[Federal Register: March 10, 2006 (Volume 71, Number 47)]
[Notices]
[Page 12347]
[DOCID:fr10mr06-53]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. ER06-510-000; ER06-510-001]

Energy Endeavors LLC; Notice of Issuance of Order

March 3, 2006.
    Energy Endeavors LLC (Energy Endeavors) filed an application for
market-based rate authority, with accompanying tariff. The proposed
market-based rate tariff provides for the sale of energy and capacity
at market-based rates. Energy Endeavors also requested waiver of
various Commission regulations. In particular, Energy Endeavors
requested that the Commission grant blanket approval under 18 CFR part
34 of all future issuances of securities and assumptions of liability
by Energy Endeavors.
    On March 2, 2006, pursuant to delegated authority, the Director,
Division of Tariffs and Market Development--West, granted the request
for blanket approval under part 34. The Director's order also stated
that the Commission would publish a separate notice in the Federal
Register establishing a period of time for the filing of protests.
Accordingly, any person desiring to be heard or to protest the blanket
approval of issuances of securities or assumptions of liability by
Energy Endeavors should file a motion to intervene or protest with the
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure. 18 CFR 385.211, 385.214
(2004).
    Notice is hereby given that the deadline for filing motions to
intervene or protest is April 3, 2006.
    Absent a request to be heard in opposition by the deadline above,
Energy Endeavors is authorized to issue securities and assume
obligations or liabilities as a guarantor, indorser, surety, or
otherwise in respect of any security of another person; provided that
such issuance or assumption is for some lawful object within the
corporate purposes of Energy Endeavors, compatible with the public
interest, and is reasonably necessary or appropriate for such purposes.
    The Commission reserves the right to require a further showing that
neither public nor private interests will be adversely affected by
continued approval of the Energy Endeavor's issuances of securities or
assumptions of liability.
    Copies of the full text of the Director's Order are available from
the Commission's Public Reference Room, 888 First Street, NE.,
Washington, DC 20426. The Order may also be viewed on the Commission's
Web site at http://www.ferc.gov, using the eLibrary link. Enter the

docket number excluding the last three digits in the docket number
filed to access the document. Comments, protests, and interventions may
be filed electronically via the Internet in lieu of paper. See, 18 CFR
385.2001(a)(1)(iii) and the instructions on the Commission's Web site
under the ``e-Filing'' link. The Commission strongly encourages
electronic filings.

Magalie R. Salas,
Secretary.
[FR Doc. E6-3451 Filed 3-9-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 83, Number 143 (Wednesday, July 25, 2018)]
[Notices]
[Pages 35305-35307]
[FR Doc No: 2018-15847]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83672; File No. SR-CBOE-2018-052]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend
the Credit Option Margin Pilot Program Through July 18, 2019

July 19, 2018.
    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 July 18, 2018, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act\3\ and Rule 19b-4(f)(6)
thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 Rule 12.3 by extending the Credit
Option Margin Pilot Program through July 18, 2019.
    The text of the proposed rule change is available on the Exchange's
website (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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On February 2, 2011, the Commission approved the Exchange's
proposal to establish a Credit Option Margin Pilot Program
(``Program'').\5\ The proposal became effective on a pilot basis to run
on a parallel track with Financial Industry Regulatory Authority
(``FINRA'') Rule 4240 that similarly operates on an interim pilot
basis.\6\
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    \5\ See Securities Exchange Act Release No. 63819 (February 2,
2011), 76 FR 6838 (February 8, 2011) order approving (SR-CBOE-2010-
106). To implement the Program, the Exchange amended Rule 12.3(l),
Margin Requirements, to make Cboe Option's margin requirements for
Credit Options consistent with Financial Industry Regulatory
Authority (``FINRA'') Rule 4240, Margin Requirements for Credit
Default Swaps. Cboe Options Credit Options (i.e., Credit Default
Options and Credit Default Basket Options) are analogous to credit
default swaps.
    \6\ See Securities Exchange Act Release No. 59955 (May 22,
2009), 74 FR 25586 (May 28, 2009) (Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change; SR-FINRA-
2009-012).
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    On January 17, 2012, the Exchange filed a rule change to, among
other things, decouple the Program with the FINRA program and to extend
the expiration date of the Program to January 17, 2013.\7\ The Program,
however, continues to be substantially similar to the provisions of the
FINRA program. Subsequently, the Exchange filed rule changes to extend
the program until January 17, 2014, January 16, 2015, January 15, 2016,
January 17, 2017, and July 18, 2017, July 18, 2018 respectively.\8\ The
Exchange believes that extending the expiration date of the Program
further will allow for further analysis of the Program and a
determination of how the Program should be structured in the future.
Thus, the Exchange is now currently proposing to extend the duration of
the Program for an additional year until July 18, 2019.
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    \7\ See Securities Exchange Act Release No. 66163 (January 17,
2012), 77 FR 3318 (January 23, 2012) (SR-CBOE-2012-007).
    \8\ See Securities Exchange Act Release Nos. 68539 (December 27,
2012), 78 FR 138 (January 2, 2013) (SR-CBOE-2012-125), 71124
(December 18, 2013), 78 FR 77754 (December 24, 2013) (SR-CBOE-2013-
123), 73837 (December 15, 2014), 79 FR 75850 (December 19, 2014)
(SR-CBOE-2014-091), 76824 (January 5, 2016), 81 FR 1255 (January 11,
2016) (SR-CBOE-2015-118), 79621 (December 14, 2016) 81 FR 95236
(December 27, 2016) (SR-CBOE-2016-089), and 81083 (July 6, 2017) 82
FR 32219 (July 12, 2017) (SR-CBOE-2017-051).
---------------------------------------------------------------------------

    Additionally, the Exchange believes that it is in the public
interest to extend the expiration date of the Program because it will
continue to allow the Exchange to list Credit Options for trading. As a
result, the Exchange will remain competitive with the Over-the-Counter
Market with respect to swaps and security-based swaps. In the future,
if the Exchange proposes an additional extension of the Credit Option
Margin Pilot Program or proposes to make the Program permanent, then
the Exchange will submit a filing proposing such amendments to the
Program.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitation
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed rule change
will further the purposes of the Act because, consistent with the goals
of the Commission at the initial adoption of the program, the margin
requirements set forth by the proposed rule change will help to
stabilize the financial markets. In addition, the proposed rule change
is substantially similar to existing FINRA Rule 4240.

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 that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
believes that, by extending the expiration of the Program, the proposed
rule change will allow for further analysis of the Program and a
determination of how the Program shall be structured in the future. In
doing so, the proposed rule change will also serve to promote
regulatory clarity and consistency, thereby reducing burdens on the
marketplace and facilitating investor protection.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public
interest;
    B. impose any significant burden on competition; and
    C. 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) of the Act \12\ and
Rule 19b-4(f)(6) \13\ thereunder.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, as required under Rule
19b-4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of the filing of the proposed
rule change, or such shorter time as designated by the Commission.

