[Federal Register Volume 85, Number 51 (Monday, March 16, 2020)]
[Notices]
[Pages 15003-15009]
[FR Doc No: 2020-05236]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88350; File No. SR-CBOE-2020-015]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Increase Position Limits for
Options on Certain Exchange-Traded Funds (``ETFs'') and Indexes

March 10, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 26, 2020, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
increase position limits for options on certain exchange-traded funds
(``ETFs'') and indexes. The text of the proposed rule change is
provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

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

1. Purpose
    Position limits are designed to address potential manipulative
schemes and adverse market impacts surrounding the use of options, such
as disrupting the market in the security underlying the options. While
position limits should address and discourage the potential for
manipulative schemes and adverse market impact, if such limits are set
too low, participation in the options market may be discouraged. The
Exchange believes that position limits must therefore be balanced
between mitigating concerns of any potential manipulation and the cost
of inhibiting potential hedging activity that could be used for
legitimate economic purposes.
    The Exchange has observed an ongoing increase in demand in options
on (1) the Standard and Poor's Depositary Receipts Trust (``SPY''),
iShares MSCI EAFE ETF (``EFA''), iShares China Large-Cap ETF (``FXI''),
iShares iBoxx High Yield Corporate Bond Fund (``HYG''), Financial
Select Sector SPDR Fund (``XLF''), Market Vectors Oil Services ETF
(``OIH'', collectively, with the aforementioned ETFs, the ``Underlying
ETFs''), and (2) the MSCI Emerging Markets Index (``MXEF'') and the
MSCI EAFE Index (``MXEA'', collectively, with MXEF, the ``Underlying
Indexes'') for both trading and hedging purposes. Though the demand for
these options appears to have increased, position limits for options on
the Underlying ETFs and Indexes have remained the same. The Exchange
believes these unchanged position limits may have impeded, and may
continue to impede, trading activity and strategies of investors, such
as use of effective hedging vehicles or income generating strategies
(e.g., buy-write or put-write), and the ability of Market-Makers to
make liquid markets with tighter spreads in these options resulting in
the transfer of volume to over-the-counter (``OTC'') markets. OTC
transactions occur through bilateral agreements, the terms of which are
not publicly disclosed to the marketplace. As such, OTC transactions do
not contribute to the price discovery process on a public exchange or
other lit markets. Therefore, the Exchange believes that the proposed
increases in position limits for options on the Underlying ETFs and
Indexes may enable liquidity providers to provide additional liquidity
to the Exchange and other market participants to transfer their
liquidity demands from OTC markets to the Exchange, as well as other
options exchange on which they participate.\3\ As described in further
detail below, the Exchange believes that the continuously increasing
market capitalization of the Underlying ETFs, ETF component securities,
and component securities of the Underlying Indexes, as well as the
highly liquid markets for those securities, reduces the concerns for
potential market manipulation and/or disruption in the underlying
markets upon increasing position limits, while the rising demand for
trading options on the Underlying ETFs and Indexes for legitimate
economic purposes compels an increase in position limits.
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    \3\ The Exchange understands that other options exchanges intend
to file similar proposed rule changes with the Commission to
increase position limits under their rules for the same options.
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Proposed Position Limits for Options on the Underlying ETFs
    Position limits for options on ETFs are determined pursuant to Rule
8.30, and vary according to the number of outstanding shares and the
trading volumes of the underlying stocks or ETFs over the past six
months. Pursuant to Exchange Rule 8.30, the largest in capitalization
and the most frequently traded stocks and ETFs have an option position
limit of 250,000 contracts (with adjustments for splits, re-
capitalizations, etc.) on the same side of the market; and smaller
capitalization stocks and ETFs have position limits of 200,000, 75,000,
50,000 or 25,000 contracts (with adjustments for splits, re-
capitalizations, etc.) on the same side of the market. Options on HYG,
XLF, and OIH are currently subject to the standard position limit of
250,000 contracts as set

forth in Exchange Rule 8.30. Rule 8.30.07 sets forth separate position
limits for options on specific ETFs, including SPY, FXI and EFA.
    The Exchange proposes to amend Rule 8.30.07 to double the position
limits and, as a result, exercise limits, for options on each of HYG,
XLF, OIH, FXI, EFA and SPY.\4\ The table below represents the current,
and proposed, position limits for options on the ETFs subject to this
proposal:
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    \4\ By virtue of 8.42.02, which is not being amended by this
filing, the exercise limits for HYG, XLF, OIH, and SPY options would
be similarly increased.

