broker-dealer, or $34.4 million for 1,230 broker-dealers. The hardware
and software cost to upgrade and modify a risk control management
system would be $11,517 per broker-dealer, or $14.2 million for 1,230
broker-dealers. The combined personnel, hardware, and software cost
would be $48.6 million. The Commission welcomes comments on these
estimates.
    Rather than developing or upgrading systems, broker-dealers may
choose to purchase a risk management solution from a third-party
vendor. Potential costs of contracting with such a vendor were obtained
from industry participants. Here again, the potential range of costs
would vary considerably, depending upon the needs of the broker-dealer.
For instance, the needs of a broker-dealer would vary based on its
current systems and controls in place, the comprehensiveness of its
controls and procedures, the sophistication of its client base, the
types of trading strategies that it utilizes, the number of trading
venues it connects to, the number of connections that it has to each
trading market, and the volume and speed of its trading activity. As
discussed previously, a broker-dealer is estimated to pay as much as
approximately $4,000 per month per trading venue for a startup contract
depending on its particular needs. The Commission conservatively
estimates $8,000 per month (i.e., connection to two trading venues), or
$96,000 annually, for a startup contract.\63\ For instance, the
Commission estimates that if 65 broker-dealers choose to purchase
systems from a third-party vendor as an alternative to building a risk
control management system from scratch,\64\ the cost to the industry
for initial startup

contracts could be approximately $6,240,000.\65\ The Commission
preliminarily believes that the annual ongoing cost would be
significantly less than the initial startup cost; however, to be
conservative, we estimate that the annual ongoing cost for 65 broker-
dealers would be the same as the startup estimate of $6,240,000 per
year. The Commission welcomes comments on the reasonableness of these
estimates.
---------------------------------------------------------------------------

    \63\ See supra Section V.D.1.
    \64\ As stated previously, the Commission estimates that 5% of
all broker-dealers will require development of a system from
scratch. See supra note 49. The Commission believes that a total of
65 broker-dealers is a reasonable estimate here.
    \65\ 65 broker-dealers x $96,000 (annual cost for a startup
contract with a third-party technology provider or service bureau) =
$6,240,000.
---------------------------------------------------------------------------

2. Legal and Compliance
    Like today, a broker or dealer would be obligated to comply with
all applicable regulatory requirements such as exchange trading rules
relating to special order types, trading halts, odd-lot orders, SEC
rules under Regulation SHO and Regulation NMS, and applicable margin
requirements. Accordingly, the Commission believes that the overall
cost increase associated with developing and maintaining compliance
policies and procedures is not expected to be significant because the
proposed rule may be substantially satisfied by existing risk
management controls and supervisory procedures already implemented by
brokers-dealer that conduct proprietary trading, traditional brokerage
activities, direct market access, and sponsored access. Therefore, many
of the financial and regulatory risk management controls specified in
the proposed rule--such as prevention of trading restricted products,
or setting of trade limits--should already be in place and should not
require significant additional expenditure of resources.
    The Commission estimates that the initial cost for a broker or
dealer to comply with the proposed requirement to establish, document,
and maintain compliance policies and supervisory procedures would be
approximately $28,200 per broker-dealer, or $36.5 million for 1,295
broker-dealers. Specifically, the costs for setting credit and capital
thresholds would be approximately $2,640; \66\ and the modification or
establishment of applicable compliance policies and procedures would be
approximately $25,555 per broker-dealer.\67\
---------------------------------------------------------------------------

    \66\ The Commission estimates that one compliance attorney and
one compliance manager would each require 5 hours, for a total
initial burden of 10 hours. See supra Section V.B.2. The total
initial cost for staff is estimated to be 5 hours x $270 (hourly
wage for a compliance attorney) + 5 hours x $258 (hourly wage for a
compliance manager) = $2,640.
     The $270 and $258 per hour estimates for a compliance attorney
and compliance manager, respectively, is from SIFMA's Office
Salaries in the Securities Industry 2008, modified by Commission
staff to account for an 1,800-hour work-year and multiplied by 5.35
to account for bonuses, firm size, employee benefits and overhead.
    \67\ The Commission estimates that one compliance attorney and
one compliance manager would each require 10 hours, while the Chief
Executive Officer would require 5 hours, for a total initial burden
of 25 hours. See supra Section V.B.2. The total initial cost for
staff is estimated to be 10 hours x $270 (hourly wage for a
compliance attorney) + 10 hours x $258 (hourly wage for a compliance
manager) + 5 hours x $4,055 (hourly wage for a Chief Executive
Officer) = $25,555.
     The $270 and $258 per hour estimates for a compliance attorney
and compliance manager, respectively, is from SIFMA's Office
Salaries in the Securities Industry 2008, modified by Commission
staff to account for an 1,800-hour work-year and multiplied by 5.35
to account for bonuses, firm size, employee benefits and overhead.
The $4,055 per hour figure for a broker-dealer Chief Executive
Officer comes from the median of June 2008 Large Bank Executive
Compensation data from TheCorporateLibrary.com, divided by 1800
hours per work-year. We invite comments on whether large bank Chief
Executive Officer total compensation is an appropriate proxy for
broker-dealer Chief Executive Officer total compensation.
---------------------------------------------------------------------------

    The Commission further estimates that the costs of the annual
review, modification of applicable compliance policies and supervisory
procedures, and preservation of such records would be approximately
$30,800 per broker-dealer, or $39.9 million for 1,295 broker-dealers.
Specifically, compliance attorneys who review, document, and update
written compliance policies and procedures would cost an estimated
$5,400 per year; \68\ a compliance manager who reviews, documents, and
updates written compliance policies and procedures is expected to cost
$5,160; \69\ and the Chief Executive Officer, who certifies the
policies and procedures, would cost $20,275.\70\
---------------------------------------------------------------------------

    \68\ 20 hours (total annual ongoing compliance hourly burden for
a compliance attorney) x $270 (hourly wage for a compliance
attorney) = $5,400. The $270 per hour estimate for a compliance
attorney is from SIFMA's Office Salaries in the Securities Industry
2008, modified by Commission staff to account for an 1,800-hour
work-year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.
    \69\ 20 hours (total annual ongoing compliance hourly burden for
a compliance manager) x $258 (hourly wage for a compliance manager)
= $5,160. The $258 per hour estimate for a compliance manager is
from SIFMA's Office Salaries in the Securities Industry 2008,
modified by Commission staff to account for an 1,800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
    \70\ 5 hours (total annual ongoing compliance hourly burden for
a Chief Executive Officer) x $4,055 (hourly wage for a Chief
Executive Officer) = $20,275. The $4,055 per hour figure for a
broker-dealer Chief Executive Officer comes from the median of June
2008 Large Bank Executive Compensation data from
TheCorporateLibrary.com, divided by 1800 hours per work-year. We
invite comments on whether large bank Chief Executive Officer total
compensation is an appropriate proxy for broker-dealer Chief
Executive Officer total compensation.
---------------------------------------------------------------------------

    The Commission believes that the ongoing legal and compliance
obligations under the proposed rule would be handled internally because
compliance with these obligations is consistent with the type of work
that a broker-dealer typically handles internally. The Commission does
not believe that a broker-dealer would likely have any recurring
external costs associated with legal and compliance obligations.
3. Total Cost
    The Commission believes that this proposed rule would have its
greatest impact on broker-dealers that provide ``naked'' access, and
that the majority of broker-dealers with market access are likely to be
able to substantially satisfy the requirements of the proposed rule
change with much of their current existing risk management controls and
supervisory procedures. However, for broker-dealers that would need to
develop or substantially upgrade their systems the cost would vary
considerably.
    We note that the potential range of costs would vary considerably,
depending upon the needs of the broker-dealer and its current risk
management controls and supervisory procedures. For example, the
Commission estimates that if 65 broker-dealers build risk management
systems from scratch and modify their compliance procedures
accordingly, the total initial cost could be approximately as much as
$19.4 million. The cost to build the risk control management systems
would be $17.6 million for 65 broker-dealers,\71\ while the cost to
initially develop or modify compliance procedures for the same would be
approximately $28,200 per broker-dealer,\72\ or $1,833,000 for 65
broker-dealers. The total initial cost to build systems from scratch is
thus estimated to be approximately $19.4 million.
---------------------------------------------------------------------------

    \71\ See supra Section VI.B.1.
    \72\ See supra Section VI.B.2.
---------------------------------------------------------------------------

    By contrast, the Commission estimates that if the remaining 1,230
broker-dealers would upgrade their pre-existing risk control management
systems and modify their compliance procedures accordingly, the total
initial cost would be approximately as much as $83.3 million. The cost
to upgrade the risk control management systems would be $48.6 million
for 1,230 broker-dealers,\73\ while the cost to initially develop or
modify compliance procedures for the same would be approximately
$28,200 per broker-dealer,\74\ or $34.7 million for 1,230 broker-
dealers. The total initial cost is

thus estimated to be approximately $83.3 million.
---------------------------------------------------------------------------

    \73\ See supra Section VI.B.1.
    \74\ See supra Section VI.B.2.
---------------------------------------------------------------------------

