[Federal Register: August 8, 2006 (Volume 71, Number 152)]
[Notices]
[Page 45086-45089]
[DOCID:fr08au06-95]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54255; File No. SR-NYSE-2005-03]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change and Amendments Nos. 1 and 2 To
Amend Exchange Rule 325 (Capital Requirements for Member
Organizations), Rule 326 (Growth Capital Requirement, Business
Reduction Capital Requirement, Unsecured Loans and Advances), and Rule
431 (Margin Requirement)

July 31, 2006.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that on January 5, 2005, the New York Stock Exchange LLC
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or the ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the Exchange.\4\ The NYSE filed Amendment No. 1 to the proposed rule
change on February 13, 2006.\5\ The NYSE filed Amendment No. 2 to the
proposed rule change on March 17, 2006.\6\ The Commission is publishing
this notice to solicit comments on the proposed rule change, as
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a et seq.
    \3\ 17 CFR 240.19b-4.
    \4\ Pursuant to discussions with the Commission staff, the
Exchange clarified the application of proposed amendments to NYSE
Rules 325, 326 and 431 to reflect the Exchange's March 7, 2006
merger with Archipelago Holdings, Inc. (``Archipelago''),
adjustments to capital levels in Rule 326 and other general
editorial changes. Telephone conversations between William Jannace,
Director, Exchange, William Wollman, Vice President, Exchange and E.
David Hwa, Special Counsel, Division of Market Regulation,
Commission, on May 11, 2006, June 8, 2006, July 19, 2006 and email
dated July 19, 2006.
    \5\ In Amendment No. 1, the Exchange clarified the application
of proposed amendments to NYSE Rule 431(e)(9) solely to OTC
derivatives transactions and expanded upon elements of the written
risk analysis provided by the proposed rule for member organizations
utilizing the alternative method of computing net capital.
    \6\ In Amendment No. 2, the Exchange clarified the application
of proposed amendments to NYSE Rule 326 to make explicit the ability
of the Exchange to restrict the growth or business of a member
organization, respectively, when its tentative net capital declines
below the early warning notification amount required by the Exchange
Act Rule 15c3-1(a)(7)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to amend Rule 325, Rule 326, and Rule 431
to reflect recent SEC rule amendments under the Exchange Act, including
amendments to Exchange Act Rule 15c3-1 that established an alternative
method of computing net capital for broker-dealers.

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

Background

    Exchange Act Rule 15c3-1 (the ``net capital rule'') contains basic
financial responsibility standards for broker-dealers. The rule is
intended to protect customers and other market participants from
broker-dealer failures, and to enable those firms that fall below the
minimum net capital requirements to liquidate in an orderly fashion
without the need for a formal proceeding or financial assistance from
the Securities Investor Protection Corporation. To help insure that
broker-dealers maintain sufficient liquid assets to satisfy promptly
the claims of customers and cover potential market and credit risks,
the net capital rule requires broker-dealers to maintain different
minimum levels of capital based upon the nature of their business and
whether they handle customer funds or securities.
    On August 20, 2004, the SEC adopted rule amendments under the
Exchange Act, including amendments to Exchange Act Rule 15c3-1, that
establish a voluntary, alternative method of computing net capital for
certain large broker-dealers that are part of consolidated supervised
groups referred to as consolidated supervised entities (``CSEs'').
Under the SEC amendments, a broker-dealer may use this

``alternative/CSE'' method only if its ultimate holding company agrees
to compute group-wide allowable capital and allowances for market,
credit, and operational risk in accordance with the standards adopted
by the Basel Committee on Banking Supervision, and consents to group-
wide SEC supervision. The alternative method of computing net capital
permits a broker-dealer to use models, such as ``value-at-risk''
(``VAR'') models and scenario analysis,\7\ that are already part of its
internal risk management control system to calculate the market risk
and derivatives-related credit risk components of its net capital
requirement. The deduction for market risk calculated using internal
models replaces the traditional ``haircut'' approach to calculating net
capital.\8\
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    \7\ Value-at risk models assess market risk based on the
probability distribution for a portfolio's market value. Scenario
analysis is a method of assessing market risk by testing various
possible scenarios.
    \8\ The ``haircut'' approach to computing net capital involves
reducing the value of firms'' proprietary securities by pre-
determined percentages to allow for potential reductions in market
value.
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    When the Membership allow their net capital to decline below
certain levels, they risk non-compliance with the net capital and
financial responsibility requirements of Exchange Act Rule 15c3-1. NYSE
Rules 325 and 326 are designed to alert the Exchange before such
problems occur, and to enable the Exchange to prevent Membership non-
compliance by restricting the business activities of any member
organization whose net capital falls below certain defined levels.