------------------------------------------------------------------------
                                                  Current      Proposed
                      ETF                         position     position
                                                   limit        limit
------------------------------------------------------------------------
SPY...........................................    1,800,000    3,600,000
EFA...........................................      500,000    1,000,000
FXI...........................................      500,000    1,000,000
HYG...........................................      250,000      500,000
OIH...........................................      250,000      500,000
XLF...........................................      250,000      500,000
------------------------------------------------------------------------

    The Exchange notes that the proposed position limits for options on
EFA and FXI are consistent with existing position limits for options on
the iShares Russell 2000 ETF (``IWM'') and the iShares MSCI Emerging
Markets ETF (``EEM''), while the proposed limits for options on FXI,
HYG, and OIH are consistent with current position limits for options on
the iShares MSCI Brazil Capped ETF (``EWZ''), iShares 20+ Year Treasury
Bond Fund ETF (``TLT''), and iShares MSCI Japan ETF (``EWJ''). The
Exchange represents that the Underlying ETFs qualify for either (1) the
initial listing criteria set forth in Exchange Rule 4.3.06(c) for ETFs
holding non-U.S. component securities, or (2) generic listing standards
for series of portfolio depository receipts and index fund shares based
on international or global indexes under which a comprehensive
surveillance agreement (``CSA'') is not required, as well as the
continued listing criteria in Rule 4.4.\5\ In compliance with its
listing rules, the Exchange also represents that non-U.S. component
securities that are not subject to a comprehensive surveillance
agreement (``CSA'') do not, in the aggregate, represent more than more
than 50% of the weight of any of the Underlying ETFs.\6\
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    \5\ The Exchange notes that the initial listing criteria for
options on ETFs that hold non-U.S. component securities are more
stringent than the maintenance listing criteria for those same ETF
options. See Rule 4.3.06(c); Rule 4.4.08.
    \6\ See Rule 4.3.06(c).
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Proposed Position Limits for Options on the Underlying Indexes
    The position limits and certain restrictions on position limits for
options on broad-based indexes are determined pursuant to Rule 8.31.
Like Rule 8.30.07, Rule 8.31 sets forth separate position limits for
various, specific broad-based indexes and also provides a position
limit of 25,000 contracts for options, restricted to no more than
15,000 near-term, on all other broad-based indexes not specifically
listed under Rule 8.31. MXEF and MXEA are currently grouped within this
category and, therefore, currently have position limits of 25,000
contracts. The Exchange proposes to amend Rule 8.31 to double the
position limits, and, as a result, the exercise limits, for MXEF and
MXEA, as well as eliminate the near-term position limit restriction on
such options. The table below represents the current, and proposed,
position limits for options on MXEA and MXEF:

------------------------------------------------------------------------
                                            Current          Proposed
                                        position  limit/ position  limit/
                 Index                     near-term        near-term
                                         position limit   position limit
------------------------------------------------------------------------
MXEF..................................    25,000/15,000     50,000/None.
MXEA..................................    25,000/15,000     50,000/None.
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    The Exchange notes that these proposed position limits for MXEA and
MXEF equal the current position limits for options on 20 other indexes,
and notes that no near-term restrictions currently exist for options on
15 other indexes.\7\ The Exchange represents that the Underlying
Indexes qualify for the initial and maintenance listing criteria set
forth in Rules 4.10(h) and (i), respectively, and that non-U.S.
component securities that are not subject to comprehensive surveillance
agreements do not, in the aggregate, represent more than 25% of the
weight of the MXEA Index or 27.5% of the weight of the MXEF Index.\8\
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    \7\ See Rule 8.31(a). The Exchange notes that there are no
position limits (including no near-term restrictions) for Cboe S&P
500 a.m./PM Basis, Cboe S&P 500 Three-Month Realized Variance, Cboe
S&P 500 Three-Month Realized Volatility and on the BXM (1/10th
value), DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD, VXST, S&P 500
Dividend Index, and SPX classes, and while there are position limits
for the Dow Jones Equity REIT Index, it is not subject to any near-
term restrictions.
    \8\ See Rule 4.10(h)(7).
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Composition and Growth Analysis for Underlying ETFs and Indexes
    As stated above, position (and exercise) limits are intended to
prevent the establishment of options positions that can be used or
might create incentives to manipulate the underlying market so as to
benefit options positions. The Securities and Exchange Commission (the
``Commission'') has recognized that these limits are designed to
minimize the potential for mini-manipulations and for corners or
squeezes of the underlying market, as well as serve to reduce the
possibility for disruption of the options market itself, especially in
illiquid classes.\9\ The Underlying ETFs as well as the ETF components
are highly liquid, and are based on a broad set of highly liquid
securities and other reference assets, as demonstrated through the
trading statistics presented in this proposal. Indeed, the Commission
recognized the liquidity of the securities comprising the underlying
interest of SPY and permitted no position limits on SPY options from
2012 through 2018.\10\ Also, the Commission has previously approved no
position limits for options on certain broad-based security
indexes.\11\ Similarly, the component securities of the Indexes are
highly liquid. The Commission has looked to the liquidity of securities
comprising an index in establishing position limits for cash-settled
index options.
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    \9\ See Securities Exchange Act Release No. 67672 (August 15,
2012), 77 FR 50750 (August 22, 2012)(SR-NYSEAmex-2012-29).
    \10\ See Securities Exchange Act Release No. 67937 (September
27, 2012), 77 FR 60489 (October 3, 2012) (SR-CBOE-2012-091), which
implemented a pilot program that ran through 2017, during which
there were no potion limits for options on SPY. See also Securities
Exchange Act Release No. 83415 (June 12, 2018), 83 FR 28274 (June
18, 2018) (SR-CBOE-2018-042).
    \11\ See supra note 5.
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    To support the proposed position limit increases, the Exchange
considered both liquidity of the Underlying ETFs and the component
securities of the Underlying ETFs and Indexes, as well as the
availability of economically equivalent products to the overlying
options and their respective position limits. For instance, some of the
Underlying ETFs are based upon broad-based indices that underlie cash-
settled options, and therefore the options on the Underlying ETFs are
economically equivalent to the options on those indices, which have no
position limits. Other Underlying ETFs are based upon broad-based
indices that underlie cash-settled options with position limits
reflecting notional values that are larger than current position limits
for options on the ETF analogues. For indexes that are tracked by an
Underlying ETF but on which there are no options listed, the Exchange
believes, based on the liquidity, depth and breadth of the underlying
market of the components of the indexes, that each of the indexes
referenced by the applicable

ETFs would be considered a broad-based index under the Exchange's
Rules. Moreover, regarding the Underlying Indexes, the Exchange
believes that the deep, liquid markets for and market capitalization of
the component securities underlying such indexes support the proposed
position limit increases for the options on those indexes.
Additionally, if in some cases certain position limits are appropriate
for the options overlying comparable indexes or basket of securities
that the Underlying ETFs track, or are appropriate for those ETFs that
track the Underlying Indexes, then those economically equivalent
position limits should be appropriate for the options overlying the
Underlying ETFs or Indexes.
    The Exchange has collected the following trading statistics
regarding shares of and options on the Underlying ETFs, as well as the
component securities or components underlying the referenced index (as
applicable):