    The total annual initial cost for 1,295 broker-dealers is estimated
to be approximately $102.6 million.\75\
---------------------------------------------------------------------------

    \75\ $19.4 million (initial cost for 65 broker-dealers building
a system from scratch) + $83.3 million (initial cost for 1,230
broker-dealers upgrading pre-existing systems) = approximately
$102.6 million.
---------------------------------------------------------------------------

    The total annual ongoing cost for 1,295 broker-dealers to maintain
a risk management control system and annual review and modification of
applicable compliance policies and procedures could be approximately as
much as $101.1 million. The annual technology cost to maintain a risk
management control system would be approximately $47,300 per broker-
dealer,\76\ or $61.3 million for 1,295 broker-dealers, while the cost
for annual review and modification of applicable compliance policies
and procedures would be approximately $30,800 per broker-dealer,\77\ or
$39.9 million for 1,295 broker-dealers. The total annual ongoing cost
is estimated to be approximately $101.1 million.
---------------------------------------------------------------------------

    \76\ See supra note 62.
    \77\ See supra notes 68, 69, and 70.
---------------------------------------------------------------------------

    The estimates of the initial and annual burdens are based on
discussions with industry participants. The Commission welcomes
comments on these estimates.
    Based on discussions with industry participants, the Commission is
aware that, if the Commission were to adopt the proposed rule, there is
a potential for latency, ranging approximately from 200 to 500
microseconds, for orders that currently route to exchanges or ATSs via
``naked'' access arrangements. The Commission however preliminarily
believes that the potential costs associated with the elimination of
``unfiltered'' access, including the potential for latency, are
justified by the overall benefit to the U.S. markets. We solicit
comment on the Commission's view. Would the controls imposed by the
rule substantially increase latency? To what extent would broker-
dealers have greater incentives to reduce any such latency? Would
broker-dealers incur additional costs in reducing any such latency?
What would be the costs to market participants of any additional
latency? Can these costs be quantified?
    The Commission is also aware that some broker-dealers may benefit
from offering sponsored access because they receive volume discounts
offered by exchanges and other market centers due to the trades entered
under the broker-dealer's MPID or otherwise. How much would the
proposed rules affect the volume discounts enjoyed by broker-dealers?
Would this effect differ across broker-dealers? What characteristics
impact a broker-dealer's reliance on sponsored access for these volume
discounts? How would any effect alter a broker-dealer's business? Can
any such costs be quantified?
    The Commission seeks comment on any other potential costs to
brokers or dealers that may result from the proposed rule. While the
Commission does not anticipate that there would be significant adverse
consequences to a broker or dealer's business, activities, or financial
condition as a result of the proposed rule, it seeks commenters' views
regarding the possibility of any such impact. For instance, would the
proposed rule impact a broker or dealer's ability to attract or retain
its market access customers? Could a broker or dealer lose order flow,
because its customer might seek other arrangements in order to access
the securities markets, such as becoming a member of a particular
exchange or becoming a broker or dealer? The Commission requests for
commenters to quantify those costs, where possible.
    The Commission preliminarily believes that any additional burden or
costs on brokers and dealers who provide market access as a result of
the proposed amendments would be justified by the improved market
security to brokers, dealers, market participants, the self-regulatory
organizations, and the public generally, all of which contribute to
investor protection and market integrity. To assist the Commission in
evaluating the costs that could result from the proposed rule, the
Commission requests comments on the potential costs identified in this
proposal, as well as any other costs that could result from the
proposed rule. In particular, comments are requested on whether there
are costs to any entity not identified above. Commenters should provide
analysis and data to support their views on the costs. In particular,
the Commission requests comment on the costs of the proposed rule on
brokers, dealers, market participants, self-regulatory organizations,
as well as any costs on others, including the investor public.
    The Commission also requests comment on the following: Would the
proposed rule impair the ability of market participants that currently
rely on ``unfiltered'' access to compete? Would the proposed rule have
any unintended, negative consequences for the U.S. markets? Would the
proposed rule decrease the propensity of market participants that
currently rely on ``unfiltered'' access to provide liquidity to the
U.S. markets? Would the proposed rule stifle or impact certain trading
strategies that may add value to the market? Would the proposed rule
limit price discovery mechanisms?

VII. Consideration of Burden on Competition, and Promotion of
Efficiency, Competition and Capital Formation

    Section 3(f) of the Exchange Act \78\ requires the Commission,
whenever it engages in rulemaking and is required to consider or
determine whether an action is necessary or appropriate in the public
interest, to consider, in addition to the protection of investors,
whether the action would promote efficiency, competition, and capital
formation. In addition, Section 23(a)(2) of the Exchange Act \79\
requires the Commission, when making rules under the Exchange Act, to
consider the impact of such rules on competition. Section 23(a)(2) also
prohibits the Commission from adopting any rule that would impose a
burden on competition not necessary or appropriate in furtherance of
the purposes of the Exchange Act.
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 78c(f).
    \79\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

A. Competition

    We consider in turn the impacts of Proposed Rule 15c3-5 on the
market center and broker-dealer industries. Information provided by
market centers and broker-dealers in their registrations and filings
with us and with FINRA informs our views on the structure of the
markets in these industries. We begin our consideration of potential
competitive impacts with observations of the current structure of these
markets.
    The broker-dealer industry, including market makers, is a highly
competitive industry, with most trading activity concentrated among
several dozen large participants and with thousands of small
participants competing for niche or regional segments of the market.
    There are approximately 5,178 registered broker-dealers, of which
890 are small broker-dealers.\80\ The Commission estimates that 1,295
brokers or dealers would have market access as defined under the
proposed rule.\81\ Of these 1,295 brokers or dealers, the Commission
estimates that approximately 21 of those were small broker-dealers. To
limit costs and make business more viable, small broker-

dealers often contract with larger broker-dealers to handle certain
functions, such as clearing and execution, or to update their
technology. Larger broker-dealers typically enjoy economies of scale
over small broker-dealers and compete with each other to service the
small broker-dealers, who are both their competitors and their
customers.
---------------------------------------------------------------------------

    \80\ These numbers are based on the Commission's staff review of
2007 and 2008 FOCUS Report filings reflecting registered broker-
dealers, and discussions with SRO staff. The number does not include
broker-dealers that are delinquent on FOCUS Report filings.
    \81\ See supra note 33.
---------------------------------------------------------------------------

    Proposed Rule 15c3-5 is intended to address a broker-dealer's
obligations generally with respect to market access risk management
controls across markets, to prohibit the practice of ``unfiltered'' or
``naked'' access to an exchange or an ATS where customer order flow
does not pass through the broker-dealer's systems or filters prior or
to entry on an exchange or ATS, and to provide uniform standards that
would be interpreted and enforced in a consistent manner. Such proposed
requirements may promote competition by establishing a level playing
field for broker-dealers in market access, in that each broker or
dealer would be subject to the same requirements in providing access.
    The proposed rule would require brokers or dealers that offer
market access, including those providing sponsored or direct market
access to customers, to implement appropriate risk management controls
and supervisory procedures to manage the financial and regulatory risks
of this business activity. As noted above, we expect there to be costs
of implementing and monitoring these systems. However, we do not
believe that these costs will create or increase any burdens of entry
into the broker-dealer industry.
    The Commission seeks comment on whether or how the proposed rule
would affect the competitive landscape in the broker-dealer industry
and on whether or how the proposed rule might create new barriers to
entry or increase existing barriers to entry in the broker-dealer
industry.
    The costs to implement appropriate risk management controls and
supervisory procedures to manage the financial and regulatory risks may
disproportionately impact small- or medium-sized broker-dealers. In
particular, the costs of instituting such controls and procedures could
be a larger portion of revenues for small- and medium-sized broker-
dealers than for larger broker dealers. In addition, to the extent that
the cost of obtaining sponsored access increases, the increases could
be a larger portion of the revenues of small and medium-sized broker-
dealers. This could impair the ability of small- and medium-sized
broker-dealers to compete for order routing business with larger firms,
limiting choice and incentives for innovation in the broker dealers
industry. However, the effect on smaller broker-dealers could be
mitigated, to some extent, by purchasing a risk management solution
from a third-party vendor.
    We do not believe that the proposed rule will alter the competitive
landscape in the competition between large broker-dealers and small and
medium broker-dealers. However, we request comment on the following
questions:
    How common is it for smaller broker-dealers to offer sponsored
access or direct market access? If smaller broker-dealers provide this
service, would costs of implementing and complying with the proposed
rule be particularly burdensome for them? Could the proposed rule
impair the ability of small- and medium-sized broker-dealers to compete
for order routing business with larger firms, limiting choice and
incentives for innovation in the broker-dealer industry, because it
would not be cost effective for them to implement the required risk
management controls and supervisory procedures?
    How common is it for smaller broker-dealers to be the sponsored
participants for larger broker-dealers? If this is common, would the
rule affect the ability of these smaller broker-dealers to access
markets? If so, in what ways and to what extent? How would any such
effects impact the securities markets more generally? If it is common
for smaller broker-dealers to offer or purchase market access, would
the rule adversely affect the ability of smaller broker-dealers to
compete or the level of service that they can provide to their
customers?
    Would the Proposed Rule 15c3-5 create vertical integration in the
industry, by inducing large customers (non-members) to acquire and
integrate with broker-dealers? Would this potential outcome have an
impact on competition in the industry?
    What are the types of customers who use sponsored access or direct
market access? Would this rule affect the competitive landscape for any
of these customer types? Would the rule affect the competitive
landscape for any other market participants, including market makers?
    In addition, the Commission is mindful of a potential race-to-the-
bottom issue in which broker-dealers competing for sponsored access or
direct market access clients with low prices will skimp on spending for
risk controls. Will the proposed rule help to halt or encourage such a
``race to the bottom''?
    The trading industry is a highly competitive one, characterized by
ease of entry. In fact, the intensity of competition across trading
platforms in this industry has increased dramatically in the past
decade as a result of market reforms and technological advances. This
increase in competition has resulted in substantial decreases in market
concentration, effective competition for the securities exchanges, a
proliferation of trading platforms competing for order flow, and
significant decreases in trading fees. The low barriers to entry for
equity trading venues are shown by new entities, primarily ATSs,
continuing to enter the market. Currently, there are approximately 50
registered ATSs that trade equity securities. In addition, the
Commission within the past few years has approved applications by two
entities--BATS and Nasdaq--to become registered as national securities
exchanges for trading equities, and approved proposed rule changes by
two existing exchanges--ISE and CBOE--to add equity trading facilities
to their existing options business. We believe that competition among
trading centers has been facilitated by Rule 611 of Regulation NMS,\82\
which encourages quote-based competition between trading centers; Rule
605 of Regulation NMS,\83\ which empowers investors and broker-dealers
to compare execution quality statistics across trading centers; and
Rule 606 of Regulation NMS,\84\ which enables customers to monitor
order routing practices.
---------------------------------------------------------------------------