Proposed Amendment to NYSE Rule 325

    NYSE Rule 325, the Exchange's primary net capital rule, requires
the Membership to comply with Exchange Act Rule 15c3-1 and imposes
additional prophylactic requirements to ensure such compliance. Rule
325(b) requires a member organization to notify the Exchange if its net
capital falls below certain percentages. The proposed amendment adds
Rule 325(b)(3), which would require a member organization to provide
concurrently to the Exchange a copy of any report or notification made
to the SEC pursuant to Exchange Act Rule 17a-11 \9\ or Commodities
Exchange Act (``CEA'') \10\ Regulation 1.12.\11\
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    \9\ 17 CFR 240.17a-11.
    \10\ 7 U.S.C. 1 et seq.
    \11\ 17 CFR 1.12.
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    This new requirement is necessary to help ensure that the Exchange
continues to receive timely notification of potential violations of
Exchange Act Rule 15c3-1, including the rule's new CSE provisions. For
example, as noted above, Exchange Act Rule 15c3-1, in conjunction with
Exchange Act Rule 17a-11, now requires a broker-dealer that elects to
use the alternative method of computing net capital to report to the
SEC whenever its tentative net capital declines below $5 billion.
Proposed Rule 325(b)(3) would require a member organization to provide
the Exchange with copies of every such report.
    Language in Rule 325(b) regarding notification to the Exchange
relating to CEA minimum capital requirements for members or member
organizations acting as futures commission merchants was rendered
obsolete by amendments to CEA Regulation 1.17 \12\ on September 30,
2004 \13\ and, therefore, has been removed from the amended Rule
325(b). The proposed new provisions of Rule 325(b)(3), however, would
require a member organization to provide the Exchange with copies of
any reports or notifications it provides to the Commodity Futures
Trading Commission (``CFTC'') under CEA Regulation 1.12. Therefore,
because CEA Regulation 1.12 requires notification by any futures
commission merchant that experiences a decline in net capital below the
CEA's early warning levels, the Exchange will continue to receive
notification if a member organization acting as futures commission
merchant is in danger of violating CEA minimum capital requirements.
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    \12\ 17 CFR 1.17.
    \13\ The CEA amendments eliminated capital requirement
calculations based on the concept of ``segregated funds.''
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    The Exchange's merger with Archipelago rendered the Exchange's
constitution obsolete so paragraphs (5) and (6) of Rule 325(e) and all
references to the constitution were removed.
    Other grammatical changes have been made throughout Rule 325 for
purposes of clarity and stylistic consistency.