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

    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange states that waiver of the 30-day operative delay
will allow it to maintain the status quo, thereby reducing market
disruption. The Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest, as it will allow the Program to continue uninterrupted,
thereby avoiding investor confusion that could result from a temporary
interruption of the Program. For this reason, the Commission designates
the proposed rule change to be operative upon filing.\14\
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change 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 protected]. Please include
File Number SR-CBOE-2018-052 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2018-052. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly.
    All submissions should refer to File Number SR-CBOE-2018-052 and
should be submitted on or before August 15, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15847 Filed 7-24-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 65 (Thursday, April 6, 2017)]
[Notices]
[Page 16876]
[FR Doc No: 2017-06804]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2016-0087]

Pipeline Safety: Request for Special Permit; City of Bangor,
Maine

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

ACTION: Notice.

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SUMMARY: PHMSA is publishing this notice to seek public comment on a
request for special permit, seeking relief from compliance with certain
requirements in the Federal pipeline safety regulations. At the
conclusion of the 30-day comment period, PHMSA will review the comments
received from this notice as part of its evaluation to grant or deny
the special permit request.

DATES: Submit any comments regarding this special permit request by May
8, 2017.

ADDRESSES: Comments should reference the docket number for the specific
special permit request and may be submitted in the following ways:

     E-Gov Web site: http://www.Regulations.gov. This site
allows the public to enter comments on any Federal Register notice
issued by any agency.
     Fax: 1-202-493-2251.
     Mail: Docket Management System: U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: Docket Management System: U.S. Department
of Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590, between
9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal
holidays.

    Instructions: You should identify the docket number for the special
permit request you are commenting on at the beginning of your comments.
If you submit your comments by mail, please submit two copies. To
receive confirmation that PHMSA has received your comments, please
include a self-addressed stamped postcard. Internet users may submit
comments at http://www.Regulations.gov.
    Note: There is a privacy statement published on http://www.Reglations.gov. Comments, including any personal information
provided, are posted without changes or edits to http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT:
    General: Ms. Kay McIver by telephone at<PHONE_NUMBER>, or email at
<EMAIL_ADDRESS>    Technical: Mr. Max Kieba by telephone at<PHONE_NUMBER>, or email at
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    PHMSA has received a special permit request from the City of
Bangor, Maine to deviate from the pipeline safety regulations to
pressure test a single segment of its pipeline with Jet-A fuel
(kerosene), rather than water as the medium, during the performance of
a Subpart E pressure test. A Draft Environmental Assessment (DEA)
accompanies the special permit request. The DEA is available at http://www.Regulations.gov, in Docket Number, PHMSA-2016-0087. We invite
interested persons to participate by reviewing the special permit
request and DEA at http://www.Regulations.gov, and by submitting
written comments, data, or other views. Please include any comments on
potential safety and environmental impacts that may result if the
special permit is granted.
    Before issuing a decision on the special permit request, PHMSA will
evaluate all comments received on or before the comment closing date.
Comments received after the closing date will be evaluated if it is
possible to do so without incurring additional expense or delay. PHMSA
will consider each relevant comment we receive in making our decision
to grant or deny a request.
    The City of Bangor operates its less than one-mile-long pipeline
from terminal tankage to the Bangor International Airport. The pipeline
is located in an industrial area of the City, offsite of the Bangor
International Airport in Penobscot County, Maine.
    The City requests this special permit for safety concerns of
private, commercial and military aircraft that refuel at the Bangor
International Airport. Due to the stringent quality control
requirements for fuel established for military and commercial aircraft,
any contaminants introduced during a test with water, including the
water itself, could endanger commercial and private aircraft, as well
as the many military missions originating from the airport.
    Testing the pipeline with water would force the City to cease
fueling operations for an estimated 48 to72 hours. The City and the
Maine Air Natural Guard operate under a Federal Joint Use Agreement,
which stipulates that the airport must remain open and available twenty
four hours a day, seven days a week, to support strategic military
missions. This is the only pipeline that supplies fuel to the airport.
Shutting down the airport would put the City in breach of contract with
the military.
    The maximum allowable operating pressure of this pipeline ranges
from 150 to 182 psi, and no leaks have been found in the past 11 years
of pressure testing.

    Issued in Washington, DC on March 31, 2017, under authority
delegated in 49 CFR 1.97.

Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2017-06804 Filed 4-5-17; 8:45 am]
 BILLING CODE 4910-60-P


Date:	July 14, 2016

To:	Brenda Shine, EPA/OAQPS/SPPD

From:	Jeff Coburn

Subject:	Meeting Record for July 14, 2016 meeting between
Representatives of API and Representatives of OAQPS (U.S. EPA)

On July 14, 2016, representatives of the U.S. Environmental Protection
Agency (EPA) and their contractor (RTI International) participated in a
conference call with representatives of the American Petroleum Institute
(API). The names and affiliations of the participants are included in
Attachment 1. The purpose of the meeting was to discuss the existing
source oil and gas information collection request (ICR) as it pertains
to the oil and gas production facilities. The following topics were
discussed.

Comment Period. API representatives noted that they had submitted a
request for a 60-day comment period extension and asked if EPA was
considering extending the comment period.  EPA representatives stated
that they did not expect to extend the public comment period, but noted
that there would be a 30-day comment period during the OMB review
period, which will occur after revisions are made to the ICR based on
the comments received during the initial 60-day public comment period.

Pre-Survey Process. API representatives stated the importance of getting
the ICR to the right individuals, particularly given the proposed
schedule of the ICR. They requested that EPA allow facilities to provide
appropriate contact information through an initial mailer or other
mechanism. EPA representatives stated that they plan to provide web
access to the facility list and allow operators to update or correct any
information during the OMB review period.

Statistical Approach for Part 2. API representatives noted that the EPA
provided two different options for the statistical sampling approach:
one based on gas-to-oil ratio (GOR) and one by groupings of basins. API
representatives generally supported the GOR groupings but suggested that
an additional grouping be provided for “stripper wells.” Stripper
wells, according to the API representative, have production rates less
than 15 barrels of oil equivalents/day, which is about 90,000 scf/d of
gas production for gas wells. According to API representatives, these
small wells have similar number and types of equipment, so they should
be grouped together. They further suggested changing the acceptable
margin of error to 15% for three of the GOR groups that are expected to
have small variability. According to API representatives, dry gas wells,
coalbed methane (CBM) wells, and stripper wells have limited variability
and that a higher error margin would be appropriate to allow reduced
number of respondents for these GOR groups. EPA representatives asked if
they had data to support this lower variability. API representatives
noted that this supposition is based on experience with the typical
equipment used on these types of wells.