    \82\ 17 CFR 242.611.
    \83\ 17 CFR 242.605.
    \84\ 17 CFR 242.606.
---------------------------------------------------------------------------

    Market centers compete with each other in several ways. National
exchanges compete to list securities; market centers compete to attract
order flow to facilitate executions; and market centers compete to
offer access to their markets to members or subscribers. In this last
area of competition, one could argue that the ability to access a
market through sponsored access or direct market access could
substitute for becoming a member or subscriber. Of course, there are
both benefits and responsibilities in being a member or subscriber that
do not accrue directly to someone using sponsored access or direct
market access. Nonetheless, to the extent that these forms of market
access are substitutes for membership, an increase in the costs of
sponsored access or direct market access may make a potential member
more likely to decide to become a member or subscriber. At the same
time, market centers may reduce the cost of access to members or

subscribers in order to attract trading flow to their venue.
    We request comment on the following questions: Would the Proposed
Rule 15c3-5 modify the competition among market centers and broker-
dealers to obtain members or offer sponsored access? What are the
benefits of being a member or subscriber to a market center that would
not be available to someone with sponsored access or direct market
access? Would the proposed rule increase or decrease the propensity of
broker-dealers and others to become members or subscribers? Would the
proposed rule increase or decrease the propensity of non-broker-dealer
market participants to register to become broker-dealers? How would the
proposed rule affect overall access to markets? Would the proposed rule
affect any other type of competition between market centers?

B. Capital Formation

    The Commission believes that the proposed rule would have a minimal
impact on the promotion of capital formation. We request comment on the
following questions: By requiring financial and regulatory controls to
be implemented on a market-wide basis to reduce the risks faced by
broker-dealers, and by prohibiting ``unfiltered'' or ``naked'' access,
would Proposed Rule 15c3-5 promote capital formation? If so, to what
extent? Would the proposed rule promote investor protection, which
could, in turn, make investors more willing to invest and promote
capital formation? Are there any other impacts of the proposed rule on
capital formation? To the extent that the proposed requirements impact
trading strategies or other behavior, how might that impact capital
formation?

C. Efficiency

    By proposing to address broker-dealer obligations with respect to
market access risk controls across markets, and by having the effect of
prohibiting ``unfiltered'' or ``naked'' access, the proposed rule would
provide uniform standards that would be interpreted and enforced in a
consistent manner. Proposed Rule 15c3-5 would help to facilitate and
maintain stability in the markets and help ensure that they function
efficiently.
    In recent years, the development and growth of automated electronic
trading has allowed ever increasing volumes of securities transactions
across the multitude of trading centers that constitute the U.S.
national market system. The Commission believes that the risk
management controls and procedures that brokers and dealers would be
required to include as part of their compliance systems should prevent
erroneous and unintended trades from occurring and thereby contribute
to overall market efficiency.
    While the Commission has consistently sought to encourage
innovations that enhance the efficiency and quality of the markets, it
also must assure that the regulatory framework keeps pace with market
developments so that emerging risks are effectively addressed. The
Commission believes that safer transactions--and the anticipated
increased confidence in the markets--should promote greater efficiency
in the long run. The Commission is aware of concerns that pre-trade
controls potentially could slow down the speed of order routing and the
incorporation of information into prices, but the Commission notes that
such concerns should be balanced against the Commission's goals, as
mandated by the Exchange Act, including to promote the integrity of the
markets and investor protection. We request comment on the following
questions:
    How would Proposed Rule 15c3-5 affect price efficiency? Would pre-
trade reviews limit unlawful or erroneous trading? To what extent would
limits on erroneous trading improve price efficiency? To what extent
would the pre-trade reviews reveal other trading that could affect
price efficiency? To what extent would the controls imposed by the rule
create latency that can slow the incorporation of information into
prices? To what extent would broker-dealers have greater incentives to
reduce any such latency?

VIII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \85\ the Commission must advise OMB as to
whether the proposed regulation constitutes a ``major'' rule. Under
SBREFA, a rule is considered ``major'' where, if adopted, it results or
is likely to result in: (1) An annual effect on the economy of $100
million or more (either in the form of an increase or a decrease); (2)
a major increase in costs or prices for consumers or individual
industries; or (3) significant adverse effect on competition,
investment or innovation. If a rule is ``major,'' its effectiveness
will generally be delayed for 60 days pending Congressional review.
---------------------------------------------------------------------------

    \85\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996) (codified
in various sections of 5 U.S.C., 15 U.S.C. and as a note to 5 U.S.C.
601).
---------------------------------------------------------------------------

    The Commission requests comment on the potential impact of the
proposed rule on the economy on an annual basis, on the costs or prices
for consumers or individual industries, and on competition, investment
or innovation. Commenters are requested to provide empirical data and
other factual support for their view to the extent possible.

IX. Initial Regulatory Flexibility Analysis

    The Commission has prepared the following Initial Regulatory
Flexibility Analysis (``IRFA''), in accordance with the provisions of
the Regulatory Flexibility Act (``RFA''),\86\ regarding proposed new
Rule 15c3-5 under the Securities Exchange Act of 1934.
---------------------------------------------------------------------------

    \86\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

A. Reasons for the Proposed Action

    Over the past decade, the proliferation of sophisticated, high-
speed trading technology has changed the way broker-dealers trade for
their accounts and as an agent for their customers. Current SRO rules
and interpretations governing electronic access to markets have sought
to address the risks of this activity. However, the Commission
preliminarily believes that more comprehensive standards that apply
consistently across the markets are needed to effectively manage the
financial, regulatory, and other risks, such as legal and operational
risks, associated with market access.
    The Commission notes that these risks are present whenever a
broker-dealer trades as a member of an exchange or subscriber to an
ATS, whether for its own proprietary account or as agent for its
customers, including traditional agency brokerage and through direct
market access or sponsored access arrangements. For this reason,
proposed new Rule 15c3-5 is drafted broadly to cover all forms of
access to trading on an exchange or ATS provided directly by a broker-
dealer. The Commission believes a broker-dealer with market access
should assure the same basic types of controls are in place whenever it
uses its special position as a member of an exchange, or subscriber to
an ATS, to access those markets. The Commission, however, is
particularly concerned about the quality of broker-dealer risk controls
in sponsored access arrangements, where the customer order flow does
not pass through the broker-dealer's systems prior to entry on an
exchange or ATS.

