMENTS

Support Proposal

No comments were submitted on this topic.

Oppose Proposal

Insufficient time. Two comments expressed concerns with the alternative
compliance

dates of May 10, 2011 or August 10, 2011, as it would not be enough time
for the owner or operators of facilities to educate their members about
the rule and develop effective SPCC Plans on time (0004 and 0011). Other
comments argued that the compliance date should be no earlier than the
proposed November 10, 2011 date. (0003, 0017, and 0021)

Alternative Approaches

No comments were submitted on this topic.

RESPONSE

The Agency agrees with the comments and has decided not to promulgate an
amended compliance date for certain facilities to either of the
alternative shorter time periods offered for comment (either May 10,
2011 or August 10, 2011). The Agency recognizes that the owner or
operator of a regulated facility needs adequate time to comply with the
SPCC rule following amendments to the regulation. EPA recognizes that
any timeframe shorter than one year from the current compliance date may
not allow sufficient time for those facilities for which EPA is granting
a compliance date extension to fully understand and comply with all of
the recently promulgated SPCC amendments or hire Professional Engineers.
A one year timeframe also accommodates seasonal considerations for
various industries. Therefore, the Agency is promulgating a one-year
compliance date extension to allow certain facilities time to prepare,
amend, and implement an SPCC Plan following recent amendments to the
SPCC rule.

 Document Number 0001 is assigned to the Federal Register Notice for the
proposed rule, included in the docket prior to FDMS posting the first
public comment.

 The dates for complying with amendments to the SPCC regulations have
been amended six times: on January 9, 2003 (68 FR 1348), on April 17,
2003 (68 FR 18890), on August 11, 2004 (69 FR 48794), on February 17,
2006 (71 FR 8462), on May 16, 2007 (72 FR 27444), and again on June 19,
2009 (74 FR 29136).

 EPA intends to issue revisions to the SPCC Guidance for Regional
Inspectors that address changes made to the SPCC rule, consistent with
the December 2006, December 2008, and November 2009 regulatory
amendments (71 FR 77266, December 26, 2006; 73 FR 74236, December 5,
2008; 74 FR 58784, November 13, 2009). The guidance document is designed
to provide more detail about the rule's applicability, to clarify the
role of the inspector in the review and evaluation of a facility owner
or operator's compliance with the performance-based SPCC requirements,
and to provide a consistent national policy on several SPCC-related
issues. EPA welcomes comments from the regulated community and the
public on the guidance document at any time. Instructions for submitting
comments are provided on the EPA Office of Emergency Management website
at http://www.epa.gov/emergencies.

 The facility has an aboveground oil storage capacity greater than 1,320
U.S. gallons or the completely buried storage capacity is greater than
42,000 U.S. gallons.

 PAGE

 PAGE   1


[Federal Register: June 21, 2006 (Volume 71, Number 119)]
[Notices]
[Page 35723-35724]
[DOCID:fr21jn06-158]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53983; File No. SR-NYSE-2005-60]

Self-Regulatory Organizations; New York Stock Exchange, Inc. (n/
k/a New York Stock Exchange LLC); Order Approving Proposed Rule Change
and Amendment Nos. 2 and 3 Thereto Relating to Proposed New Rules
342.24 (``Annual Branch Office Inspection'') and 342.25 (``Risk-Based
Surveillance and Branch Office Identification'') To Permit Member
Organizations To Classify Appropriate Branch Offices for Cyclical
Inspections and Proposed New Rule 342.26 (``Criteria for Inspection
Programs'')

June 14, 2006.
    On August 15, 2005, the New York Stock Exchange, Inc. (n/k/a New
York Stock Exchange LLC) (``Exchange'') filed with the Securities and
Exchange Commission (``SEC'' or ``Commission''), pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposal to adopt Exchange Rules 342.24
(``Annual Branch Office Inspection'') and 342.25 (``Risk-Based
Surveillance and Branch Office Identification'') to permit
organizations to classify appropriate branch offices for cyclical
inspections and 342.26 (``Criteria for Inspection Programs''). The
Exchange filed Amendment No. 2 to the proposed rule change on April 7,
2006.\3\ The proposed rule change, as amended, was published for
comment in the Federal Register on April 27, 2006.\4\ The Commission
received no comments regarding the proposal, as amended. On June 12,
2006, the Exchange filed Amendment No. 3 to the proposed rule
change.\5\ This order approves the proposed rule change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange filed Amendment No. 1 to the proposed rule
change on October 31, 2005 and withdrew Amendment No. 1 on April 7,
2006.
    \4\ See Securities Exchange Act Release No. 53689 (April 20,
2006), 71 FR 24881 (``Notice'').
    \5\ In Amendment No. 3, the Exchange made several non-
substantive clarifying changes to the rule text. This was a
technical amendment and is not subject to notice and comment.
---------------------------------------------------------------------------