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                                                                                Shares  outstanding  (ETFs)                                     Total market  cap of ETF
              Product                    ADV \12\ (ETF shares)          ADV  (option contracts)                  \13\                   Fund market cap  (USD)            Components \14\
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SPY...............................  70.3 million..................  2.8 million...................  968.7 million.................  312.9 billion................  29.3 trillion.
FXI...............................  26.1 million..................  196,600.......................  106.8 million.................  4.8 billion..................  28.0 trillion.
EFA...............................  25.1 million..................  156,000.......................  928.2 million.................  64.9 billion.................  19.3 trillion.
HYG...............................  20.0 million..................  193,700.......................  216.6 million.................  19.1 billion.................  906.4 billion. \15\
XLF...............................  48.8 million..................  102,100.......................  793.6 million.................  24.6 billion.................  3.8 trillion.
OIH...............................  8.9 million...................  32,500........................  58.3 million..................  770.8 million................  167 billion.
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    The Exchange has also collected similar trading statistics
regarding options on and the component securities of the Underlying
Indexes:
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    \12\ Average daily volume (ADV) data for ETF shares and options
contracts, as well as for options on the Underlying Indexes
presented below, are for all of 2019. Additionally, reference to ADV
in ETF shares, ETF options, and index options herein this proposal
are for all of 2019, unless otherwise indicated
    \13\ Shares Outstanding and Fund Market Capitalization Data were
sourced from Bloomberg on January 2, 2020.
    \14\ Total Market Capitalization of the ETF Components was
sourced from Bloomberg on January 3, 2020.
    \15\ Total Market Capitalization of HYG was sourced from IHS
Markit, which sends daily constituent information to the Exchange.

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                                                           Number of                            Full Market Cap
                                     ADV  (option          component       Index Market cap      of component
             Product                  contracts)          securities       (USD)  (trillion)      securities
                                                           (indexes)                              (trillion)
----------------------------------------------------------------------------------------------------------------
MXEF............................               1,055               1,404                 6.2                18.0
MXEA............................                 594                 917                14.9                19.3
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    The Exchange believes that, overall, the liquidity in the shares of
the Underlying ETFs and in the component securities of the Underlying
ETFs and Indexes, and in their overlying options, as well as the large
market capitalizations and structure of each of the Underlying ETFs and
Indexes, support the proposal to increase the position limits for each
option class. Given the robust liquidity and capitalization in the
Underlying ETFs and in the component securities of the Underlying ETFs
and Indexes the Exchange does not anticipate that the proposed increase
in position limits would create significant price movements. Also, the
Exchange believes the market capitalization of the underlying component
securities of the applicable index or reference asset are large enough
to adequately absorb potential price movements that may be caused by
large trades.
    Specifically, the Exchange notes that SPY tracks the performance of
the S&P 500 Index, which is an index of diversified large cap U.S.
companies.\16\ It is composed of 505 selected stocks spanning over
approximately 24 separate industry groups. The S&P 500 is one of the
most commonly followed equity indices, and is widely considered to be
the best indicator of stock market performance as a whole. SPY is one
of the most actively traded ETFs, and, since 2017,\17\ its ADV has
increased from approximately 64.6 million shares to 70.3 million shares
by the end of 2019. Similarly, its ADV in options contracts has
increased from 2.6 million to 2.8 million through 2019.\18\ As noted,
the demand for options trading on SPY has continued to increase,
however, the position limits have remained the same, which the Exchange
believes may have impacted growth in SPY option volume from 2017
through 2019. The Exchange also notes that SPY shares are more liquid
than PowerShares QQQ Trust (``QQQ'') shares, which is also currently
subject to a position limit of 1,800,000 contracts.\19\ Specifically,
SPY currently experiences over twice the ADV in shares and over four
times the ADV in options than that of QQQ.\20\
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    \16\ See SPDR S&P 500 ETF Trust, available at https://www.ssga.com/us/en/individual/etfs/funds/spdr-sp-500-etf-trust-spy
(January 21, 2020).
    \17\ See Securities Exchange Release No. 81483 (August 25,
2017), 82 FR 41457 (August 31, 2017) (Notice of Filing of a Proposed
Rule Change To Amend Interpretation and Policy .07 of Exchange Rule
4.11, Position Limits, To Increase the Position Limits for Options
on Certain ETFs) (SR-CBOE-2017-057). The Exchange notes that the
statistics for comparisons to 2017 data throughout this proposal
have been drawn from SR-CBOE-2017-057.
    \18\ See Securities Exchange Act Release No. 83415 (June 12,
2018), 83 FR 28274 (June 18, 2018) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Amend the Position Limit
for SPY Options) (SR-CBOE-2018-042).
    \19\ The Exchange notes that it also updates the PowerShares QQQ
Trust symbol in Rule 8.30(a) from QQQQ to QQQ as this accurately
reflects the current ticker symbol for PowerShares QQQ, which was
officially changed from QQQQ to QQQ by Invesco PowerShares Capital
Management LLC in 2011. See Morningstar, PowerShares Changes Ticker
Symbol of Tech-Heavy QQQ ETF, available at morningstar.com/articles/374713/powershares-changes-ticker-symbol-of-tech-heavy-qqq-etf
(March 23, 2011).
    \20\ The 2019 AVD for QQQ shares is 30.2 million and for options
on QQQ is 670,200.
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    EFA tracks the performance of MSCI EAFE Index, which is comprised
of over 900 large and mid-cap securities across 21 developed markets,
including countries in Europe, Australia and the Far East, excluding
the U.S. and