B. Objectives

    Proposed Rule 15c3-5 would apply to any broker or dealer that has
access to

trading in securities on an exchange or ATS as a result of being a
member or subscriber of the exchange or ATS, respectively. As noted
above, the proposed rule would include not only direct market access or
sponsored access services offered to customers of broker-dealers, but
also access to trading for the proprietary account of the broker-dealer
and for more traditional agency activities. The Commission believes
that any broker-dealer with market access should establish effective
risk management controls to protect against breaches of credit or
capital limits, erroneous trades, violations of SEC or exchange trading
rules, and the like.
    Proposed Rule 15c3-5 would require a broker or dealer with market
access, or that provides a customer or any other person with access to
an exchange or ATS through use of its MPID or otherwise, to establish,
document, and maintain a system of risk management controls and
supervisory procedures reasonably designed to manage the financial,
regulatory, and other risks related to market access. The proposed rule
would apply to trading in all securities on an exchange or ATS,
including equities, options, exchange-traded funds, and debt
securities. Specifically, the proposed rule would require that brokers
or dealers with access to trading securities on an exchange or ATS, as
a result of being a member or subscriber thereof, establish, document,
and maintain a system of risk management controls and supervisory
procedures that, among other things, are reasonably designed to (1)
systematically limit the financial exposure of the broker or dealer
that could arise as a result of market access, and (2) ensure
compliance with all regulatory requirements that are applicable in
connection with market access.
    The required financial risk management controls would be required
to be reasonably designed to prevent the entry of orders that exceed
appropriate pre-set credit or capital thresholds, or that appear to be
erroneous. The required regulatory risk management controls and
supervisory procedures would also be required to be reasonably designed
to prevent the entry of orders that fail to comply with any regulatory
requirements that must be satisfied on a pre-order entry basis, prevent
the entry of orders that the broker-dealer or customer is restricted
from trading, restrict market access technology and systems to
authorized persons, and assure appropriate surveillance personnel
receive immediate post-trade execution reports. For example, such
systems would block orders that do not comply with exchange trading
rules relating to special order types and odd-lot orders, among others.
    The proposed requirement that a broker-dealer's financial and
regulatory risk management controls and procedures be reasonably
designed to prevent the entry of orders that fail to comply with the
specified conditions would necessarily require the controls be applied
on an automated, pre-trade basis before orders route to an exchange or
ATS, thereby effectively prohibiting the practice of ``unfiltered'' or
``naked'' access to an exchange or ATS.
    The risk management controls and supervisory procedures required by
proposed Rule 15c3-5 must be under the direct and exclusive control of
the broker or dealer with market access. This provision is designed to
eliminate the practice, which the Commission understands exists today
under current SRO rules, whereby the broker-dealer providing market
access relies on its customer, a third party service provider, or
others, to establish and maintain the applicable risk controls. The
Commission believes the risks presented by market access--and in
particular ``naked'' access--are too great to permit a broker-dealer to
delegate the power to control those risks to the customer or to a third
party, either of whom may be an unregulated entity.

C. Legal Basis

    Pursuant to the Exchange Act and particularly, Sections 2, 3(b),
11A, 15, 17(a) and (b), and 23(a) thereof, 15 U.S.C. 78b, 78c(b), 78k-
1, 78o, 78q(a) and (b), and 78w(a), the Commission is proposing new
Rule 15c3-5.

D. Small Entities Subject to the Rule

    For purposes of Commission rulemaking in connection with the RFA, a
broker-dealer is a small business if its total capital (net worth plus
subordinated liabilities) on the last day of its most recent fiscal
year was $500,000 or less, and is not affiliated with any entity that
is not a ``small business.'' \87\ The Commission staff estimates that
at year-end 2008 there were 1,095 broker or dealers which were members
of an exchange, and 21 of those were classified as ``small
businesses.'' \88\ In addition, the Commission estimates that there
were 200 brokers or dealers that were subscribers to ATSs but not
members of an exchange.\89\ The Commission estimates that, of those 200
brokers or dealers, only a small number would be classified as ``small
businesses.''
---------------------------------------------------------------------------

    \87\ 17 CFR 240.0-10(c).
    \88\ See supra note 33.
    \89\ Id.
---------------------------------------------------------------------------

    Currently, most small brokers or dealers, when accessing an
exchange or ATS in the ordinary course of their business, should
already have risk management controls and supervisory procedures in
place. The extent to which such small brokers or dealers would be
affected economically under the proposed rule would depend
significantly on the financial and regulatory risk management controls
that already exist in the broker or dealer's system, as well as the
nature of the broker or dealer's business. In many cases, the proposed
rule may be substantially satisfied by a small broker-dealer's pre-
existing financial and regulatory risk management controls and current
supervisory procedures. Further, staff discussions with various
industry participants indicated that very few, if any, small broker-
dealers with market access provide other persons with ``unfiltered''
access, which may require more significant systems upgrades to comply
with the proposed rule. Therefore, these brokers or dealers should only
require limited updates to their systems to meet the requisite risk
management controls and other requirements in the proposed rule. The
proposed rule also would impact small brokers or dealers that utilize
risk management technology provided by a vendor or some other third
party; however, the proposed requirement to directly monitor the
operation of the financial and regulatory risk management controls
should not impose a significant cost or burden because the Commission
understands that such technology allows the broker or dealer to
exclusively manage such controls.\90\
---------------------------------------------------------------------------

    \90\ The Commission's understanding is based on discussions with
various industry participants.
---------------------------------------------------------------------------

E. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed rule would require brokers or dealers to establish,
document, and maintain certain risk management controls and supervisory
procedures as well as regularly review such controls and procedures,
and document the review, and remediate issues discovered to assure
overall effectiveness of such controls and procedures. Each such broker
or dealer would be required to preserve a copy of its supervisory
procedures and a written description of its risk management controls as
part of its books and records in a manner consistent with Rule 17a-
4(e)(7) under the Exchange Act. Such regular review would be required
to be conducted in accordance with written

procedures and would be required to be documented. The broker or dealer
would be required to preserve a copy of such written procedures, and
documentation of each such review, as part of its books and records in
a manner consistent with Rule 17a-4(e)(7) under the Exchange Act, and
Rule 17a-4(b) under the Exchange Act, respectively.
    In addition, the Chief Executive Officer (or equivalent officer)
would be required to certify annually that the broker or dealer's risk
management controls and supervisory procedures comply with the proposed
rule, and that the broker-dealer conducted such review. Such
certifications would be required to be preserved by the broker or
dealer as part of its books and records in a manner consistent with
Rule 17a-4(b) under the Exchange Act. Most small brokers or dealers
currently should already have supervisory procedures and record
retention systems in place. The proposed rule would require small
brokers or dealers to update their procedures and perform additional
internal compliance functions. Based on discussions with industry
participants and the Commission's prior experience with broker-dealers,
the Commission estimates that implementation of a regular review,
modification of applicable compliance policies and procedures, and
preservation of such records would require, on average, 45 hours of
compliance staff time for brokers or dealers depending on their
business model.\91\ The Commission believes that the business models of
small brokers or dealers would necessitate less than the average of 45
hours. We request comments on these estimates.
---------------------------------------------------------------------------

    \91\ See supra Section V.D.2.
---------------------------------------------------------------------------

F. Duplicative, Overlapping, or Conflicting Federal Rules

    The Commission believes that there are no Federal rules that
duplicate, overlap, or conflict with the proposed rule amendments and
the proposed new rule.

G. Significant Alternatives

    Pursuant to Section 3(a) of the Regulatory Flexibility Act,\92\ the
Commission must consider certain types of alternatives, including: (1)
The establishment of differing compliance or recording requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for small
entities; (3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part of the rule,
for small entities.
---------------------------------------------------------------------------

    \92\ 5 U.S.C. 603(c).
---------------------------------------------------------------------------

    The Commission considered whether it would be necessary or
appropriate to establish different compliance or reporting requirements
or timetables; or to clarify, consolidate, or simplify compliance and
reporting requirements under the rule for small entities. Because the
proposed rule is designed to mitigate, as discussed in detail
throughout this release, significant financial and regulatory risks,
the Commission preliminarily believes that small entities should be
covered by the rule. The proposed rule includes performance standards.
The Commission also preliminarily believes that the proposed rule is
flexible enough for small brokers and dealers to comply with the
proposed rule without the need for the establishment of differing
compliance or reporting requirements for small entities, or exempting
them from the proposed rule's requirements.

H. Request for Comments

    The Commission encourages written comments on matters discussed in
this IRFA. In particular, the Commission seeks comment on the number of
small entities that would be affected by the proposed new rule, and
whether the effect on small entities would be economically significant.
Commenters are asked to describe the nature of any impact on small
entities, including broker-dealers or other small businesses or small
organizations, and provide empirical data to support their views.

X. Statutory Authority

    Pursuant to the Exchange Act and particularly, Sections 2, 3(b),
11A, 15, 17(a) and (b), and 23(a) thereof, 15 U.S.C. 78b, 78c(b), 78k-
1, 78o, 78q(a) and (b), and 78w(a), the Commission proposes a new Rule
15c3-5 under the Exchange Act that would require broker-dealers with
market access, or that provide a customer or any other person with
market access through use of its market participant identifier or
otherwise, to establish appropriate risk management controls and
supervisory systems.

XI. Text of Proposed Rule

List of Subjects in 17 CFR Part 240

    Brokers, Reporting and recordkeeping requirements, Securities.

    For the reasons set out in the preamble, 17 CFR Part 240 is
proposed to be amended as follows.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    1. The authority citation for Part 240 continues to read in part as
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4,
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise
noted.
* * * * *
    2. Section 240.15c3-5 is added to read as follows:

Sec.  240.15c3-5  Risk management controls for brokers or dealers with
market access.