I. Description of Proposed Rule Change

    The proposed amendments would permit member organizations, with the
written approval of the Exchange, to exempt certain branch offices from
the general annual branch office inspection requirement of Exchange
Rule 342 (``Offices--Approval, Supervision and Control''). Proposed
Exchange Rules 342.24 and 342.25 would permit member organizations to
submit to the Exchange, for approval, policies and procedures outlining
a risk-based surveillance system that the firm would use to identify
branch offices requiring less frequent than annual inspections.\6\ Such
policies and procedures must reflect the member organization's business
model and product mix, and must provide, at a minimum, for: (1)
Flexibility to initiate ``for-cause'' inspections, when circumstances
warrant, of any branch office that has been exempted from the standard
annual inspection cycle; (2) inspection on an unannounced basis of no
less than half of the branch offices inspected each year; and (3) a
system to allow employees to report compliance issues on a confidential
basis outside of the branch office chain of command. As discussed in
the Notice and set forth in proposed Exchange Rule 342.25(B), certain
prescribed criteria, applied to each branch office, also would be
required of any acceptable risk-based surveillance system used to
determine which branch offices could be exempted from annual
inspection.
---------------------------------------------------------------------------

    \6\ In addition, a member organization would still be able to
seek an exemption if it has demonstrated to the satisfaction of the
Exchange that because of proximity, special reporting, or
supervisory practice, other arrangements may satisfy the Exchange
rule's requirements for a particular branch office. See proposed
Exchange Rule 342.24(A)(1).
---------------------------------------------------------------------------

    The Rule states that certain branch offices would not be deemed
appropriate for an exemption under the proposed amendments.
Specifically, offices with one or more registered representatives
subject to special supervision in the current or immediately preceding
year, offices with 25 or more registered individuals, offices in the
top 20% of production or customer assets at the member organization,
and any branch offices exercising supervision over other branch offices
or that have not been inspected within the previous two calendar years
would not be eligible for exemption from the annual inspection
requirement. In fact, the proposed amendments would require that all
branch offices, without exception, be inspected at least once every
three calendar years. Finally, the proposed amendments would re-
position language from Interpretation /03 of Exchange Rule 342(a)(b)
into the text of Exchange Rule 342.

II. Discussion

    The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\7\
In particular, the Commission finds that the proposal, as amended, is
consistent with the provisions of Section 6(b)(5) of the Act,\8\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change, as amended,
appropriately balances the need for firms to surveil and inspect their
branch offices with the need to provide firms with some flexibility to
adapt branch office inspections according to changing circumstances.
Specifically, the proposal would allow member organizations to seek an
exemption from the requirement to inspect branch offices annually based
upon written policies and procedures that provide for a risk-based
surveillance system. The policies and procedures would have to be
submitted to and approved by the Exchange. The Commission believes that
the ability to implement a limited risk-based surveillance system for
certain branch offices should allow firms to concentrate their
surveillance and compliance resources on those branch offices that
require more frequent and thorough on-site inspections.
    Furthermore, the Exchange expressly sets forth in proposed Rule
342.25 the risk factors and criteria that firms, at a minimum, should
consider when developing their policies and procedures. The Commission
believes that providing explicit factors and criteria to distinguish
those offices that warrant annual inspection from those that might not
should also enable member organizations to more effectively direct a
firm's attention to those regulatory risk areas in need of closer
scrutiny during the course of an