Canada.\21\ The Exchange notes that from 2017 through 2019, ADV has
grown significantly in shares of EFA and in options on EFA, from
approximately 19.4 million shares in 2017 to 25.1 million through 2019,
and from approximately 98,800 options contract in 2017 to 155,900
through 2019. The Exchange notes that options are available on the
MXEA, the analogue index (also subject to a proposed position limit
increase described in detail below), which is currently subject to a
position limit of 25,000 contracts (50,000 as proposed). Utilizing the
notional value comparison of EFA's share price of $69.44 and MXEA's
index level of 2036.94, approximately 29 EFA option contracts equal one
MXEA option contract. Based on the above comparison of notional values,
a position limit for EFA options that would be economically equivalent
to that of MXEA options equates to 725,000 contracts (currently) and
1,450,000 (for the proposed 50,000 contracts position limit increase
for MXEA options). Also, MXEA index options have an ADV of 594 options
contracts, in which equate to an ADV of 17,226 EFA option contracts (as
that is 29 times the size of 594). EFA options, which are more actively
traded and held than MXEA options, are currently subject to a position
limit of 500,000 options contracts despite their much higher ADV of
approximately 156,700 options contracts.
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    \21\ See iShares MSCI EAFE ETF, available at https://www.ishares.com/us/products/239623/ishares-msci-eafe-etf (February
10, 2020).
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    FXI tracks the performance of the FTSE China 50 Index, which is
composed of the 50 largest Chinese stocks.\22\ FXI shares and options
have also experienced increased liquidity since 2017, as ADV has grown
from approximately 15.1 million shares in 2017 to 26.1 million through
2019, as well as approximately 71,900 options contracts in 2017 to
196,600 through 2019. Although there are currently no options on the
FTSE China 50 Index listed for trading,\23\ the components of the FTSE
China 50 Index, which can be used to create a basket of stocks that
equate to the FXI ETF, currently have a market capitalization of
approximately $28 trillion and FXI has a market capitalization of $4.8
billion (as indicated above), which the Exchange believes are both
large enough to absorb potential price movements caused by a large
trade in FXI.
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    \22\ See iShares China Large-Cap ETF, available at https://www.ishares.com/us/products/239536/ishares-china-largecap-etf
(February 10, 2020).
    \23\ The Exchange is authorized to list options on the FTSE
China 50 Index pursuant to Rule 4.12(l).
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    XLF invests in a wide array of financial service firms with
diversified business lines ranging from investment management to
commercial and investment banking. It generally corresponds to the
price and yield performance of publicly traded equity securities of
companies in the SPDR Financial Select Sector Index.\24\ XLF
experiences ADV in shares and in options that is significantly greater
that the ADV in shares and options for EWZ (26.7 million shares and
186,500 option contracts), TLT (9.6 million shares and 95,200 options
contracts), and EWJ (7.2 million shares and 5,700 options contracts),
each of which already have a position limit of 500,000 contracts--the
proposed position limit for XLF options. Although there are no options
listed on the SPDR Financial Select Sector Index listed for trading,
the components of the index, which can be used to create a basket of
stocks that equate to the XLF ETF, currently have a market
capitalization of $3.8 trillion (indicated above). Additionally, XLF
has a market capitalization of $24.6 billion. The Exchange believes
that both of these are large enough to absorb potential price movements
caused by a large trade in XLF.
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    \24\ See Select Sector SPDR ETFs, XLF, available at http://www.sectorspdr.com/sectorspdr/sector/xlf (January 15, 2020).
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    OIH seeks to replicate the price and yield performance of the MVIS
U.S. Listed Oil Services 25 (``MVOIHTR'') Index, which tracks the
overall performance of U.S.-listed companies involved in oil services
to the upstream oil sector, including oil equipment, oil services, or
oil drilling.\25\ The Exchange notes that the ADV in OIH shares and
options on OIH is greater than the ADV in EWJ shares (7.2 million
shares) and options on EWJ (5,700 options contracts), which is
currently subject to a position limit of 500,000 options contracts--the
proposed limit for options on OIH. Like that of XLF and FXI above,
there is currently no index option analogue for OIH approved for
options trading, however, the components of the MVOIHTR Index, which
can be used to create the OIH ETF, currently have a market
capitalization of $167 billion and OIH currently has a market
capitalization of $770.8 million--sufficient to absorb price movements
as a result of potentially oversized trades. Moreover, OIH is used to
hedge the oil market, which includes approximately $200 billion of open
interest in U.S. futures as of January 2020, thus, potentially
necessitating substantial hedging capacity.
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    \25\ See VanEck Vectors Oil Services ETF, available at https://www.vaneck.com/etf/equity/oih/overview/ (January 15, 2020).
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    Finally, HYG attempts to track the investment results of Markit
iBoxx USD Liquid High Yield Index, which is composed of U.S. dollar-
denominated, high-yield corporate bonds and is one of the most widely
used high-yield bond ETFs.\26\ HYG experiences significantly higher ADV
in shares and options than both TLT (9.6 million shares and 95,200
options contracts), and EWJ (7.2 million shares and 5,700 options
contracts), which are currently subject to a position limit of 500,000
options contracts--the proposed limit for options on HYG. While HYG
does not have an index option analogue listed for trading, the Exchange
believes that its market capitalization of $19.1 billion, and of $906.4
billion in component securities, is adequate to absorb a potential
price movement that may be caused by large trades in HYG.
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    \26\ See iShares iBoxx $ High Yield Corporate Bond ETF,
available at https://www.ishares.com/us/products/239565/ishares-iboxx-high-yield-corporate-bond-etf (January 15, 2020).
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    Also, as demonstrated by the table above, the components of the
Underlying Indexes similarly experience relatively high liquidity and
market capitalization. As stated above, MXEA consists of large and mid-
cap components across 21 developed countries. The market capitalization
of the MXEA components (separately and in the aggregate) has increased
significantly since the initial listing of MXEA options on the Exchange
in 2016--from approximately $11.4 trillion to $14.9 trillion in the
aggregate by the end of 2019, and from approximately $12.3 billion in
2016 to $16.3 billion on average per component by the end of 2019. The
Exchange also notes that the average market capitalization of the
component securities unadjusted for inclusion in MXEA is currently
around $20 billion.
    The MXEF is an equity index designed to capture large and mid-cap
representation across 26 emerging market countries, also covering
approximately 85% of the free float-adjusted market capitalization in
each country.\27\ The market capitalization of the components of MXEF
in the aggregate has also grown significantly since the initial listing
of MXEF options on the Exchange in 2016--from approximately $3.2
trillion in 2016 to $6.2 trillion by the end of 2019.