Part 1 Questionnaire. API representatives stated that some of the
information requested in the Part 1 questionnaire were difficult to
collect or estimate (e.g., distance to nearest gas gathering line,
electricity availability, and distance to field office). API suggested
that this information be collected only in Part 2 and that the EPA could
add a separate “basin-level” section in Part 1 that could collect
this information at the basin level (i.e., Is electrification from the
grid available in the basin? Is there gas infrastructure in the basin?).
API representatives also noted that EPA should clarify that distance
from field offices be based on driving distance rather than GIS mapping
(or “as the crow flies”) distance.

Response Timing: API representatives noted that the time provided to
respond to the survey was not adequate and recommended that EPA provide
more time for operators to collect and provide this data to ensure EPA
gets the correct information.

Follow-up Meeting: API representatives suggested that a follow-up
meeting be scheduled, perhaps after the end of the comment period once
EPA has had a chance to process some of the public comments. They also
noted that they would like to discuss how the facility counts were
developed as they did not get similar results through their queries
using DI Desktop. EPA representatives noted that these types of meetings
were helpful and were open to scheduling a follow-up meeting in August.

Attachment 1

Participants in July 14, 2016 EPA/API Conference Call

API Representatives

Grover Campbell, Devon

Lisa Campbell, ERM

Denise Grubert, ERM

Marcus Koblitz, API

Tom Monahan, XTO

Matt Todd, API

Andy Woerner, ERM

Angela Zivkovich, Anadarko

U.S. EPA Representatives

Jameel Alsalam

Angie Carey

Amy Hambrick

Jodi Howard

Penny Lassiter

Brenda Shine

Lisa Thompson

Jonathan Witt

RTI International (EPA Contractor)

Jeff Coburn

 PAGE

 PAGE   2

  PAGE   \* MERGEFORMAT  2


[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)]
[Notices]
[Pages 63924-63926]
[FR Doc No: 2018-26837]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84742; File No. SR-NYSEAMER-2018-53]

Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
NYSE American Rule 5.1E(a)(2)

December 6, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on November 27, 2018, NYSE American LLC (``Exchange'' or ``NYSE
American'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 NYSE American Rule 5.1E(a)(2) to
remove the requirement that the Exchange file with the Securities and
Exchange Commission (the ``Commission'') a Form 19b-4(e) for each ``new
derivative securities product'' that will commence trading on the
Exchange pursuant to unlisted trading privileges. The proposed rule
change is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend NYSE American
Rule 5.1E(a)(2)(A) to remove the requirement that the Exchange file
with the Commission a Form 19b-4(e) for each ``new derivative
securities product'' that will commence trading on the Exchange
pursuant to unlisted trading privileges. The Exchange also proposes to
renumber the remaining subsections of NYSE American Rule 5.1E(a)(2) to
maintain an organized rule structure. The Exchange notes that a
substantially identical proposed rule change by NYSE National, Inc.
(``NYSE National'') was recently approved by the Commission.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 83289 (May 17,
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. SR-
NYSENat-2018-02).
---------------------------------------------------------------------------

    NYSE American Rule 5.1E(a)(2)(A) sets forth the requirement for the
Exchange to file with the Commission a Form 19b-4(e) with respect to
each ``new derivative securities product'' that is traded pursuant to
unlisted trading privileges. However, the Exchange believes that it
should not be necessary to file a Form 19b-4(e) with the Commission if
it begins trading a ``new derivative securities product'' pursuant to
unlisted trading privileges, because Rule 19b-4(e)(1) under the Act
refers to the ``listing and trading'' of a ``new derivative securities
product.'' The Exchange believes that the requirements of that rule
refer to when an exchange lists and trades a ``new derivative
securities product'', and not when an exchange seeks only to trade such
product pursuant to unlisted trading privileges pursuant to Rule 12f-2
under the Act.\5\ Therefore, the Exchange proposes to delete the
requirement in current NYSE American Rule 5.1E(a)(2)(A) for the
Exchange to file a Form 19b-4(e) with the Commission with respect to
each ``new derivative securities product'' it begins trading pursuant
to unlisted trading privileges. In addition, as a result of the
deletion of current NYSE American Rule 5.1E(a)(2)(A), the Exchange
proposes to renumber current NYSE American Rules 5.1E(a)(2)(B)-(F).
---------------------------------------------------------------------------

    \5\ 17 CFR 240.12f-2.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \6\ of the Act in general, and
furthers the objectives of Section 6(b)(5) of the Act \7\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, 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. Specifically,
eliminating the requirement to file a Form 19b-4(e) for each ``new
derivative securities product'' the Exchange begins trading on an
unlisted trading privileges basis removes an unnecessary regulatory
requirement thereby providing for a more efficient process for adding a
``new derivative securities product'' to trading on the Exchange on an
unlisted trading privileges basis.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, the Commission recently approved a substantially
identical proposed rule change by NYSE National.\8\ In particular, the
Commission noted in the approval order that it ``believes that the
filing of a Form 19b-4(e) is not required when an Exchange is trading a
new derivative securities product on a UTP basis only'' \9\ and also
found that the NYSE National's proposed rule change is ``consistent
with the requirements of Section 6(b)(5) of the Act.'' \10\ The Nasdaq
Stock Market LLC (``Nasdaq''), Nasdaq PHLX LLC (``PHLX''), Nasdaq BX,
Inc. (``BX'') and Investors Exchange LLC (``IEX'') also recently
amended their rules to remove the requirement to file with the
Commission a Form 19b-4(e) for each ``new derivative securities
product'' traded on each of those exchanges pursuant to unlisted
trading privileges.\11\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 83289 (May 17,
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. (SR-
NYSENat-2018-02).
    \9\ See supra note 10 [sic] at page 23975 at footnote 149.
    \10\ See supra note 10 [sic] at page 23975-6.
    \11\ See Securities Exchange Act Release Nos. 84488 (October 25,
2018), 83 FR 54801 (October 31, 2018) (SR-NASDAQ-2018-082); 84542
(November 6, 2018), 83 FR 56385 (November 13, 2018) (SR-Phlx-2018-
67); 84546 (November 7, 2018), 83 FR 56888 (November 14, 2018) (SR-
BX-2018-051); and 83609 (July 9, 2018), 83 FR 32704 (July 13, 2018)
(SR-IEX-2018-14).
---------------------------------------------------------------------------

    With respect to the renumbering of current NYSE American Rules
5.1E(a)(2)(B)-(F), the Exchange believes that these changes are
consistent with the Act because they will allow the Exchange to
maintain a clear and organized rule structure, thus preventing investor
confusion.
    For these reasons, the Exchange believes the proposed rule change
is consistent with the requirements of Section 6(b)(5) of the Act.