on-site inspection. The proposed criteria should provide a more uniform
standard for firms seeking an exemption from the annual branch office
inspection.
    Furthermore, the Commission believes that the proposed amendments
contain appropriate limitations on a firm's ability to apply the
exemption from the requirement to inspect branch offices every year.
For instance, the proposal specifically excludes certain offices, given
their size, scope of supervisory activities, or other factors, from
eligibility for the exemption. The Rule requires firms to retain the
ability to initiate ``for cause'' inspections of a branch office where
developments during the year require a reconsideration of a branch's
exemption. Requiring firms to use unannounced branch office inspections
for no less than half of the branch offices inspected each year should
provide additional incentive to branch office personnel to make
compliance with the Exchange's rules and the securities laws a
priority. Furthermore, the Commission believes that requiring firms to
allow employees to report compliance issues on a confidential basis
outside of the branch office chain of command and requiring branch
office inspections to be carried out by a person independent of the
branch office in question should encourage branch office employees to
report issues of regulatory concern. The Commission also notes that the
proposal would require every branch office, without exception, to be
inspected at least once every three calendar years. The Commission
emphasizes that, notwithstanding any exemption granted under the
proposed rules, each member firm is subject to an ongoing duty to
supervise each branch office and monitor for compliance with all
applicable securities laws and regulations.\9\
---------------------------------------------------------------------------

    \9\ See Section 15(b)(4)(E) of the Act, 15 U.S.C. 78o(b)(4)(E).
---------------------------------------------------------------------------

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-2005-60), as amended,
is hereby approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E6-9695 Filed 6-20-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Rules and Regulations]
[Pages 26703-26704]
[FR Doc No: 2012-10946]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Parts 228 and 231

[Docket No. FRA-2004-17529; Notice No. 9]
RIN 2130-AB94

Inflation Adjustment of the Aggravated Maximum Civil Monetary
Penalty for a Violation of a Federal Railroad Safety Law or Federal
Railroad Administration Safety Regulation or Order; Correction

AGENCY: Federal Railroad Administration (FRA), Department of
Transportation (DOT).

ACTION: Final rule; correcting amendments.

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

SUMMARY: On April 24, 2012, FRA published a final rule, pursuant to the
Federal Civil Penalties Inflation Adjustment Act of 1990, which
increased the aggravated maximum civil monetary penalty that the agency
will apply when assessing a civil penalty for a violation of a railroad
safety statute, regulation, or order under its authority. See 77 FR
24416. In preparing that final

rule for publication, three errors were made as described in the
Supplementary Information. FRA is correcting these minor errors so that
the final rule clearly conforms to FRA's intent.

DATES: The corrections to the final rule are effective on June 25,
2012.

FOR FURTHER INFORMATION CONTACT: Veronica Chittim, Trial Attorney,
Office of Chief Counsel, FRA, 1200 New Jersey Avenue SE., Mail Stop 10,
Washington, DC 20590 (telephone<PHONE_NUMBER>),
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Three errors were included in the final rule
published on April 24, 2012. See 77 FR 24416. FRA failed to account for
an October 31, 2011 amendment to 49 CFR part 228. The October 31, 2011
amendment to part 228 redesignated Sec.  228.21, ``Penalties,'' as
Sec.  228.6, and removed and reserved Sec.  228.21. See 76 FR 67073,
67087-88. In preparing the April 24, 2012, final rule for publication,
FRA instructed that the numerical amount ``$100,000'' be removed from
49 CFR 228.21 and the numerical amount ``$105,000'' be added in its
place. The instruction should have directed the removal of the
numerical amount ``$100,000'' from 49 CFR 228.6 and the addition of
``$105,000'' in its place. Additionally, FRA inadvertently transposed
two numbers, in instructions 66 and 67, by instructing changes to the
numerical amounts at ``213.146.A'' in appendix A to part 231. See 77 FR
24416. The final rule should have instructed that the changes be made
to ``146.A''. FRA is correcting these minor errors so that the final
rule clearly conforms to FRA's intent.

List of Subjects

49 CFR Part 228

    Administrative practice and procedure, Buildings and facilities,
Hazardous materials transportation, Noise control, Penalties, Railroad
employees, Railroad safety, Reporting and recordkeeping requirements,
Sanitation.

49 CFR Part 231

    Penalties, Railroad safety.

The Final Rule

    In accordance with the foregoing, parts 228 and 231, of subtitle B,
chapter II of title 49 of the Code of Federal Regulations are corrected
by making the following correcting amendments:

PART 228--[AMENDED]

0
1. The authority citation for part 228 continues to read as follows:

    Authority:  49 U.S.C. 20103, 20107, 21101-21109; Sec. 108, Div.
A, Pub. L. 110-432, 122 Stat. 4860-4866; 49 U.S.C. 21301, 21303,
21304, 21311; 28 U.S.C. 2461, note; 49 U.S.C. 103; and 49 CFR 1.49.

Sec.  228.6  [Amended]

0
2. Section 228.6 is amended by removing the numerical amount
``$100,000'' and adding in its place the numerical amount ``$105,000''.