Additionally, the average market capitalization per constituent has
risen from approximately $3.8 billion in 2016 to approximately $4.4
billion in 2019. Like MXEA, the Exchange notes that the average market
capitalization of the component securities unadjusted for inclusion in
the index is approximately $12.9 billion. The Exchange also notes that
MXEF has experienced a continuous rise in the overall number of its
component securities, which has recently climbed to 1,401 component
securities in 2019 compared to 834 in 2016 when initially listed.
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    \27\ See MSCI Emerging Markets Index fact sheet (dated December
31, 2019), available at: https://www.msci.com/documents/10199/c0db0a48-01f2-4ba9-ad01-226fd5678111.
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    The Exchange further notes that the ETFs that track MXEF (EEM) and
MXEA (EFA, described in detail above) are currently subject to
significantly larger notionally adjusted position limits--1,000,000
contracts (as proposed for EFA)--yet these products are essentially
comprised of and impacted by the same underlying component securities.
In addition to this, the Underlying Indexes are designed to change over
time as various regions and entities emerge and mature, and, as a
result of the growth of the markets represented, the Underlying Indexes
have each experienced continued expansion. As a result, the Exchange
has observed increasing demand for trading in options and other
derivatives on the Underlying Indexes, which the Exchange believes
necessitates the proposed position limit increases and elimination of
near-term position limit restrictions. In light of the continued
expansion and increased demand for options on MXEF and MXEA, the
Exchange believes that implementing the same overall limits by
eliminating near-term limits would mitigate any potential impact on
using options effectively for portfolio hedging--particularly because
options on MEXF and MXEA offer investors the opportunity to manage
global equity exposure, mitigate portfolio risk, and generate
additional options premium income.\28\ Further, the Exchange believes
that the expanded limits and the elimination of near-term limit
restrictions are necessary to help its options market to compete
against the futures markets. Futures positions that are deemed bona
fide hedging transactions are exempt from position limit rules under
the Commodity Exchange Act and its implementing regulations.\29\ Thus,
institutions may offset much larger equity positions using index
futures products than by using index options. Therefore, the Exchange
believes that increasing the position limits and eliminating near-term
restrictions for options on the Underlying Indexes will help the
Exchange maintain competitive equality with the future markets.
---------------------------------------------------------------------------