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

    The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. To the contrary, removing
the requirement to file a Form 19b-4(e) will serve to enhance
competition by providing for the efficient addition of new derivative
securities products for trading pursuant to unlisted trading privileges
on the Exchange. To the extent that a competitor marketplace believes
that the proposed rule change places it at a competitive disadvantage,
it may file with the Commission a proposed rule change to adopt the
same or similar rule.
    In addition, the proposal to renumber current NYSE American Rules
5.1E(a)(2)(B)-(F) does not impact competition in any respect since it
merely maintains a clear and organized rule structure.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; or (iii) become operative prior to
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) of the Act \12\ and Rule 19b-4(f)(6)
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of 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.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Commission notes that the Exchange's proposal does not
present any new or novel issues. Thus, the Commission believes that
waiver of the 30-day operative delay is consistent with the protection
of investors and the

public interest and hereby waives the 30-day operative delay and
designates the proposed rule change to be operative upon filing.\14\
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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.

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-NYSEAMER-2018-53 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEAMER-2018-53. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2018-53 and should be submitted
on or before January 2, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-26837 Filed 12-11-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 68 (Tuesday, April 11, 2017)]
[Notices]
[Pages 17483-17489]
[FR Doc No: 2017-07181]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80382; File No. SR-DTC-2017-002]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change To Address and Update
Practices and Policies With Respect to the Credit Risk Rating Matrix
and Make Other Changes

April 5, 2017.
    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 March 22, 2017, The Depository Trust Company (``DTC'') 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 clearing agency.\3\ 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.
    \3\ On March 22, 2017, DTC filed this proposed rule change as an
advance notice (SR-DTC-2017-801) with the Commission pursuant to
Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform
and Consumer Protection Act entitled the Payment, Clearing, and
Settlement Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule
19b-4(n)(1)(i) of the Act, 17 CFR 240.19b-4(n)(1)(i). A copy of the
advance notice is available at http://www.dtcc.com/legal/sec-rule-filings.aspx.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The proposed rule change consists of amendments to DTC's Rules, By-
Laws and Organization Certificate (``Rules'').\4\ The proposed rule
change would amend Rules 1 and 2 in order to (i) address and update
DTC's practices and policies with respect to the existing matrix
(hereinafter referred to as the ``Credit Risk Rating Matrix'' or
``CRRM''), which was, as described in an earlier DTC rule filing,\5\
developed by DTC to assign a credit rating to certain Participants
(``CRRM-Rated Participants'') by evaluating the risks posed by CRRM-
Rated Participants to DTC and its Participants from providing services
to these CRRM-Rated Participants and (ii) make other amendments to the
Rules to provide more transparency and clarity regarding DTC's current
ongoing membership monitoring process.
---------------------------------------------------------------------------

    \4\ Capitalized terms not defined herein are defined in the
Rules, available at www.dtcc.com/~/media/Files/Downloads/legal/
rules/dtc_rules.pdf.
    \5\ See Securities Exchange Act Release No. 53655 (April 14,
2006), 71 FR 20428 (April 20, 2006) (SR-DTC-2006-03) (order of the
Commission) approving a proposed rule change (``2006 Rule Change'')
of DTC to amend the criteria used by DTC to place Participants on
surveillance status, including, but not limited to DTC's application
of the CRRM and the placement of lower rated CRRM-Rated Participants
on an internal list in order to be monitored more closely (``Watch
List'').
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

1. Purpose
    The proposed rule change would amend Rules 1 and 2 in order to (i)
address and update DTC's practices and policies with respect to the
CRRM and (ii) provide more transparency and clarity regarding DTC's
current membership monitoring process. In this regard, the proposed
rule change would (i) add proposed definitions for the terms ``Credit
Risk Rating Matrix'' and ``Watch List'' to Rule 1 (Definitions), as
discussed below and (ii) amend Rule 2 (Participants and Pledgees) to
(A) clarify a provision in Section 1 relating to the types of
information a Participant must provide to DTC upon DTC's request for
the Participant to demonstrate its satisfactory financial condition and
operational capability, including its risk management practices with
respect to services of DTC utilized by the Participant for another
Person and (B) add a new Section 10 to include provisions relating to
the monitoring, surveillance and review of Participants, including, but
not limited to, the application of the CRRM and proposed

enhancements to the CRRM, as further discussed below.
(i) Background
    DTC occupies an important role in the securities settlement system
by, among other things, providing services for the settlement of book-
entry transfer and pledge of interests in eligible deposited securities
and net funds settlement, in connection with which Participants may
incur net funds settlement obligations to DTC. DTC uses the CRRM, the
Watch List and the enhanced surveillance to manage and monitor default
risks of Participants on an ongoing basis, as discussed below. The
level and frequency of such monitoring for a Participant is determined
by the Participant's risk of default as assessed by DTC. Participants
that are deemed by DTC to pose a heightened risk to DTC and its
Participants are subject to closer and more frequent monitoring.
Existing Credit Risk Rating Matrix
    Pursuant to the 2006 Rule Change, all Participants that are either
U.S. broker-dealers or U.S. banks are assigned a rating generated
solely based on quantitative factors by entering financial data of
those Participants into an internally generated credit rating matrix,
i.e., the CRRM.\6\ All other types of Participants are monitored by
credit risk staff using financial criteria deemed relevant by DTC but
would not be assigned a rating by the CRRM.\7\
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    \6\ See 2006 Rule Change, SR-DTC-2006-03, 71 FR 20428, which
explained that the ratings assigned by the CRRM were generated using
financial data extracted from standard regulatory reports of U.S.
broker-dealers and banks. A small number of U.S. banks which
submitted standard regulatory reports were not assigned a rating
because they did not take deposits or make loans, and therefore the
regulatory reports of these banks did not contain information on
asset quality and/or liquidity, which was a data component used in
the CRRM. Id. However, the 2006 Rule Change provided DTC with
discretion to continue to ``evaluate the matrix methodology and its
effectiveness and make such changes as it deems prudent and
practicable within such time frames as it determines to be
appropriate.'' Id. DTC has continued to evaluate the CRRM and has
determined that the CRRM is the most effective method available to
it to evaluate the default risk presented by any U.S. bank that
submits regulatory reports, including a bank whose reports exclude
certain data components as mentioned above. Accordingly, DTC applies
the CRRM to assign ratings to any U.S. bank that submits regulatory
reports, including those that were not covered by the CRRM in 2006,
as reflected in the proposed rule change.
    \7\ In the 2006 Rule Change, DTC noted that these Participants
would be monitored by credit risk staff by reviewing similar
criteria as those reviewed for Participants included on the matrix
but such review would occur outside of the matrix process. Id.
---------------------------------------------------------------------------