PART 231--[AMENDED]

0
3. The authority citation for part 231 continues to read as follows:

    Authority: 49 U.S.C. 20102-20103, 20107, 20131, 20301-20303,
21301-21302, 21304; 28 U.S.C. 2461, note; and 49 CFR 1.49.

Appendix A to Part 231--[Amended]

0
4. Appendix A is amended by:
0
a. Removing the numerical amount ``650'' from the entry at 146.A and
adding in its place the numerical amount ``1,000''; and
0
b. Removing the numerical amount ``1,000'' from the entry at 146.A and
adding in its place the numerical amount ``2,000''.

    Issued in Washington, DC, on May 1, 2012.
Robert C. Lauby,
Acting Associate Administrator for Railroad Safety/Chief Safety
Officer, Federal Railroad Administration.
[FR Doc. 2012-10946 Filed 5-4-12; 8:45 am]
BILLING CODE 4910-06-P


[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Notices]
[Pages 75174-75178]
[FR Doc No: 2016-26053]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79145; File No. SR-Phlx-2016-109]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt Phlx Rule
765 (Prohibition Against Trading Ahead of Customer Orders)

October 24, 2016.
    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 October 20, 2016, NASDAQ PHLX LLC (``Phlx'' 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 Commission is
publishing this notice to

solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to adopt Phlx Rule 765 (Prohibition Against
Trading Ahead of Customer Orders). Phlx also proposes to amend Rule
3404 (Recording of Order Information) to include an additional order
reporting requirement related to one of the exceptions in Rule 765.
    The text of the proposed rule change is set forth below. Proposed
new language is italicized; deleted text is in brackets.
* * * * *

Rules of the Exchange

* * * * *

Rule 765 Prohibition Against Trading Ahead of Customer Orders

    (a) Phlx members and persons associated with a member shall comply
with FINRA Rule 5320 as if such Rule were part of Phlx's rules.
    (b) For purposes of this Rule:
    (1) References to FINRA Rules 5310, 5320 and 7440 shall be
construed as references to Phlx Rules 764, 765 and 3404, respectively;
    (2) The reference in FINRA Rule 5320 to an ``institutional
account'', as defined in FINRA Rule 4512(c), shall be construed to
apply to accounts of customers that do not meet the definition of
``non-institutional customer'', as defined in Phlx Rule 763(c);
    (3) FINRA Rule 5320.02(b) and the reference to FINRA Rule 6420
therein shall be disregarded;
    (4) References to ``FINRA'' shall be construed as references to
``Phlx''.
    (c) Phlx members and persons associated with a member relying upon
the exception set forth in FINRA Rule 5320.03 shall comply with the
reporting requirements stated therein. Phlx and FINRA are parties to
the Regulatory Contract pursuant to which FINRA has agreed to perform
certain functions on behalf of Phlx. Therefore, Phlx members are
complying with Phlx Rule 765 by complying with FINRA Rule 5320.03 as
written, including, for example, reporting requirements and
notifications. In addition, functions performed by FINRA, FINRA
departments, and FINRA staff under Phlx Rule 765 are being performed by
FINRA on behalf of Phlx.
* * * * *

Rule 3000 NASDAQ OMX PSX

* * * * *

Rule 3404 Recording of Order Information

    With respect to orders for securities listed on the NASDAQ Stock
Market or the Exchange, member organizations and persons associated
with a member organization shall comply with the following Rule:
    (a) No Change.
    (b) Order Origination and Receipt
    Unless otherwise indicated, the following order information must be
recorded under this Rule when an order is received or originated. For
purposes of this Rule, the order origination or receipt time is the
time the order is received from the customer.
    (1) through (16) No Change.
    (17) an identification of the order as related to a Program Trade
or an Index Arbitrage Trade; [and]
    (18) the type of account, i.e., retail, wholesale, employee,
proprietary, or any other type of account designated by the Exchange,
for which the order is submitted[.]; and
    (19) if the member is relying on the exception provided in FINRA
Rule 5320.02 with respect to the order, the unique identification of
any appropriate information barriers in place at the department within
the member where the order was received or originated.
* * * * *