    (a) For the purpose of this section:
    (1) The term market access shall mean access to trading in
securities on an exchange or alternative trading system as a result of
being a member or subscriber of the exchange or alternative trading
system, respectively.
    (2) The term regulatory requirements shall mean all Federal
securities laws, rules and regulations, and rules of self-regulatory
organizations, that are applicable in connection with market access.
    (b) A broker or dealer with market access, or that provides a
customer or any other person with access to an exchange or alternative
trading system through use of its market participant identifier or
otherwise, shall establish, document, and maintain a system of risk
management controls and supervisory procedures reasonably designed to
manage the financial, regulatory, and other risks of this business
activity. Such broker or dealer shall preserve a copy of its
supervisory procedures and a written description of its risk management
controls as part of its books and records in a manner consistent with
Sec.  240.17a-4(e)(7).
    (c) The risk management controls and supervisory procedures
required by paragraph (b) of this section shall include the following
elements:
    (1) Financial risk management controls and supervisory procedures.
The risk management controls and supervisory procedures shall be
reasonably designed to systematically limit the financial exposure of
the broker or dealer that could arise as a result of market access,
including being reasonably designed to:
    (i) Prevent the entry of orders that exceed appropriate pre-set
credit or capital thresholds in the aggregate for each customer and the
broker or dealer and, where appropriate, more finely-tuned by sector,
security, or otherwise

by rejecting orders if such orders would exceed the applicable credit
or capital thresholds; and
    (ii) Prevent the entry of erroneous orders, by rejecting orders
that exceed appropriate price or size parameters, on an order-by-order
basis or over a short period of time, or that indicate duplicative
orders.
    (2) Regulatory risk management controls and supervisory procedures.
The risk management controls and supervisory procedures shall be
reasonably designed to ensure compliance with all regulatory
requirements, including being reasonably designed to:
    (i) Prevent the entry of orders unless there has been compliance
with all regulatory requirements that must be satisfied on a pre-order
entry basis;
    (ii) Prevent the entry of orders for securities for a broker or
dealer, customer, or other person if such person is restricted from
trading those securities;
    (iii) Restrict access to trading systems and technology that
provide market access to permit access only to persons and accounts
pre-approved and authorized by the broker or dealer; and
    (iv) Assure that appropriate surveillance personnel receive
immediate post-trade execution reports that result from market access.
    (d) The financial and regulatory risk management controls and
supervisory procedures described in paragraph (c) of this section shall
be under the direct and exclusive control of the broker or dealer that
is subject to paragraph (b) of this section.
    (e) A broker or dealer that is subject to paragraph (b) of this
section shall establish, document, and maintain a system for regularly
reviewing the effectiveness of the risk management controls and
supervisory procedures required by paragraphs (b) and (c) of this
section and for promptly addressing any issues.
    (1) Among other things, the broker or dealer shall review, no less
frequently than annually, the business activity of the broker or dealer
in connection with market access to assure the overall effectiveness of
such risk management controls and supervisory procedures. Such review
shall be conducted in accordance with written procedures and shall be
documented. The broker or dealer shall preserve a copy of such written
procedures, and documentation of each such review, as part of its books
and records in a manner consistent with Sec.  240.17a-4(e)(7) and Sec.
240.17a-4(b), respectively.
    (2) The Chief Executive Officer (or equivalent officer) of the
broker or dealer shall, on an annual basis, certify that such risk
management controls and supervisory procedures comply with paragraphs
(b) and (c) of this section, and that the broker or dealer conducted
such review, and such certifications shall be preserved by the broker
or dealer as part of its books and records in a manner consistent with
Sec.  240.17a-4(b).

    By the Commission.

     Dated: January 19, 2010.
Florence E. Harmon,
Deputy Secretary.

    Note: This Appendix to the Preamble will not appear in the Code
of Federal Regulation.

Appendix

A. Current SRO Guidance

    The New York Stock Exchange (``NYSE'') and the Financial
Industry Regulatory Authority (``FINRA'') (formerly known as the
National Association of Securities Dealers, Inc. (``NASD'')) \1\
have issued several Information Memoranda (``IM'') and Notices to
Members (``NTM''), respectively, that are designed to provide
guidance to their members that provide market access to customers.
The guidance provided by the NYSE and the NASD is primarily
advisory, as opposed to compulsory, and is similar in many respects.
As discussed in more detail below, both SROs emphasize the need for
members to implement and maintain internal procedures and controls
to manage the financial and regulatory risks associated with market
access, and recommend certain best practices.\2\
---------------------------------------------------------------------------

    \1\ In 2007, the NASD and the member-related functions of New
York Stock Exchange Regulation, Inc., the NYSE's regulatory
subsidiary, were consolidated. As part of this regulatory
consolidation, the NASD changed its name to FINRA. For clarity, this
release uses the term ``NASD'' to refer to matters that occurred
prior to the consolidation and the term ``FINRA'' to refer to
matters that occurred after the consolidation.
    \2\ The Commission notes that the collective NASD and NYSE
guidance described below now constitutes FINRA's current guidance on
market access.
---------------------------------------------------------------------------

1. NYSE Guidance

    In 1989, the NYSE first issued an IM to provide guidance for its
members that permitted customers to access the NYSE SuperDot
System.\3\ NYSE IM-89-6 stated that it was permissible for members
to receive electronic orders directly from their customers and re-
transmit those orders to the NYSE's SuperDot system, but that
members providing such access must satisfy all regulatory
requirements relating to those orders.\4\
---------------------------------------------------------------------------

    \3\ See NYSE IM-89-6 (January 25, 1989).
    \4\ The NYSE specifically referenced NYSE Rule 405 pertaining to
Diligence as to Accounts, and NYSE Rule 382, pertaining to Carrying
Agreements. The NYSE also stated that a member's ``know your
customer'' obligations had to be satisfied either through
conventional methods or through automated system parameters. In NYSE
IM-89-6, the NYSE required its members to provide a written
statement acknowledging their responsibility for electronic customer
orders retransmitted to the NYSE. Id.
---------------------------------------------------------------------------

    In 1992, the NYSE issued NYSE IM-92-15 \5\ which stated that
members should have written procedures and controls for the
monitoring and supervision of electronic orders, including those
that limit access to electronic order entry systems to authorized
users, validate order accuracy, and check the order against
established credit limits. The NYSE indicated that either the
customer or the member could establish the necessary controls, but
that the member would be ultimately responsible for maintaining and
implementing them. Later that year, NYSE IM-92-43,\6\ was issued and
stressed the importance of effective policies and procedures
designed to minimize errors associated with electronic order
entry.\7\
---------------------------------------------------------------------------

    \5\ NYSE IM-92-15 (May 28, 1992). In NYSE IM-92-15, the NYSE
recognized that the ``ongoing need to enhance efficiency and to
facilitate the swift and orderly processing and execution of orders
* * * [had] led to the development and increased usage of electronic
order routing systems by member organizations.'' However, the NYSE
also warned that while technological developments facilitated the
handling of a significantly higher order volume, it also increased
the prospect of order errors and concerns regarding sufficient
internal controls. Accordingly, the NYSE advised that internal
control procedures were important elements of any electronic trading
system and reaffirmed that members must adhere to certain regulatory
requirements and business practices when permitting access to
electronic order routing systems.
    \6\ NYSE IM-92-43 (December 29, 1992).
    \7\ NYSE IM-92-43 emphasized that the member was responsible for
assuring that control procedures, whether established by the
customer or the member, were reasonably expected to monitor and
supervise the entry of orders and minimize the potential for errors.
The NYSE also clarified that members should obtain and maintain, as
part of their books and records, a copy of their customer's written
control procedures pertaining to electronic order entry. If the
control procedures were established by the member, the customer
should sign an undertaking committing to adhere to them. The NYSE
also noted that built-in system checks, such as pre-set size and
dollar limits, were an alternative way to satisfy the control
requirements. Id.
---------------------------------------------------------------------------

    In 2002, NYSE IM-02-48 was issued to re-emphasize member
obligations related to the submission of electronic orders.\8\ The
NYSE noted that electronic order entry systems could lead to
increased market volatility and significant exposure to financial
risk for members, and thus members were required to have written
internal control and supervisory procedures addressing those risks.
The NYSE indicated that these should, at a minimum, incorporate
controls to: (1) Limit the use of the system to authorized persons;
(2) validate

order accuracy; (3) establish credit limits or systematically
prevent the transmission of orders exceeding preset credit or order
size parameters; and (4) monitor for duplicative orders. If a member
used a vendor's order entry system, the NYSE stressed that it was
the member's responsibility to ensure that the requisite controls
were in place. If relying on the customer's controls, members were
reminded that they had to obtain, for books and records purposes,
the customer's written control procedures and a written undertaking
to provide the member with written notification of any significant
changes to such procedures.
---------------------------------------------------------------------------

    \8\ NYSE IM-02-48 (November 7, 2002). NYSE noted that there were
a number of erroneous orders submitted via electronic order entry
systems as a result of human error or defective commercial or
proprietary software systems, and that the errors most commonly
involved an incorrect quantity of shares being submitted, or the
inadvertent release of files containing previously transmitted
orders. Moreover, the NYSE emphasized the need for safeguards to
prevent the disabling of the systemic controls or the system whether
the system was provided by the member, a vendor, the customer or
another third party. Id.
---------------------------------------------------------------------------