    The 2006 Rule Change explained that credit risk staff could
downgrade a particular Participant's credit rating based on various
qualitative factors. An example of such qualitative factors might be
that the Participant in question received a qualified audit opinion on
its annual audit. DTC noted in the 2006 Rule Change that in order to
protect DTC and its other Participants, it was important that credit
risk staff maintain the discretion to downgrade a Participant's credit
rating on the CRRM and thus subject the Participant to closer
monitoring.
    The current CRRM is comprised of two credit rating models--one for
the U.S. broker-dealers and one for the U.S. banks--and generates
credit ratings for the relevant Participants based on a 7-point rating
system, with ``1'' being the strongest credit rating and ``7'' being
the weakest credit rating.
    Over time, the current CRRM has not kept pace with DTC's evolving
Participant membership base and heightened expectations from regulators
and stakeholders for robustness of financial models. Specifically, the
current CRRM only generates credit ratings for those Participants that
are U.S. banks or U.S. broker-dealers that file standard reports with
their regulators, which currently comprise 80% of Participants; foreign
banks and trust companies currently account for 5% of Participants.\8\
The number of Participants that are foreign banks or trust companies
increased from 12 in 2012 to 13 in 2017, and is expected to continue to
grow over the coming years. Foreign banks and trust companies are
typically large global financial institutions that have complex
businesses and conduct a high volume of activities. Although foreign
banks and trust companies are not currently rated by the CRRM, they are
monitored by DTC's credit risk staff using financial criteria deemed
relevant by DTC and can be placed on the Watch List if they experience
a financial change that presents risk to DTC. Given the increase in the
number of foreign bank Participants in recent years, there is a need to
formalize DTC's credit risk evaluation process of the foreign bank or
trust company Participants by assigning credit ratings to them in order
to better facilitate the comparability of credit risks among
Participants.\9\
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    \8\ As of March 16, 2017, there are 251 Participants, of which
50 (or 20%) are U.S. banks, 151 (or 60%) are U.S. broker-dealers and
13 (or 5%) are foreign banks or trust companies.
    \9\ DTC noted in the 2006 Rule Change that the CRRM is applied
across DTC and its affiliated clearing agencies, NSCC and FICC.
Specifically, in order to run the CRRM, credit risk staff uses the
financial data of the applicable DTC Participants in addition to
data of applicable members of NSCC and FICC. In this way, each
applicable DTC Participant is rated against other applicable members
of NSCC and FICC. See 2006 Rule Change, SR-DTC-2006-03, 71 FR 20428.
---------------------------------------------------------------------------

    As mentioned above, a Participant's credit rating is currently
based solely upon quantitative factors. It is only after the CRRM has
generated a credit rating with respect to a Participant that such
Participant's credit rating may be downgraded manually by credit risk
staff, after taking into consideration relevant qualitative factors.
The inability of the current CRRM to take into account qualitative
factors requires frequent and manual overrides by credit risk staff,
which may result in inconsistent and/or incomplete credit ratings for
Participants.
    Furthermore, the current CRRM uses a relative scoring approach and
relies on peer grouping of Participants to calculate the credit rating
of a Participant. This approach is not ideal because a Participant's
credit rating can be affected by changes in its peer group even if the
Participant's financial condition is unchanged.
Proposed Credit Risk Rating Matrix Enhancements
    To improve the coverage and the effectiveness of the current CRRM,
DTC is proposing three enhancements to the CRRM. The first proposed
enhancement would expand the scope of CRRM coverage by enabling the
CRRM to generate credit ratings for Participants that are foreign banks
or trust companies and that have audited financial data that is
publicly available. The second proposed enhancement would incorporate
qualitative factors into the CRRM and therefore is expected to reduce
the need and the frequency of manual overrides of Participant credit
ratings. The third enhancement would replace the relative scoring
approach currently used by CRRM with a statistical approach to estimate
the absolute probability of default of each Participant.
A. Enable the CRRM to Generate Credit Ratings for Foreign Bank or Trust
Company Participants
    The current CRRM is comprised of two credit rating models--one for
the U.S. broker-dealers and one for the U.S. banks. DTC is proposing to
enhance the CRRM by adding an additional credit rating model for the
foreign banks and trust companies. The additional model would expand
the scope of Participants to which the CRRM would apply to include
foreign banks and trust companies that have audited financial data that
is publicly available. The CRRM credit rating of a foreign bank or
trust company that is a Participant

would be based on quantitative factors, including size, capital,
leverage, liquidity, profitability and growth, and qualitative factors,
including market position and sustainability, information reporting and
compliance, management quality, capital management and business/product
diversity. By enabling the CRRM to generate credit ratings for these
Participants, the enhanced CRRM would provide more comprehensive credit
risk coverage of DTC's membership base.
    With the proposed enhancement to the CRRM as described above,
applicable foreign bank or trust company Participants would be included
in the CRRM process and be evaluated more effectively and efficiently
because financial data with respect to these foreign bank or trust
company Participants could be extracted from data sources in an
automated form.\10\
---------------------------------------------------------------------------

    \10\ In the 2006 Rule Change, DTC noted that these Participants
would be monitored by credit risk staff by reviewing similar
criteria as those reviewed for Participants included on the CRRM,
but such review would occur outside of the CRRM process. Id.
---------------------------------------------------------------------------

    After the proposed enhancement, CRRM would be able to generate
credit ratings on an ongoing basis for all Participants that are U.S.
banks, U.S. brokers-dealers and foreign banks and trust companies,
which together represent approximately 85% of Participants.\11\
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    \11\ As of March 16, 2017, there are 37 Participants that would
not be rated by the enhanced CRRM, as proposed, because they are
central securities depositories, securities exchanges, government
sponsored entities, central counterparties, central banks and U.S.
trust companies that do not file Call Reports (as defined below).
---------------------------------------------------------------------------