Proposed Amendment to NYSE Rule 326

    NYSE Rule 326, which enables the Exchange to restrict a member
organization's business activities if its net capital falls below
certain defined levels, uses a two-step approach to preventing
Membership non-compliance with Exchange Act Rule 15c3-1. First, Rule
326(a) allows the Exchange to prohibit a member organization from
expanding its business if its net capital falls below specified levels.
Second, if a member organization's net capital falls below lower,
specified levels, Rule 326(b) allows the Exchange to compel it to
reduce its existing business. To enable the Exchange to regulate its
Membership proactively (that is, to act if a member or member
organization is in danger of violating Exchange Act Rule 15c3-1, rather
than waiting until Exchange Act Rule 15c3-1 has been violated), the
levels specified in NYSE Rule 326 are higher than those contained in
Exchange Act Rule 15c3-1.
    The proposed amendments would add Rule 326(a)(4) to provide minimum
tentative net capital \14\ and net capital levels for the Exchange to
use when prohibiting, under Rule 326(a), the expansion of business by a
member organization using the alternative method computing net capital
under the CSE rules. The levels proposed in Rule 326(a)(1)(d) (50
percent of the tentative net capital level that triggers SEC
notification or the net capital level is less than $1.25 billion) will
not unduly restrict a member organization's business, but will allow
the Exchange, after evaluating a member organization's financial
condition, to use the disincentive of restricted business expansion to
encourage a member organization whose net capital has fallen to levels
that risk violation of Exchange Act Rule 15c3-1 to take necessary
corrective action.
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    \14\ The term ``tentative net capital,'' as it pertains to the
new regulations regarding broker-dealers using the ``alternative/
CSE'' method, is defined in Exchange Act Rule 15c3-1(c)(15), part of
the SEC's new CSE regulations.
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    Language in Rule 326(a) regarding limiting a member organization's
expansion of business due to CEA minimum capital requirements for a
member organization acting as futures commission merchant was rendered
obsolete by the aforementioned amendments to CEA Regulation 1.17, and,
therefore, has been removed from the amended Rule 326(a).
    The proposed amendment would add Rule 326(b)(1)(d) to provide
minimum tentative net capital and net capital levels for the Exchange
to use in requiring a member organization that uses the alternative
method of computing net capital to reduce its business pursuant to Rule
326(b). The levels proposed in Rule 326(b)(1)(d) (40 percent of the
tentative net capital level that triggers SEC notification or net
capital less than $1 billion) would not unduly restrict a member
organization's business, but would allow the Exchange, after evaluating
a member organization's financial condition, to use the disincentive of
mandatory business reduction to encourage necessary corrective action
by a member organization whose net capital has fallen to levels that
risk violation of Exchange Act Rule 15c3-1.

    Language in Rule 326(b) regarding the reduction of a member
organization's business due to CEA minimum capital requirements for a
member organization acting as futures commission merchant was rendered
obsolete by the aforementioned amendments to CEA Regulation 1.17, and,
therefore, has been removed from the amended Rule 326(b). The proposed
new provisions of Rule 326(b)(1)(e), however, would require a member
organization to reduce its business if its net capital falls below 110
percent of the minimum capital requirements of CEA Regulation 1.17 (the
same level that triggers notification to the CFTC under CEA Regulation
1.12). Therefore, the Exchange will retain the ability to compel a
member organization to reduce its business if its net capital falls to
levels that may violate CEA minimum capital requirements.
    Other grammatical changes have been made throughout Rule 326 for
purposes of accuracy, clarity, and stylistic consistency.