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
    Phlx proposes to adopt Rule 765 (Prohibition Against Trading Ahead
of Customer Orders). This rule will largely incorporate FINRA Rule 5320
(Prohibition Against Trading Ahead of Customer Orders), commonly known
as the ``Manning Rule'', by reference. Phlx also proposes to adopt, as
part of Rule 3404 (Recording of Order Information), language that
specifies how members shall comply with the exception set forth in
FINRA Rule 5320.02 (No-Knowledge Exception) if the member implements
information barriers in reliance on that exception.
    Phlx believes that Rule 765 will add important additional
safeguards to the treatment of customer orders by members, and that the
amendment to Rule 3404 will increase regulatory efficiency in
conducting surveillance to ensure compliance with Rule 765. In
addition, both The Nasdaq Stock Market LLC (``Nasdaq'') and NASDAQ BX,
Inc. (``BX'') have previously adopted rules prohibiting the trading
ahead of customer orders that reference FINRA Rule 5320, and so this
proposal will further align the Phlx rules with Nasdaq and BX rules in
this regard.\3\
---------------------------------------------------------------------------

    \3\ FINRA Rule 5320 was previously codified as NASD IM-2110-2
(Trading Ahead of Customer Limit Order) and NASD Rule 2111 (Trading
Ahead of Customer Market Orders). FINRA adopted FINRA Rule 5320 in
2011, which combined NASD IM-2110-2 and NASD Rule 2111 into one rule
and made several changes. See Securities Exchange Act Release No.
63895 (February 11, 2011), 76 FR 9386 (February 17, 2011) (SR-FINRA-
2009-090). Nasdaq adopted IM-2110-2 as part of its Form 1
application that it submitted in 2001. See Securities Exchange Act
Release No. 44396 (June 7, 2001), 66 FR 31952 (June 13, 2001) (File
No. 10-131). Nasdaq subsequently amended that rule to reflect the
adoption of FINRA Rule 5320. See Securities Exchange Act Release No.
68153 (November 5, 2012), 77 FR 67409 (November 9, 2012) (SR-NASDAQ-
2012-124). In 2008, BX adopted IM-2110-2 (Trading Ahead of Customer
Limit Order), which incorporates NASD IM-2110-2 by reference, and
Rule 2111 (Trading Ahead of Customer Market Orders), which
incorporates NASD Rule 2111 by reference. See Securities and
Exchange Act Release No. 59154 (December 23, 2008), 73 FR 80468
(December 31, 2008) (SR-BSE-2008-48).
---------------------------------------------------------------------------

    Proposed Rule 765 contains three distinct elements. First, Rule 765
states that members shall be required to comply with FINRA Rule 5320 as
if that rule were part of Phlx's rules. As part of incorporating FINRA
Rule 5320 by reference, Rule 765 states that references to FINRA shall
be construed as references to Phlx, and replaces cross-references to
other FINRA rules with cross-references to corresponding Phlx rules.
Second, Rule 765 exempts members from complying with FINRA Rule
5320.02(b) and the reference to FINRA Rule 6420 therein, as those
provisions deal with trading in OTC equity securities, which Phlx does
not regulate. Finally, Rule 765 addresses how members and persons
associated with a member relying upon the exception set forth in FINRA
Rule 5320.03 (relating to riskless principal transactions) shall comply
with the reporting requirements stated therein. These elements are
further discussed below.

Compliance with FINRA Rule 5320
    Rule 765 states that Phlx members and persons associated with a
member shall comply with FINRA Rule 5320 as if such Rule were part of
Phlx's rules. As part of incorporating FINRA Rule 5320 by reference,
Rule 765 states that references to ``FINRA'' shall be construed as
references to ``Phlx''.
    Rule 765 also changes cross-references from FINRA rules to Phlx
rules. Specifically, FINRA Rule 5320 cross-references FINRA Rules 5310
(Best Execution and Interpositioning), 5320 (Prohibition Against
Trading Ahead of Customer Orders) and 7440 (Recording of Order
Information). Rule 765 changes those cross-references to references to
Phlx Rules 764 (Best Execution and Interpositioning), 765 (Prohibition
Against Trading Ahead of Customer Orders) and 3404 (Recording of Order
Information), respectively.
    Finally, FINRA Rule 5320 contains an exception for large orders
(10,000 shares or more, unless such orders are less than $100,000 in
value) and for orders for customers that meet the definition of an
``institutional account'', as defined in FINRA Rule 4512(c). Phlx
proposes to adopt a similar exception by cross-referencing Phlx Rule
763(c), which defines a ``non-institutional customer'' using the same
criteria as FINRA Rule 4512(c).\4\ Although the two definitions use the
same criteria, those criteria are used to define opposite concepts
(``institutional account'' versus ``non-institutional customer'').
Since the same criteria is used to define opposite concepts, Rule 765
states that the reference in FINRA Rule 5320 to an ``institutional
account'' as defined in FINRA Rule 4512(c) shall be construed to apply
to accounts of customers that do not meet the definition of ``non-
institutional customer'', as defined in Rule 763(c).
---------------------------------------------------------------------------