B. Incorporate Qualitative Factors Into the CRRM
    In addition, as proposed, the enhanced CRRM would blend both
qualitative factors and quantitative factors to produce a credit rating
for each applicable Participant in relation to the Participant's credit
risk. For U.S. and foreign banks and trust companies, the enhanced CRRM
would use a 70/30 weighted split between quantitative and qualitative
factors to generate credit ratings. For U.S. broker-dealers, the weight
split between quantitative and qualitative factors would be 60/40.
These weight splits have been chosen by DTC based on the industry best
practice as well as research and sensitivity analysis conducted by DTC.
DTC would review and adjust the weight splits as well as the
quantitative and qualitative factors, as needed, based on recalibration
of the CRRM to be conducted by DTC approximately every three to five
years.
    Although there are advantages to measuring credit risk
quantitatively, quantitative evaluation models alone are incapable of
fully capturing all credit risks. Certain qualitative factors may
indicate that a Participant is or will soon be undergoing financial
distress, which may in turn signal a higher default exposure to DTC and
its other Participants. As such, a key enhancement being proposed to
the CRRM is the incorporation of relevant qualitative factors into each
of the three credit rating models mentioned above. By including
qualitative factors in the three credit rating models, the enhanced
CRRM would capture risks that would otherwise not be accounted for with
quantitative factors alone.\12\ Adding qualitative factors to the CRRM
would not only enable it to generate more consistent and comprehensive
credit ratings for applicable Participants, but it would also help
reduce the need and frequency of manual credit rating overrides by the
credit risk staff because overrides would likely only be required under
more limited circumstances.\13\
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    \12\ The initial set of qualitative factors that would be
incorporated into the CRRM includes (a) for U.S. broker dealers,
market position and sustainability, management quality, capital
management, liquidity management, geographic diversification,
business/product diversity and access to funding, (b) for U.S.
banks, environment, compliance/litigation, management quality,
liquidity management and parental demands and (c) for foreign banks
and trust companies, market position and sustainability, information
reporting and compliance, management quality, capital management and
business/product diversity.
    \13\ Once a Participant is assigned a credit rating, if
circumstances warrant, credit risk staff would still have the
ability to override the CRRM-issued credit rating by manually
downgrading such rating as they do today. To ensure a conservative
approach, the CRRM-issued credit ratings cannot be manually
upgraded.
---------------------------------------------------------------------------

C. Shifting From Relative Scoring to Absolute Scoring
    As proposed, the enhanced CRRM would use an absolute scoring
approach and rank each Participant based on its individual probability
of default rather than the relative scoring approach that is currently
in use. This proposed change is designed to have a Participant's CRRM-
generated credit rating reflect an absolute measure of the
Participant's default risk and eliminate any potential distortion of a
Participant's credit rating from the Participant's peer group that may
occur under the relative scoring approach used in the existing CRRM.
D. Watch List and Enhanced Surveillance
    In addition to the Watch List, DTC also maintains an enhanced
surveillance list (referenced herein and in the proposed rule text as
``enhanced surveillance'') for membership monitoring. The enhanced
surveillance list is generally used when Participants are undergoing
drastic and unexpected changes in their financial conditions or
operation capabilities and thus are deemed by DTC to be of the highest
risk level and/or warrant additional scrutiny due to DTC's ongoing
concerns about these Participants. Accordingly, Participants that are
subject to enhanced surveillance are reported to DTC's management
committees and are also regularly reviewed by a cross-functional team
comprised of senior management of DTC. More often than not,
Participants that are subject to enhanced surveillance are also on the
Watch List. The group of Participants that is subject to enhanced
surveillance is generally much smaller than the group on the Watch
List. The enhanced surveillance list is an internal tool for DTC that
triggers increased monitoring of a Participant above the monitoring
that occurs when a Participant is on the Watch List.
    A Participant could be placed on the Watch List either based on its
credit rating of 5, 6 or 7, which can either be generated by the CRRM
or from a manual downgrade, or when DTC deems such placement as
necessary to protect DTC and its Participants. In contrast, a
Participant would be subject to enhanced surveillance only when close
monitoring of the Participant is deemed necessary to protect DTC and
its Participants.
(ii) Detailed Description of the Proposed Rule Changes
    The 2006 Rule Change, while setting forth the procedures DTC
follows with regard to the CRRM and the Watch List, did not incorporate
these procedures into the text of the Rules. Pursuant to the proposed
rule change, DTC would amend the Rules to incorporate the CRRM with the
enhancements proposed above, including (1) the use of both quantitative
and qualitative factors in generating credit ratings for CRRM-Rated
Participants, (2) the expansion of the scope of CRRM coverage to enable
the CRRM to generate credit ratings for Participants that are (a) U.S.
banks that file the Consolidated Report of Condition and Income (``Call
Report''), (b) U.S. broker-dealers that file the Financial and
Operational Combined Uniform Single Report (``FOCUS

Report'') or the equivalent with their regulators, or (c) foreign banks
or trust companies that have audited financial data that is publicly
available and (3) that the CRRM would use an absolute scoring approach
and rank each Participant based on its individual probability of
default (rather than the relative scoring approach that is currently in
use). Also, the proposed rule change would define the CRRM and the
Watch List and add rule text to provide more transparency and clarity
regarding DTC's current ongoing membership monitoring process.
    In this regard, the proposed rule change would (i) add proposed
definitions for CRRM and Watch List to Rule 1 (Definitions) and (ii)
amend Rule 2 (Participants and Pledgees) (A) Section 1 to clarify a
provision relating to the types of information a Participant must
provide to DTC upon DTC's request for the Participant to demonstrate
its satisfactory financial condition and operational capability,
including its risk management practices with respect to services of DTC
utilized by the Participant for another Person or Persons and (B) to
add a new Section 10 to include provisions relating to the monitoring,
surveillance and review of Participants, including, but not limited to,
the application of the CRRM and proposed enhancements to the CRRM, as
further discussed below.
A. Proposed Changes to Rule 1 (Definitions)
    The proposed rule change would amend Rule 1 to add definitions for
the CRRM and the Watch List.
    The proposed definition of the CRRM would provide that the term
``Credit Risk Rating Matrix'' means a matrix of credit ratings of
Participants as specified in the proposed new Section 10(a) of Rule 2.
As proposed, the definition would state that the CRRM is developed by
DTC to evaluate the credit risk such Participants pose to DTC and its
Participants and is based on factors determined to be relevant by DTC
from time to time, which factors are designed to collectively reflect
the financial and operational condition of a Participant. The proposed
definition would also state that these factors include (i) quantitative
factors, such as capital, assets, earnings and liquidity and (ii)
qualitative factors, such as management quality, market position/
environment and capital and liquidity risk management.
    The proposed definition of the Watch List would provide that the
term ``Watch List'' means, at any time and from time to time, the list
of Participants whose credit ratings derived from the CRRM are 5, 6 or
7, as well as Participants that, based on DTC's consideration of
relevant factors, including those that would be set forth in the
proposed new Section 10 of Rule 2 (described below), are deemed by DTC
to pose a heightened risk to DTC and its Participants.
B. Proposed Changes to Section 1 of Rule 2 (Participants and Pledgees)
    Section 1 of Rule 2 provides, among other things, that upon the
request of DTC, a Participant shall furnish to DTC information
sufficient to demonstrate its satisfactory financial condition and
operational capability. The proposed rule change would, by way of
example, clarify that the types of information that DTC may require in
this regard include, but are not limited to, such information as DTC
may request regarding the businesses and operations of the Participant
and its risk management practices with respect to services of DTC
utilized by the Participant for another Person.
C. Proposed New Section 10 of Rule 2
    The proposed rule change would add a new Section 10 of Rule 2 to
include provisions relating to the monitoring, surveillance and review
of Participants, including, but not limited to, the application of, and
the proposed enhancements to, the CRRM. In this regard, the proposed
new Section 10 of Rule 2 would provide that:
    (1) All Participants would be monitored and reviewed by DTC on an
ongoing and periodic basis, which may include monitoring of news and
market developments and review of financial reports and other public
information.
    (2)(i) A Participant that is (A) qualified to be a Participant
pursuant to (x) Rule 3, Section 1(d) and files the Call Report (i.e., a
U.S. Bank) or (y) Rule 3, Section 1(h)(ii) and files the FOCUS Report
or the equivalent with its regulator (i.e., a U.S. broker-dealer) or
(B) a foreign bank or trust company qualified to be a Participant
pursuant to Section 2 of the Policy Statement on the Admission of
Participants and that has audited financial data that is publicly
available, would be assigned a credit rating by DTC in accordance with
the CRRM. The proposed rule change would also provide that a
Participant's credit rating will be reassessed each time the
Participant provides DTC with requested information pursuant to Section
1 of Rule 2, or as may be otherwise required under the Rules and
Procedures \14\ (including proposed new Section 10 of Rule 2).
---------------------------------------------------------------------------