Proposed Amendment to NYSE Rule 431

    Section 7(a) \15\ of the Exchange Act empowers the Board of
Governors of the Federal Reserve System to prescribe the rules and
regulations regarding the credit that may be extended by broker-dealers
on securities (Regulation T \16\). NYSE Rule 431 prescribes specific
margin requirements that must be maintained in all of a member
organization's customer accounts, based on the type of securities
products held in such accounts.
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    \15\ 15 U.S.C. 78g(a).
    \16\ 12 CFR 220 et seq.
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    Exchange Act Rule 15c3-1e(c),\17\ one of the recent SEC amendments
related to the alternative method of computing net capital for CSE
broker-dealers, prescribes deductions to net capital for credit risk on
transactions in certain derivative instruments for broker-dealers using
the alternative method (for example, VAR models), provided the broker-
dealers have in place comprehensive internal risk management procedures
that address market, credit, liquidity, legal, and operational risk at
the firm.
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    \17\ 17 CFR 240.15c3-1e(c).
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    The proposed amendment to Rule 431 would add Rule 431(e)(9). This
new paragraph would exempt a member organization using the alternative
method of computing net capital from Rule 431 for certain exposures
arising from transactions in over-the-counter (``OTC'') derivative
instruments \18\ for which the member organization may compute a
deduction to net capital for credit risk using the methods contained in
Rule 15c3-1e(c).
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    \18\ These instruments are described in Exchange Act Rule 15c3-
1e(c)(vi)(E), 17 CFR 240.15c3-1e(c)(vi)(E).
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    A member organization that applies Rule 431(e)(9) must maintain a
written risk analysis methodology for assessing the amount of credit
that may be extended with respect to OTC derivatives transactions and
the methodology must include at least those procedures and guidelines
enumerated in paragraph (e)(9). The procedures and guidelines relate to
reviewing customer account documentation and financial information;
establishing credit limits for customers; monitoring the member
organization's credit risk exposure to its customers; management
reporting on credit extension exposure; managing the impact of credit
extension on the member organization's overall risk exposure; the
appropriate management response to violations of credit extension
limits; stress testing customer accounts individually and in the
aggregate; and determining whether to collect margin from a particular
customer. The member organization must establish a method for period
review of these procedures by an independent unit of the organization,
such as internal audit or risk management. Management also must review
periodically the member organization's credit extension activities for
consistency with the guidelines.
2. Statutory Basis
    The proposed amendments to NYSE Rules 325, 326, and 431 are
consistent with the requirements of Section 6(b)(5) \19\ of the
Exchange Act, which requires that the rules of the Exchange be designed
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest in that they incorporate into the Exchange's rules
recent SEC amendments to Exchange Act Rule 15c3-1 regarding the
alternative method of computing net capital for broker-dealers that are
part of a CSE.
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    \19\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal does not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Exchange Act.

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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) As the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Exchange 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 e-mail to<EMAIL_ADDRESS>Please include File

Number SR-NYSE-2005-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2005-03. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro/shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the

proposed rule change between the Commission and any person, other than
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing will also be available for inspection and copying at the
principal office of the NYSE. 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-NYSE-2005-03 and should be submitted on or before August
29, 2006.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\20\
Nancy M. Morris,
Secretary.
[FR Doc. E6-12841 Filed 8-7-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 82, Number 195 (Wednesday, October 11, 2017)]
[Notices]
[Pages 47319-47320]
[FR Doc No: 2017-21849]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

Hazardous Materials: Notice of Applications for Special Permits

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
DOT.

ACTION: List of applications for special permits.

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SUMMARY: In accordance with the procedures governing the application
for, and the processing of, special permits from the Department of
Transportation's Hazardous Material Regulations, notice is hereby given
that the Office of Hazardous Materials Safety has received the
application described herein. Each mode of transportation for which a
particular special permit is requested is indicated by a number in the
``Nature of Application'' portion of the table below as follows: 1--
Motor vehicle, 2--Rail freight, 3--Cargo vessel, 4--Cargo aircraft
only, 5--Passenger-carrying aircraft.

DATES: Comments must be received on or before November 13, 2017.

ADDRESSES: Record Center, Pipeline and Hazardous Materials Safety
Administration U.S. Department of Transportation, Washington, DC 20590.
    Comments should refer to the application number and be submitted in
triplicate. If confirmation of receipt of comments is desired, include
a self-addressed stamped postcard showing the special permit number.

FOR FURTHER INFORMATION CONTACT: Ryan Paquet, Director, Office of
Hazardous Materials Approvals and Permits Division, Pipeline and
Hazardous Materials Safety Administration, U.S. Department of
Transportation, East Building, PHH-30, 1200 New Jersey Avenue
Southeast, Washington, DC 20590-0001,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Copies of the applications are available for
inspection in the Records Center, East Building, PHH-30, 1200 New
Jersey Avenue Southeast, Washington, DC or at http://regulations.gov.
    This notice of receipt of applications for special permit is
published in accordance with part 107 of the Federal hazardous
materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).

    Issued in Washington, DC, on September 29, 2017.
Donald Burger,
Chief, General Approvals and Permits Branch.