    \4\ Rule 763(c) defines a non-institutional customer as ``a
customer that is not (1) a bank, savings and loan association,
insurance company, or registered investment company; (2) an
investment adviser registered either with the Commission under
Section 203 of the Investment Advisers Act of 1940 or with a state
securities commission (or any agency or office performing like
functions); or (3) any other entity (whether a natural person,
corporation, partnership, trust, or otherwise) with total assets of
at least $50 million.'' FINRA Rule 4512(c) uses the same criteria to
define an ``institutional account''. See FINRA Rule 4512(c).
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    Phlx believes that it is appropriate to adopt a Manning rule that
is substantively the same as the current FINRA rule, including the
various exceptions to that rule. First, Phlx believes that the
rationale for initially adopting the Manning rule continues to apply
today. In initially approving NASD IM-2110-2, the Commission found that
the rule would enhance investor confidence by allowing more trade
volume to be made available to customers by giving customer orders
priority over the market maker's proprietary trading, which would
result in quicker and more frequent executions for customers.\5\ The
Commission also found that the rule would improve the price discovery
process, as market makers would be encouraged to handle customer limit
orders in a timely fashion, which would provide investors with a more
accurate indication of the buy and sell interest at a given moment.\6\
Phlx believes that the reasons justifying the proposal of the original
NASD rule also apply here.
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    \5\ See Securities Exchange Act Release No. 34279 (June 29,
1994), 59 FR 16369 (July 7, 1994) (SR-NASD-93-58).
    \6\ Id.
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    Second, as noted above, both Nasdaq and BX have adopted rules
prohibiting the trading ahead of customer orders that largely adopt
FINRA Rule 5320 by reference, and so this proposal will further align
the Phlx rules with Nasdaq and BX rules in this regard.
    Phlx also believes that it is appropriate to incorporate by
reference the various exceptions set forth in the FINRA rule. With
respect to incorporating FINRA's definition of an institutional
account, and that rule's corresponding carve-out for institutional
accounts, the SEC noted in originally approving NASD IM-2110-2 (which
allowed members to set the specific terms and conditions for acceptance
of institutional orders) that institutional orders may qualify for
special treatment. The SEC found that, because most market makers
cannot typically fill institutional-size orders out of inventory,
institutions generally only hold market makers to a ``best efforts''
standard in return for the willingness of the market maker to put up
substantial capital to provide liquidity for large orders.\7\ Phlx
believes that a similar rationale applies here, and that this rationale
justifies incorporating this exception by reference.
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    \7\ See Securities Exchange Act Release No. 34279 (June 29,
1994), 59 FR 16369 (July 6, 1994) (SR-NASD-93-58).
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    Phlx also believes that it is appropriate to incorporate by
reference the exception in FINRA Rule 5320 for riskless principal
trades.\8\ In initially proposing this exception, the NASD stated that
it considered trades that met the standards of the riskless principal
exception to be functionally equivalent to an agency trade and
therefore did not materially implicate a market maker's proprietary
trading.\9\ According to NASD, this position was primarily based on the
rule's requirement that only trades where a market maker gives the
customer a trade price that reflects the market maker's actual cost in
acquiring the stock would be eligible for the exception, as the
requirement to ``trade flat'' effectively removed concerns that a
member would breach its fiduciary duty to customer limit orders that it
holds.\10\ Phlx believes that the same rationale applies here, and that
this rationale justifies incorporating this exception by reference.
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    \8\ FINRA Rule 5320.03 provides that the obligations under the
rule ``shall not apply to a member's proprietary trade if such
proprietary trade is for the purposes of facilitating the execution,
on a riskless principal basis, of an order from a customer (whether
its own customer or the customer of another broker-dealer) (the
``facilitated order''), provided that the member: (a) Submits a
report, contemporaneously with the execution of the facilitated
order, identifying the trade as riskless principal to FINRA (or
another self-regulatory organization if not required under FINRA
rules); and (b) has written policies and procedures to ensure that
riskless principal transactions for which the member is relying upon
this exception comply with applicable FINRA rules. At a minimum
these policies and procedures must require that the customer order
was received prior to the offsetting principal transaction, and that
the offsetting principal transaction is at the same price as the
customer order exclusive of any markup or markdown, commission
equivalent or other fee and is allocated to a riskless principal or
customer account in a consistent manner and within 60 seconds of
execution. Members must have supervisory systems in place that
produce records that enable the member and FINRA to reconstruct
accurately, readily, and in a time-sequenced manner all facilitated
orders for which the member relies on this exception.''
    \9\ See Securities Exchange Act Release No. 46006 (May 30,
2002), 67 FR 39455 (June 7, 2002) (SR-NASD-2002-66). NASD extended
this exception to NASD Rule 2111 (Trading Ahead of Customer Market
Orders) when NASD adopted that rule in 2005. See Securities Exchange
Act Release No. 52226 (August 9, 2005), 70 FR 48219 (August 16,
2005) (SR-NASD-2004-045).
    \10\ See Securities Exchange Act Release No. 46006 (May 30,
2002), 67 FR 39455 (June 7, 2002) (SR-NASD-2002-66).
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Exception From Requirement To Comply With FINRA Rule 5320.02(b)
    Rule 765 excludes a provision of FINRA's Manning rule that relates
to the over-the-counter market. Specifically, Rule 765 provides that
FINRA Rule 5320.02(b) and its reference to FINRA Rule 6420 therein
shall be disregarded. FINRA Rule 5320.02 applies the Manning rule to
OTC equity securities, which are defined in FINRA Rule 6420.\11\ Phlx
is excluding FINRA Rule