    \14\ Pursuant to Section 1 of Rule 1, the term ``Procedures''
means the Procedures, service guides, and regulations of DTC adopted
pursuant to Rule 27, as amended from time to time. Rules, supra note
4.
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    (ii) Because the factors used as part of the CRRM may not identify
all risks that a CRRM-Rated Participant may present to DTC, DTC may, in
its discretion, override the CRRM-Rated Participant's credit rating
derived from the CRRM to downgrade that Participant. In this regard,
the proposed rule change would provide that (A) such a downgrading may
result in the Participant being placed on the Watch List, and/or it may
subject the Participant to enhanced surveillance based on relevant
factors, including those described in paragraph (4) below and (B) DTC
may also take such additional actions with regard to the Participant as
are permitted by the Rules and Procedures.
    (3) Participants other than CRRM-Rated Participants would not be
assigned a credit rating by the CRRM but may be placed on the Watch
List and/or may be subject to enhanced surveillance based on relevant
factors, including those described in paragraph (4) below, as DTC deems
necessary to protect it and its Participants.
    (4) The factors to be considered by DTC as proposed in paragraphs
(2)(ii) and (3) above would include, but would not be not limited to,
(i) news reports and/or regulatory observations that raise reasonable
concerns relating to the Participant, (ii) reasonable concerns around
the Participant's liquidity arrangements, (iii) material changes to the
Participant's organizational structure, (iv) reasonable concerns of DTC
about the Participant's financial stability due to particular facts and
circumstances, such as material litigation or other legal and/or
regulatory risks, (v) failure of the Participant to demonstrate
satisfactory financial condition or operational capability or if DTC
has a reasonable concern regarding the Participant's ability to
maintain applicable participation standards and (vi) failure of the
Participant to provide information required by DTC to assess risk
exposure posed by the Participant's activity (including information
requested by DTC pursuant to Section 1 of Rule 2).
    (5) A Participant being subject to enhanced surveillance or being
placed on the Watch List would result in more thorough monitoring of
the Participant's financial condition and/or operational capability,
which could include, for example, on-site visits or additional due
diligence information requests from

DTC. In this regard, the proposed rule change would provide that DTC
may require a Participant placed on the Watch List and/or subject to
enhanced surveillance to make more frequent financial disclosures,
including, without limitation, interim and/or pro forma reports. The
proposed rule change would also provide that Participants that are
subject to enhanced surveillance would also be reported to DTC's
management committees and regularly reviewed by a cross-functional team
comprised of senior management of DTC. The proposed rule change would
further provide that DTC may also take such additional actions with
regard to any Participant (including a Participant placed on the Watch
List and/or subject to enhanced surveillance) as are permitted by the
Rules and Procedures.
Implementation Timeframe
    Pending Commission approval, DTC expects to implement this proposal
promptly. Participants would be advised of the implementation date of
this proposal through issuance of a DTC Important Notice.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires that the Rules be designed
to promote the prompt and accurate clearance and settlement of
securities transactions and to assure the safeguarding of securities
and funds which are in the custody or control of DTC or for which it is
responsible.\15\
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    \15\ 15 U.S.C. 78q-1(b)(3)(F).
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    By enhancing the CRRM to enable it to assign credit ratings to
Participants that are foreign banks or trust companies and that have
audited financial data that is publicly available, DTC believes that
the proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act. This is because the proposed rule change expands the CRRM's
applicability to a wider group of Participants, which further improves
DTC's membership monitoring process and better enables DTC to safeguard
the securities and funds which are in its custody or control or for
which it is responsible in furtherance of the Act.
    Similarly, by enhancing the CRRM to enable it to incorporate
qualitative factors when assigning a Participant's credit rating, DTC
believes that this proposed rule change is consistent with Section
17A(b)(3)(F) of the Act. This is because the proposed rule change would
enable DTC to take into account relevant qualitative factors in an
automated and more effective manner when monitoring the credit risks
presented by Participants, thus improving DTC's membership monitoring
process overall, which would in turn better enable DTC to safeguard the
securities and funds which are in its custody or control or for which
it is responsible in furtherance of the Act.
    Likewise, by enhancing the CRRM to shift from a relative scoring
approach to an absolute scoring approach when assigning a Participant's
credit rating, DTC believes that this proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act. This is because the
proposed rule change would enable DTC to generate credit ratings for
Participants that are more reflective of the Participants' default
risk, thus improving DTC's membership monitoring process overall, which
would in turn better enable DTC to safeguard the securities and funds
which are in its custody or control or for which it is responsible in
furtherance of the Act.
    By providing specificity, clarity and additional transparency to
the Rules related to DTC's current ongoing membership monitoring
process, DTC believes that the proposed rule changes to (1) Rule 1 to
add the definitions of CRRM and Watch List, (2) Section 1 of Rule 2 to
clarify a provision relating to the types of information a Participant
must provide to DTC upon DTC's request for the Participant to
demonstrate its satisfactory financial condition and operational
capability and (3) add Section 10 of Rule 2 to include provisions
relating to the monitoring, surveillance and review of Participants,
including, but not limited to, the application of the CRRM and proposed
enhancements thereto, are consistent with Section 17A(b)(3)(F) of the
Act because the proposed rule changes would help ensure that the Rules
remain accurate and clear. Collectively, the proposed changes would
help ensure that the Rules are more transparent, accurate and clear,
which would help enable all stakeholders to readily understand their
respective rights and obligations with DTC's clearance and settlement
of securities transactions. Therefore, DTC believes that the proposed
rule changes would promote the prompt and accurate clearance and
settlement of securities transactions, consistent with Section
17A(b)(3)(F) of the Act.
    The proposed enhancements to the CRRM are consistent with Rule
17Ad-22(e)(3)(i) under the Act, which was recently adopted by the
Commission.\16\ Rule 17Ad-22(e)(3)(i) will require DTC to establish,
implement, maintain and enforce written policies and procedures
reasonably designed to maintain a sound risk management framework for
comprehensively managing risks that arise in or are born by DTC, which
includes . . . systems designed to identify, measure, monitor and
manage the range of risks that arise in or are borne by DTC.\17\ The
proposed enhancements to the CRRM have been designed to assist DTC in
identifying, measuring, monitoring and managing the credit risks to DTC
posed by its Participants. The proposed enhancements to the CRRM
accomplish this by (i) expanding the CRRM's applicability to a wider
group of Participants to include Participants that are foreign banks or
trust companies, (ii) enabling the CRRM to take into account relevant
qualitative factors in an automated and more effective manner when
monitoring the credit risks presented by Participants and (iii)
enabling the CRRM to generate credit ratings for Participants that are
more reflective of the Participants' default risk by shifting to an
absolute scoring approach, all of which would improve DTC's membership
monitoring process overall. Therefore, DTC believes the proposed
enhancements to the CRRM would assist DTC in identifying, measuring,
monitoring and managing risks that arise in or are born by DTC,
consistent with the requirements of Rule 17Ad-22(e)(3)(i).
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    \16\ 17 CFR 240.17Ad-22(e)(3)(i). The Commission adopted
amendments to Rule 17Ad-22, including the addition of new subsection
17Ad-22(e), on September 28, 2016. See Securities Exchange Act
Release No. 78961 (September 28, 2016), 81 FR 70786 (October 13,
2016) (S7-03-14). DTC is a ``covered clearing agency'' as defined by
the new Rule 17Ad-22(a)(5) and must comply with new subsection (e)
of Rule 17Ad-22 by April 11, 2017. Id.
    \17\ Id.
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    The proposed rule change to Section 1 of Rule 2 with respect to the
scope of information that may be requested by DTC from its Participants
has been designed to be consistent with Rule 17Ad-22(e)(19) under the
Act, which was recently adopted by the Commission.\18\ Rule 17Ad-
22(e)(19) will require DTC to establish, implement, maintain and
enforce written policies and procedures reasonably designed to
identify, monitor, and manage the material risk to DTC arising from
arrangements in which firms that are indirect participants in DTC rely
on the services provided by Participants to access DTC's payment,
clearing, or settlement facilities.\19\ By expressly reflecting in