2. NASD Guidance

    The NASD offered its initial guidance on market access in 1998,
when it issued NASD NTM-98-66 \9\ to address a variety of issues for
NASD members to consider if they chose to allow customers to route
orders to Nasdaq through member systems.\10\ Among other things, the
NASD affirmed that members were responsible for honoring all
executions that occurred as a result of market access,\11\ and
should perform appropriate due diligence of customers for which they
offer this service.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 40354 (August 24,
1998), 63 FR 46264 (August 31, 1998) (NASD NTM-98-66).
    \10\ NASD NTM-98-66 elaborated on the NASD's April 1998 Nasdaq
interpretive letter regarding non-member access to SelectNet. In
particular, NASD expanded the discussion to address non-member
access to Nasdaq's Small Order Execution System (``SOES''). The
systems were discussed separately because SOES was an automatic
execution facility while SelectNet was an order-delivery facility.
Id.
    \11\ The NASD required its members to provide a letter to Nasdaq
acknowledging responsibility for non-member orders submitted through
the member's system. Id.
---------------------------------------------------------------------------

    The NASD also stated that members should have adequate written
procedures and controls to effectively monitor and supervise order
entry by customers. Specifically, the NASD indicated that members'
controls should address: (1) The entry of unauthorized orders; (2)
orders that exceed or attempt to exceed pre-set credit or other
parameters, such as order size, established by the member; (3)
potentially manipulative activity by electronic access customers;
(4) potential violations of affirmative determination requirements
\12\ and short-sale rules. More generally, NASD stated that members
should ensure compliance with SEC and NASD rules, and that
``whenever possible * * * controls should be automated and system
driven.'' \13\ Finally, the NASD required a signed agreement setting
forth the responsibilities of both the member and the non-member
customer with respect to the access arrangement.\14\
---------------------------------------------------------------------------

    \12\ Formerly, NASD Rule 3370(b)(2)(A) stated, in part, that
``[n]o member or person associated with a member shall accept a
`short' sale order for any customer * * * in any security unless the
member or person associated with a member makes an affirmative
determination that the member will receive delivery of the security
from the customer * * * or that the member can borrow the security
on behalf of the customer * * * for delivery by settlement date.''
See former NASD Rule 3370(b)(2)(A). In 2004, NASD Rule 3370(b) was
repealed because it was deemed to overlap with and be duplicative of
Rule 203 of Regulation SHO. See Securities Exchange Act Release No.
50822 (December 8, 2004), 69 FR 74554 (December 14, 2004) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change by
National Association of Securities Dealers, Inc. Relating to Repeal
of Existing NASD Short Sale Rules in Light of SEC Regulation SHO).
    \13\ The NASD also required that members provide a description
of the system that permitted a non-member's access to Nasdaq
execution facilities, including details on how orders were received
and re-transmitted, the system's security and capacity, the manner
that the system connected to Nasdaq, and any internal system
protocols designed to fulfill the member's ``know your customer''
obligations and other regulatory obligations. See supra note 10.
    \14\ Among other things, the agreement informed the customer of
its potential liability under Federal securities laws for any
illegal trading activity, and of NASD surveillance to detect any
illegal trading activity. Id.
---------------------------------------------------------------------------

    In 2004, in response to an increase in order entry errors by
non-member customers, NASD issued NTM-04-66 \15\ to remind members
of their responsibility for all orders entered under their MPID, and
that reasonable steps should be taken to address order entry
errors.\16\ The NASD advised that a member's supervisory system and
written supervisory procedures should be consistent with the NASD's
supervision rule, Rule 3010,\17\ and related guidance provided in a
variety of NTMs.\18\ The NASD further noted that members should
consider, when developing a supervisory system and written
supervisory procedures, controls that: (1) Limit the use of
electronic order entry systems to authorized persons; (2) check for
order accuracy; (3) prevent orders that exceed preset credit- and
order-size parameters from being transmitted to a trading system;
and (4) prevent the unwanted generation, cancellation, re-pricing,
resizing, duplication, or re-transmission of orders.\19\ Finally,
the NASD reminded members that it would closely examine the
supervisory systems and written supervisory procedures of members
with respect to the review and detection of potential order-entry
errors and, where appropriate, initiate disciplinary action against
firms and their supervisory personnel.
---------------------------------------------------------------------------

    \15\ NASD NTM-04-66 (September 2004).
    \16\ The NASD noted that order entry errors typically resulted
from mistakes in data entry or malfunctioning software. Id.
    \17\ NASD Rule 3010 has not yet been consolidated as a FINRA
rule; it is currently included in the FINRA Transitional Rulebook.
    \18\ See NASD NTMs 88-84 (November 1988), 89-34 (April 1989),
98-96 (December 1998), and 99-45 (June 1999). A FINRA Information
Notice, dated December 8, 2008, clarified that the NASD Rules
generally apply to all FINRA member firms.
    \19\ NASD further suggested members consider, among other
things, safeguards that ensure that the testing or maintenance of a
firm's trading system does not result in inadvertent errors. See
supra note 15.
---------------------------------------------------------------------------

B. Exchange Rules

    The exchanges each have adopted rules that, in general, permit
non-member ``sponsored participants'' to obtain direct access to the
exchange's trading facilities, so long as a sponsoring broker-dealer
that is a member of the exchange takes responsibility for the
sponsored participant's trading, and certain contractual commitments
are made.\20\ The required contractual commitments typically entail
agreements by the sponsored participant to: (1) Comply with exchange
rules as if it were a member; (2) provide the sponsoring broker-
dealer a current list of all ``authorized traders'' who may submit
orders to the exchange, and restrict access to the order entry
system to those persons; (3) take responsibility for all trading by
its authorized traders (and anyone else using their passwords); (4)
establish adequate procedures to effectively monitor and control its
access to the exchange through its employees, agents, or customers;
and (5) pay when due all amounts payable to the exchange, the
sponsoring broker-dealer, or others that arise from its access to
the exchange's trading facilities.
---------------------------------------------------------------------------

    \20\ See, e.g., NYSE Rule 123B.30, NYSE Alternext Equities Rule
123B.30, NYSE Amex Rule 86, NYSE Arca Rules 7.29 and 7.30, NYSE Rule
86, CBOE Rule 6.20A, CHX Article 5, Rule 3, NSX Rule 11.9, BATS Rule
11.3(b), ISE Rule 706, NASDAQ Rule 4611(d), NASDAQ OMX BX Rule
4611(d), NASDAQ OMX PHLX Rule 1094(b)(ii).
---------------------------------------------------------------------------

C. New Nasdaq Rule

    As noted above, to address the increasing risks associated with
market access, Commission staff has been urging the securities
industry, the exchanges, FINRA and other market participants to
enhance exchange and FINRA rules by requiring more robust broker-
dealer financial and regulatory risk controls. In December 2008,
Nasdaq filed a proposed rule change to require broker-dealers
offering direct market access or sponsored access to Nasdaq to
establish controls regarding the associated financial and regulatory
risks, and to obtain a variety of contractual commitments from
sponsored access customers.\21\ The Commission

approved Nasdaq's improved market access rule on January 13,
2010.\22\
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 59275 (January 22,
2009), 74 FR 5193 (January 29, 2009) (File No. SR-NASDAQ-2008-104).
After publication the Commission received thirteen comment letters
on the proposal. The majority of commenters supported the proposal
conceptually, but critiqued certain aspects of it. A few commenters
wholly opposed Nasdaq's proposal because they believed Nasdaq's
current rule was sufficient. One commenter opposed the current
proposal because it lacked rigor. The various comments addressed:
(1) The scope of the proposed Nasdaq rule and the definitions
contained therein; (2) the required contracts; (3) compliance with
financial and regulatory controls, and (4) confidentiality and
regulatory propriety. Letters to Elizabeth M. Murphy, Secretary,
Commission, from Harvey Cloyd, Chief Executive Officer, Electronic
Transaction Clearing, Inc., dated February 5, 2009; John Jacobs,
Director of Operations, Lime Brokerage LLC, dated February 17, 2009
(``Lime Letter''); Manisha Kimmel, Executive Director, Financial
Information Forum, dated February 19, 2009 (``FIF Letter''); Ted
Myerson, President, FTEN, Inc., dated February 19, 2009 (``FTEN
Letter''); Michael A. Barth, Executive Vice President, OES Market
Group, dated February 23, 2009; Jeff Bell, Executive Vice President,
Clearing and Technology Group, Wedbush Morgan Securities, dated
February 23, 2009; Stuart J. Kaswell, Executive Vice President &
General Counsel, Managed Funds Association, dated February 24, 2009;
Ann Vlcek, Managing Director and Associate General Counsel,
Securities Industry and Financial Markets Association (``SIFMA''),
dated February 26, 2009 (``SIFMA Letter''), Nicole Harner Williams,
Vice President, Associate General Counsel, Penson Financial
Services, Inc., dated February 27, 2009; Samuel F. Lek, Chief
Executive Officer, Lek Securities Corporation, dated June 15, 2009;
letter to David S. Shillman, Associate Director, Division of Trading
and Markets (``Division'') Commission, from Gary LaFever, Chief
Corporate Development Officer, FTEN, Inc., dated April 29, 2009;
letter to James Brigagliano, Co-Acting Director, Division,
Commission, from John Jacobs, Chief Operations Officer, Lime
Brokerage LLC, dated June 30, 2009; and letter to David S. Shillman,
Associate Director, Division, from Ann Vlcek, Managing Director and
Associate General Counsel, SIFMA, dated November 23, 2009. Nasdaq
amended the filing and responded to comments. See File No. SR-
NASDAQ-2008-104, Amendments No. 2 and 3, received respectively on
October 19 and 23, 2009. A more extensive summary of comments and
NASDAQ's response to comments is contained in the Nasdaq Market
Access Approval Order. See Securities Exchange Act Release No. 61345
(January 13, 2010) (``Nasdaq Market Access Approval Order'').
    \22\ See Nasdaq Market Access Approval Order, supra note 21.
---------------------------------------------------------------------------