5320.02(b) and its reference to FINRA Rule 6420 from Rule 765 because
this provision relates to over-the-counter securities, and Phlx does
not regulate the over-the-counter market.\12\
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    \11\ FINRA Rule 5320.02 provides that, with respect to OTC
equity securities, if a member implements and utilizes an effective
system of internal controls, such as appropriate information
barriers, that operate to prevent a non-market-making trading unit
from obtaining knowledge of customer orders held by a separate
trading unit, the non-market-making trading unit trading in a
proprietary capacity may continue to trade at prices that would
satisfy the customer orders held by the separate trading unit. FINRA
defines an OTC equity security as ``any equity security that is not
an `NMS stock' as that term is defined in Rule 600(b)(47) of SEC
Regulation NMS; provided, however, that the term `OTC Equity
Security' shall not include any Restricted Equity Security.'' See
FINRA Rule 6420(f).
    \12\ Nasdaq proposed a similar exclusion when updating its
Manning rule to reflect the adoption of FINRA Rule 5320. See
Securities Exchange Act Release No. 68153 (November 5, 2012), 77 FR
67409 (November 9, 2012) (SR-NASDAQ-2012-124).
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Compliance With FINRA Rule 5320.03
    Finally, Phlx proposes to adopt language governing how Phlx members
may comply with one of the exceptions to FINRA's Manning rule;
specifically, the exception for riskless principal trades.\13\ If a
member relies upon the riskless principal exception, FINRA Rule 5320.03
requires that the member, among other things, submit a report
contemporaneous with the execution of the customer trade identifying
the trade as riskless principal, and have written policies and
procedures in place to ensure that the riskless principal trades for
which the member is relying upon the exception comply with applicable
FINRA rules. Rule 765(c) states that members and persons associated
with a member relying upon the exception set forth in FINRA Rule
5320.03 shall comply with the reporting requirements stated therein.
The Rule further states that Phlx and FINRA are parties to the
Regulatory Contract pursuant to which FINRA has agreed to perform
certain functions on behalf of Phlx. Therefore, Phlx members are
complying with Phlx Rule 765 by complying with FINRA Rule 5320.03 as
written, including, for example, reporting requirements and
notifications. In addition, Rule 765 states that functions performed by
FINRA, FINRA departments, and FINRA staff under Phlx Rule 765 are being
performed by FINRA on behalf of Phlx. Phlx believes that this provision
provides useful clarification as to how members may comply with the
rule's riskless principal exception.
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    \13\ That exception is discussed in note 8 above.
---------------------------------------------------------------------------