the Rules what is already DTC's current practice associated with its
request for information sufficient to demonstrate a Participant's
satisfactory financial condition and operational capability to state
that such request may include information regarding the businesses and
operations of the Participant, as well as its risk management practices
with respect to services of DTC utilized by the Participant for another
Person, this proposed rule change would help enable DTC to have rule
provisions that are reasonably designed to identify, monitor and manage
the material risks to DTC arising from tiered participation
arrangements consistent with Rule 17Ad-22(e)(19).
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    \18\ 17 CFR 240.17Ad-22(e)(19). Id.
    \19\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change to (i) enable
the CRRM to generate credit ratings for Participants that are foreign
banks or trust companies, (ii) incorporate qualitative factors into the
CRRM and (iii) shift to an absolute scoring approach would impose any
burden on competition that is not necessary or appropriate in
furtherance of the Act.\20\ These proposed enhancements to the CRRM
would improve DTC's Participant credit risk evaluation process by (1)
expanding the CRRM's credit rating capability and thereby providing
more comprehensive credit risk coverage of Participants, (2) enabling
the CRRM to generate more consistent and comprehensive credit ratings
for Participants and thereby reducing the need and frequency for manual
downgrades and (3) enabling the CRRM to generate credit ratings for
Participants that are more reflective of the Participants' default
risk. However, DTC recognizes that any change to its Participant credit
risk evaluation process, such as the proposed rule change, may impose a
burden on competition in terms of potential impact on Participants'
credit ratings. Nevertheless, DTC believes that any burden on
competition derived from the proposed rule change would be necessary
and appropriate in furtherance of the Act because the proposed
enhancements to the CRRM would help improve DTC's membership monitoring
process and thus better enable DTC to safeguard the securities and
funds which are in its custody or control or for which it is
responsible. Furthermore, the proposed enhancements to the CRRM would
also assist DTC in identifying, measuring, monitoring and managing
risks that arise in or are born by DTC. As such, DTC does not believe
the proposed enhancements to the CRRM would impose any burden on
competition that is not necessary or appropriate in furtherance of the
Act.
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    \20\ 15 U.S.C. 78q-1(b)(3)(I).
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    DTC does not believe that the proposed rule changes to (i) add
proposed definitions for CRRM and Watch List to Rule 1 and (ii) amend
Rule 2 to (A) clarify a provision relating to the types of information
a Participant must provide to DTC upon DTC's request for the
Participant to demonstrate its satisfactory financial condition and
operational capability and (B) add provisions relating to the
monitoring, surveillance and review of Participants that may operate
separately or in conjunction with DTC's application of the CRRM, would
have any impact on competition because each of such proposed rule
changes is designed to provide additional specificity, clarity and
transparency in the Rules regarding DTC's current ongoing membership
monitoring process by expressly providing in the Rules DTC's current
practices with respect to such process. As such, these proposed rule
changes would not impact Participants or impose any burden on
competition.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others

    Written comments relating to this proposed rule change have not
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self- regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.
    The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.

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-DTC-2017-002 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2017-002. 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 DTC and on DTCC's
Web site (http://dtcc.com/legal/sec-rule-filings.aspx). 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-DTC-2017-002 and should be
submitted on or before May 2, 2017.
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    \21\ 17 CFR 200.30-3(a)(12).

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    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07181 Filed 4-10-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 93 (Wednesday, May 13, 2020)]
[Notices]
[Page 28654]
[FR Doc No: 2020-10179]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4503-DR; Docket ID FEMA-2020-0001]

Alabama; Amendment No. 1 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Alabama (FEMA-4503-DR), dated March 29, 2020, and
related determinations.

DATES: This amendment was issued April 30, 2020.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Alabama is hereby amended to include Individual
Assistance limited to the Crisis Counseling Program for those areas
determined to have been adversely affected by the event declared a
major disaster by the President in his declaration of March 29, 2020.

    Individual Assistance limited to the Crisis Counseling Program
for all areas in the State of Alabama (already designated for
emergency protective measures [Category B] not authorized under
other Federal statutes, including direct Federal assistance).
    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households In Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050 Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

Pete Gaynor,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2020-10179 Filed 5-12-20; 8:45 am]
 BILLING CODE 9111-23-P