                                              Special Permits Data
----------------------------------------------------------------------------------------------------------------
                                                                      Regulation(s)       Nature of the special
   Application No.           Docket No.            Applicant             affected            permits thereof
----------------------------------------------------------------------------------------------------------------
20540-N..............  .....................  LINDE GAS NORTH      173.163(b).........  To authorize the
                                               AMERICA LLC.                              transportation in
                                                                                commerce of DOT
                                                                                specification 3A and
                                                                                3AA cylinders
                                                                                containing certain
                                                                                hazardous materials
                                                                                after previously
                                                                                containing hydrogen
                                                                                fluoride. (Modes 1, 2,
                                                                                3).
20541-N..............  .....................  ISGEC HEAVY          179.300-19(a)......  To authorize the
                                               ENGINEERING LTD.                          manufacture, mark,
                                                                                sale, and use of DOT
                                                                                specification tank cars
                                                                                that have been
                                                                                inspected outside of
                                                                                the United States.
                                                                                (Mode 1).
20543-N..............  .....................  SODASTREAM USA, INC  172.301(c), 180.209  To authorize the
                                                                                transportation in
                                                                                commerce of certain
                                                                                cylinders that are
                                                                                authorized to be
                                                                                requalified every 10
                                                                                years. (Modes 1, 2, 3).
20545-N..............  .....................  STANDARD FUSEE       172.101, 172.202,    To authorize the
                                               CORPORATION.         172.301, 172.401.    transportation in
                                                                                commerce of certain
                                                                                explosive materials
                                                                                reclassed as Division
                                                                                4.1. (Modes 1, 2, 3, 4,
                                                                                5).
20546-N..............  .....................  DEPARTMENT OF        173.159(d).........  To authorize the
                                               DEFENSE (MILITARY                         transportation in
                                               SURFACE DEPLOYMENT                        commerce of batteries
                                               & DISTRIBUTION                            in metal drums or boxes
                                               COMMAND).                                 as strong outer
                                                                                packagings. (Modes 1,
                                                                                2, 3, 4).
20547-N..............  .....................  FISHER SCIENTIFIC    173.158(e).........  To authorize the one
                                               COMPANY LLC.                              time transportation of
                                                                                nitric acid without
                                                                                tightly closed
                                                                                intermediate inner
                                                                                packagings cushioned
                                                                                with an absorbent
                                                                                material. (Mode 1).
20549-N..............  .....................  CORNERSTONE          172.102(c)(1),       To authorize the
                                               ARCHITECTURAL        172.200, 172.300,    manufacture, marking,
                                               PRODUCTS LLC.        172.400,             sale and use of non-DOT
                                                                    172.700(a).          specification
                                                                                fiberboard boxes for
                                                                                the transportation in
                                                                                commerce of certain
                                                                                batteries without
                                                                                shipping papers,
                                                                                marking of the proper
                                                                                shipping name and
                                                                                identification number
                                                                                or labeling, when
                                                                                transported for
                                                                                recycling or disposal.
                                                                                (Modes 1, 3).
20550-N..............  .....................  NORTHSTAR TREKKING.  172.101(j),          To authorize the
                                                                    172.200,             transportation in
                                                                    172.204(c)(3),       commerce of certain
                                                                    172.300, 173.1,      hazardous materials by
                                                                    173.27(b)(2),        external load with a
                                                                    175.30(a)(1),        helicopter in remote
                                                                    175.75.              areas of the U.S.
                                                                                without being subject
                                                                                to hazard communication
                                                                                requirements and
                                                                                quantity limitations
                                                                                where no other means of
                                                                                transportation is
                                                                                available. (Mode 4).
20551-N..............  .....................  MONDY GLOBAL, INC..  173.304(a).........  To authorize the
                                                                                transportation in
                                                                                commerce of non-DOT
                                                                                specification cylinders
                                                                                containing refrigerant
                                                                                gases for the purpose
                                                                                of transferring the
                                                                                materials to compliant
                                                                                packagings outside of
                                                                                the port area. (Mode 1,
                                                                                3).
20556-N..............  .....................  SAFT AMERICA INC...  172.101(j).........  To authorize the
                                                                                transportation in
                                                                                commerce of lithium ion
                                                                                batteries in excess of
                                                                                35 kg net weight by
                                                                                cargo-only aircraft.
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2017-21849 Filed 10-10-17; 8:45 am]
 BILLING CODE 4901-60-P