Rule 3404 and Compliance with the No-Knowledge Exception
    Phlx also proposes to adopt, as part of Rule 3404 (Recording of
Order Information) language that specifies how members shall comply
with the exception set forth in FINRA Rule 5320.02 (No-Knowledge
Exception) if the member implements information barriers in reliance on
that exception. Under this exception, if a member implements and
utilizes an effective system of internal controls, such as appropriate
information barriers, that operate to prevent one trading unit from
obtaining knowledge of customer orders held by a separate trading unit,
those other trading units trading in a proprietary capacity may
continue to trade at prices that would satisfy the customer orders held
by the separate trading unit.\14\ FINRA Rule 5320.02 further specifies
that, if a member implements and utilizes appropriate information
barriers in reliance on this exception, the member must uniquely
identify such information barriers as prescribed in FINRA Rule
7440(b)(19).\15\ That rule states that, if the member is relying on the
exception provided in FINRA Rule 5320.02 with respect to the order, the
member must record the unique identification of any appropriate
information barriers in place at the department within the member where
the order was received or originated. Members must record this
information when an order is received or originated, which means the
time the order is received from the customer.\16\
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    \14\ See FINRA Rule 5320.02. This exception applies to NMS
stocks, as defined in Rule 600 of Regulation NMS. See 17 CFR
242.600(47).
    \15\ FINRA Rule 7440(b)(19) has subsequently been re-numbered as
Rule 7440(b)(20). See Securities Exchange Act Release No. 77523
(April 5, 2016), 81 FR 21427 (April 11, 2016) (SR-FINRA-2016-006).
    \16\ See FINRA Rule 7440(b)(20).
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    As part of incorporating FINRA's Manning rule, Phlx proposes to
adopt, as Rule 3404(b)(19), corresponding language that sets forth how
members shall comply with the no-knowledge exception if members utilize
information barriers in reliance on that exception. Just as FINRA Rule
5320.02 references the applicable requirement in FINRA Rule 7440(b)
that members identify the appropriate information barriers in place in
connection with the order that is subject to the no-knowledge
exception, Rule 765 shall reference the corresponding requirement in
Rule 3404.
    Phlx believes that it is appropriate to adopt a corresponding
requirement that a member identify, at the time of order receipt or
origination, the appropriate information barriers in place if a member
is utilizing information barriers in reliance on the no-knowledge
exception. In initially proposing this requirement as part of FINRA
Rule 7440, FINRA stated that it would enhance regulatory efficiency by
allowing FINRA to ascertain, on an automated basis, those firms that
are claiming the no-knowledge exception, thereby reducing the number of
``false positives'' where trading ahead may otherwise be indicated.\17\
Phlx believes that the same rationale applies here. Phlx also notes
that Nasdaq has incorporated the no-knowledge exception as part of its
Manning rule and the corresponding language that sets forth how members
shall comply with the no-knowledge exception if members utilize
information barriers in reliance on that exception.\18\
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    \17\ See Securities Exchange Act Release No. 65692 (November 4,
2011), 76 FR 70195 (November 10, 2011) (Notice of filing of SR-
FINRA-2011-063).
    \18\ See Nasdaq Rule 5320A and Rule 7440A.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\19\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\20\ in particular, in that it 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. Phlx believes that the proposed rule will add important
additional safeguards to the treatment of customer orders by members,
and notes that the SEC has previously found that the Manning rule may
result in increased market quality for market participants. Phlx also
notes that the SEC has previously approved the various exceptions to
the rule, such as the exception for institutional accounts and the
riskless principal exception, which Phlx proposes to incorporate by
reference. Phlx believes that the proposed amendment to Rule 3404 will
increase regulatory efficiency in conducting surveillance to ensure
compliance with Rule 765. Finally, Nasdaq and BX already contain rules
prohibiting trading ahead of customer orders that reference the
applicable FINRA rule, and so this proposal will further align the Phlx
rules with Nasdaq and BX rules in this regard.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. The proposed rule will apply
equally to all similarly-situated members, i.e., members that handle
customer market and limit orders. To the extent that the rule contains
exceptions for certain kinds of accounts (such as trades for accounts
of customers that do not meet the definition of ``non-institutional

customer'') and certain kinds of trades (such as riskless principal
trades), and additional reporting requirements for firms that use
information barriers pursuant to the no-knowledge exception, these
exceptions and requirements will also apply equally to all similarly-
situated market participants. In addition, the SEC has previously found
that such exceptions and requirements are consistent with 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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \21\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2016-109 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2016-109. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-Phlx-2016-109 and
should be submitted on or before November 18, 2016.
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    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-26053 Filed 10-27-16; 8:45 am]
 BILLING CODE 8011-01-P