    The Nasdaq rule requires a combination of contractual
provisions, financial controls, and regulatory controls for Nasdaq
members providing direct market access or sponsored access. Nasdaq's
rule differs from its previous access rule, and other SRO access
rules, by: (1) Clearly defining ``direct market access'' and
``sponsored access;'' (2) requiring by rule that broker-dealers
providing those services establish controls designed to address
specified financial and regulatory risks; (3) requiring that
appropriate supervisory personnel of the sponsoring member receive
immediate post-trade execution reports for all direct market access
and sponsored access customers.\23\
---------------------------------------------------------------------------

    \23\ For sponsored access arrangements, the Nasdaq rule also
requires sponsoring members to obtain certain contractual
commitments from sponsored participants that echo those required by
current exchange rules, and go further by requiring the sponsored
participant (1) provide access to books and records, financial
information and otherwise cooperate with the sponsoring member for
regulatory purposes; (2) maintain its trading activity within the
credit thresholds set by the sponsoring member; and (3) allow
immediate termination of the access arrangement if it poses serious
risk to the sponsoring member or the integrity of the market. See
Nasdaq Rule 4611(d)(3)(A). In addition, if a service bureau or other
third party provides the sponsored access system, the sponsoring
member must obtain contractual commitments from the third party
analogous to clauses (1) and (3) above, as well as to restrict
access to authorized persons. See Nasdaq Rule 4611(d)(3)(B).
---------------------------------------------------------------------------

    With respect to controls for financial risk, Nasdaq's rule
requires members offering direct market access or sponsored access
to establish procedures and controls designed to systemically limit
the sponsoring member's financial exposure.\24\ At a minimum, these
procedures and controls must be designed to prevent sponsored
customers from: (1) Entering orders that exceed appropriate preset
credit thresholds; (2) trading products that the sponsored customer
or sponsoring member is restricted from trading; and (3) submitting
erroneous orders, by rejecting orders that exceed certain price or
size parameters or that indicate duplicative orders.\25\
---------------------------------------------------------------------------

    \24\ See Nasdaq Rule 4611(d)(4).
    \25\ See Nasdaq Rule 4611(d)(4)(A)-(C).
---------------------------------------------------------------------------

    With respect to controls for regulatory risk, Nasdaq's rule
requires members offering direct market access or sponsored access
to establish systemic controls designed to ensure compliance with
applicable regulatory requirements.\26\ In addition, Nasdaq's rule
requires a sponsoring member to ensure that appropriate supervisory
personnel receive and review timely reports of all trading activity
by its sponsored customers, including immediate post-trade execution
reports.\27\
---------------------------------------------------------------------------

    \26\ The Nasdaq rule defines ``regulatory requirements'' to
include all applicable Federal securities laws and rules and Nasdaq
rules, including but not limited to the Nasdaq Certificate of
Incorporation, Bylaws, Rules and Nasdaq Market Center procedures.
See Nasdaq Rule 4611(d)(3)(i).
    \27\ The immediate post-trade execution reports should include
the identity of the applicable sponsored customer. In addition,
appropriate supervisory personnel of the sponsoring member should
receive all required audit trail information no later than the end
of the trading day; and all information necessary to create and
maintain the trading records required by regulatory requirements, no
later than the end of the trading day. See Nasdaq Rule 4611(d)(5).

[FR Doc. 2010-1269 Filed 1-25-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 38 (Wednesday, February 26, 2014)]
[Notices]
[Pages 10867-10868]
[FR Doc No: 2014-04223]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No: FAA-2011-0786]

Deadline for Notification of Intent To Use the Airport
Improvement Program (AIP) Primary, Cargo, and Nonprimary Entitlement
Funds for Fiscal Year 2014.

AGENCY: Federal Aviation Administration, DOT.

ACTION: Notice.

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

SUMMARY: The Federal Aviation Administration (FAA) announces May 1,
2014, as the deadline for each airport sponsor to notify the FAA
whether or not it will use its fiscal year 2014 entitlement funds
available under Section 47114 of Title 49, United States Code, to
accomplish Airport Improvement Program (AIP)-eligible

projects that the sponsor previously identified through the Airports
Capital Improvement Plan (ACIP) process during the preceding year.
    The sponsor's notification must address all entitlement funds
apportioned for fiscal year 2014, as well as any entitlement funds not
obligated from prior years. After Friday, July 11, 2014, the FAA will
carry over all remaining entitlement funds, and the funds will not be
available again until at least the beginning of fiscal year 2015. This
notification requirement does not apply to non-primary airports covered
by the block-grant program.

FOR FURTHER INFORMATION CONTACT: Mr. Frank J. San Martin, Manager,
Airports Financial Assistance Division, APP-500, on<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Title 49 of the United States Code, section
47105(f), provides that the sponsor of each airport to which funds are
apportioned shall notify the Secretary by such time and in a form as
prescribed by the Secretary, of the sponsor's intent to apply for its
apportioned funds, also called entitlement funds. Therefore, the FAA is
hereby notifying sponsors about steps required to ensure that the FAA
has sufficient time to carryover and convert remaining entitlement
funds, due to processes required under federal laws. This notice
applies only to those airports that have had entitlement funds
apportioned to them, except those nonprimary airports located in
designated Block Grant States. Sponsors intending to apply for any of
their available entitlement funds, including those unused from prior
years, shall submit by 12:00 p.m. prevailing local time on Thursday,
May 1, 2014, a written indication to the designated Airports District
Office (or Regional Office in regions without Airports District
Offices) their intent to submit a grant application no later than close
of business Friday, July 11, 2014, to use their fiscal year 2014
entitlement funds available under Title 49 of the United States Code,
section 47114. This notice must address all entitlement funds
apportioned for fiscal year 2014 including those entitlement funds not
obligated from prior years. By Friday, June 13, 2014, airport sponsors
that have not yet submitted a final application to the FAA, should
notify the FAA of any issues with meeting the final application
deadline of July 11, 2014. Absent notification from the sponsor by the
May 1st deadline and/or subsequent notification by the June 13th
deadline of any issues with meeting the application deadline, the FAA
will proceed after Friday, July 11, 2014 to take action to carry over
all remaining entitlement funds without further notice. The funds will
not be available again until at least the beginning of fiscal year
2015.
    This notice is promulgated to expedite and facilitate the grant-
making process.
    The AIP grant program is operating under the requirements of Public
Law No. 112-91, the ``FAA Modernization and Reform Act of 2012,''
enacted on February 14, 2012, which authorizes the FAA through
September 30, 2015 and the ``Consolidated Appropriations Act, 2014''
which appropriates FY 2014 funds for the AIP.

    Issued in Washington, DC, on February 20, 2014.
Elliott Black,
Deputy Director, Office of Airport Planning and Programming.
[FR Doc. 2014-04223 Filed 2-25-14; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Notices]
[Pages 33006-33007]
[FR Doc No: 2021-13116]

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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34302; 812-15210]

Nationwide Mutual Funds, et al.

June 16, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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

    Notice of an application under Section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from Section 15(c) of
the Act.

Applicants: Nationwide Mutual Funds and Nationwide Variable Insurance
Trust, each of which is a registered open-end investment company that
is organized as a Delaware statutory trust (each, a ``Trust'' and
together, the ``Trusts'') and that may offer one or more series of
shares (each a ``Series''), and Nationwide Fund Advisors (the
``Adviser''), a Delaware business trust registered as an investment
adviser under the Investment Advisers Act of 1940 (``Advisers Act''),
that serves as an investment adviser to each Trust (together with the
Trusts and the Series, the ``Applicants'').

Summary of Application: The requested exemption would permit a Trust's
board of trustees (the ``Board'') to approve new sub-advisory
agreements and material amendments to existing sub-advisory agreements
for the Subadvised Series (as defined below), without complying with
the in-person meeting requirement of Section 15(c) of the Act.

Filing Dates: The application was filed on March 22, 2021.

Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by emailing the Commission's
Secretary at<EMAIL_ADDRESS>and serving Applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on July 12, 2021, and should be accompanied
by proof of service on the Applicants, in the form of an affidavit or,
for lawyers, a certificate of service. Pursuant to rule 0-5 under the
Act, hearing requests should state the nature of the writer's interest,
any facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request by emailing the Commission's
Secretary.

ADDRESSES: The Commission<EMAIL_ADDRESS>Applicants: Amy
E. Haid, Esq., by email to<EMAIL_ADDRESS>
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, at<PHONE_NUMBER>, or
Trace W. Rakestraw, at<PHONE_NUMBER> (Division of Investment
Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number or an Applicant
using the ``Company'' name box, at http://www.sec.gov/search/search.htm
or by calling<PHONE_NUMBER>.

I. Requested Exemptive Relief

    1. Applicants request an exemption from Section 15(c) of the Act to
permit the Board,\1\ including the Independent Board Members,\2\ to
approve an agreement (each a ``Sub-Advisory Agreement'') pursuant to
which a sub-adviser manages all or a portion of the assets of one or
more of the Series, or a material amendment thereof (a ``Sub-Adviser
Change''), without complying with the in-person meeting requirement of
Section 15(c).\3\ Under the requested relief, the Independent Board
Members could instead approve a Sub-Adviser Change at a meeting at
which members of the Board participate by any means of communication
that allows them to hear each other simultaneously during the meeting.
---------------------------------------------------------------------------

    \1\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Series (as defined below).
    \2\ The term ``Independent Board Members'' means the members of
the Board who are not parties to the Sub-Advisory Agreement (as
defined below), or ``interested persons,'' as defined in Section
2(a)(19) of the Act, of any such party.
    \3\ Applicants do not request relief that would permit the Board
and the Independent Board Members to approve renewals of Sub-
Advisory Agreements at non-in-person meetings.
---------------------------------------------------------------------------

    2. Applicants request that the relief apply to Applicants, as well
as to any future series of the Trusts and any other existing or future
registered open-end management investment company or Series thereof
that intends to rely on the requested order in the future and that: (i)
Is advised by the Adviser; \4\ (ii) uses the multi-manager structure
described in the application; and (iii) complies with the terms and
conditions of the application (each, a ``Subadvised Series'').\5\
---------------------------------------------------------------------------

    \4\ The term ``Adviser'' includes (i) the Adviser or its
successors, and (ii) any entity controlling, controlled by or under
common control with, the Adviser or its successors. For the purposes
of the requested order, ``successor'' is limited to an entity or
entities that result from a reorganization into another jurisdiction
or a change in the type of business organization.
    \5\ The term ``Subadvised Series'' also includes a wholly-owned
subsidiary, as defined in the Act, of a Subadvised Series (each a
``Subsidiary'') and the term ``sub-adviser'' includes any sub-
adviser to a Subsidiary. All registered open-end investment
companies that intend to rely on the requested order are named as
Applicants. Any entity that relies on the requested order will do so
only in accordance with the terms and conditions contained in the
application.
---------------------------------------------------------------------------

II. Management of the Subadvised Series

    3. The Adviser will serve as the investment adviser to each
Subadvised Series pursuant to an investment advisory agreement with a
Trust (each an ``Investment Management Agreement''). The Adviser,
subject to the oversight of the Board, will provide continuous
investment management services to each Subadvised Series. Applicants
are not seeking an exemption from the Act with respect to the
Investment Management Agreements.
    4. Applicants state that the Subadvised Series may seek to provide
exposure to multiple strategies across various asset classes, thus
allowing investors to more easily access such strategies without the
additional transaction costs and administrative burdens of investing in
multiple funds to seek to achieve comparable exposures.
    5. To that end, the Adviser may achieve its desired exposures to
specific strategies by allocating discrete portions of the Subadvised
Series' assets to various sub-advisers. Consistent with the terms of
each Investment Management Agreement and subject to the Board's
approval,\6\ the Adviser would delegate management of all or a portion
of the assets of a Subadvised Series to a sub-adviser.\7\ Each sub-
adviser would be an ``investment adviser'' to the Subadvised Series
within the meaning of Section 2(a)(20)

of the Act.\8\ The Adviser would retain overall responsibility for the
management and investment of the assets of each Subadvised Series.
---------------------------------------------------------------------------

    \6\ A Sub-Advisory Agreement may also be subject to approval by
a Subadvised Series' shareholders. Applicants currently rely on a
multi-manager exemptive order to enter into and materially amend
Sub-Advisory Agreements without obtaining shareholder approval. See
Nationwide Investing Foundation, et al., Investment Company Act
Release Nos. 23104 (Apr. 6, 1998) (notice) and 23133 (Apr. 28, 1998)
(order).
    \7\ A sub-adviser may manage the assets of a Subadvised Series
directly or provide the Adviser with model portfolio or investment
recommendation(s) that would be utilized in connection with the
management of a Subadvised Series.
    \8\ Each sub-adviser would be registered with the Commission as
an investment adviser under the Advisers Act or not subject to such
registration.
---------------------------------------------------------------------------

III. Applicable Law

    6. Section 15(c) of the Act prohibits a registered investment
company having a board from entering into, renewing or performing any
contract or agreement whereby a person undertakes regularly to act as
an investment adviser (including a sub-adviser) to the investment
company, unless the terms of such contract or agreement and any renewal
thereof have been approved by the vote of a majority of the investment
company's board members who are not parties to such contract or
agreement, or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
    7. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction or any class or classes of
persons, securities, or transactions from any provisions of the Act, or
any rule thereunder, if such exemption is necessary or appropriate in
the public interest and consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the Act.
Applicants state that the requested relief meets this standard for the
reasons discussed below.

IV. Arguments in Support of the Requested Relief

    8. Applicants assert that boards of registered investment
companies, including the Board, typically hold in-person meetings on a
quarterly basis. Applicants state that during the three to four month
period between board meeting dates, market conditions may change or
investment opportunities may arise such that the Adviser may wish to
make a Sub-Adviser Change. Applicants also state that at these moments
it may be impractical and costly to hold an additional in-person Board
meeting, especially given the geographic diversity of Board members and
the additional cost of holding in-person meetings.
    9. As a result, Applicants believe that the requested relief would
allow the Subadvised Series to operate more efficiently. In particular,
Applicants assert that without the delay inherent in holding in-person
Board meetings (and the attendant difficulty of obtaining the necessary
quorum for, and the additional costs of, an unscheduled in-person Board
meeting), the Subadvised Series would be able to act more quickly and
with less expense to add or replace sub-advisers when the Board and the
Adviser believe that a Sub-Adviser Change would benefit the Subadvised
Series.
    10. Applicants also note that the in-person meeting requirement in
Section 15(c) of the Act was designed to prohibit absentee approval of
advisory agreements. Applicants state that condition 1 to the requested
relief is designed to avoid such absentee approval by requiring that
the Board approve a Sub-Adviser Change at a meeting where all
participating Board members can hear each other and be heard by each
other during the meeting.\9\
---------------------------------------------------------------------------

    \9\ Applicants state that technology that includes visual
capabilities will be used unless unanticipated circumstances arise.
Applicants also state that the Board could not rely upon the relief
to approve a Sub-Advisory Agreement by written consent or another
form of absentee approval by the Board.
---------------------------------------------------------------------------

    11. Applicants, moreover, represent that the Board would conduct
any such non-in-person consideration of a Sub-Advisory Agreement in
accordance with its typical process for approving Sub-Advisory
Agreements. Consistent with Section 15(c) of the Act, the Board would
request and evaluate such information as may reasonably be necessary to
evaluate the terms of any Sub-Advisory Agreement, and the Adviser and
sub-adviser would provide such information.
    12. Finally, Applicants note that if one or more Board members
request that a Sub-Adviser Change be considered in-person, then the
Board would not be able to rely on the relief and would have to
consider the Sub-Adviser Change at an in-person meeting.

V. Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. The Independent Board Members will approve a Sub-Adviser Change
at a non-in-person meeting in which Board members may participate by
any means of communication that allows those Board members
participating to hear each other simultaneously during the meeting.
    2. Management will represent that the materials provided to the
Board for the non-in-person meeting include the same information the
Board would have received if a Sub-Adviser Change were sought at an in-
person Board meeting.
    3. The notice of the non-in-person meeting will explain the need
for considering the Sub-Adviser Change at a non-in-person meeting. Once
notice of the non-in-person meeting to consider a Sub-Adviser Change is
sent, Board members will be given the opportunity to object to
considering the Sub-Adviser Change at a non-in-person Board meeting. If
a Board member requests that the Sub-Adviser Change be considered in-
person, the Board will consider the Sub-Adviser Change at an in-person
meeting, unless such request is rescinded.
    4. A Subadvised Series' ability to rely on the requested relief
will be disclosed in the Subadvised Series' registration statement.
    5. In the event that the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the application, the requested order will expire on the effective
date of that rule.

    For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13116 Filed 6-22-21; 8:45 am]
BILLING CODE 8011-01-P