    \28\ See e.g. Cboe Global Markets, MSCI Index Options, Manage
Global Equity Exposure, available at http://www.cboe.com/products/stock-index-options-spx-rut-msci-ftse/cboe-options-on-msci-indexes
(February 24, 2020).
    \29\ See 7 U.S.C. 6a(3); 17 CFR 1.3(z) and 1.47.
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Creation and Redemption for ETFs
    The Exchange believes that the creation and redemption process for
ETFs will lessen the potential for manipulative activity with options
on the Underlying ETFs. When an ETF provider wants to create more
shares, it looks to an Authorized Participant (generally a market maker
or other large financial institution) to acquire the securities the ETF
is to hold. For instance, when an ETF is designed to track the
performance of an index, the Authorized Participant can purchase all
the constituent securities in the exact same weight as the index, then
deliver those shares to the ETF provider. In exchange, the ETF provider
gives the Authorized Participant a block of equally valued ETF shares,
on a one-for-one fair value basis. The price is based on the net asset
value, not the market value at which the ETF is trading. The creation
of new ETF units can be conducted during an entire trading day, and is
not subject to position limits. This process works in reverse where the
ETF provider seeks to decrease the number of shares that are available
to trade. The creation and redemption process, therefore, creates a
direct link to the underlying components of the ETF, and serves to
mitigate potential price impact of the ETF shares that might otherwise
result from increased position limits for the ETF options.
    The Exchange understands that the ETF creation and redemption
process seeks to keep an ETF's share price trading in line with the
ETF's underlying net asset value. Because an ETF trades like a stock,
its share price will fluctuate during the trading day, due to simple
supply and demand. If demand to buy an ETF is high, for instance, the
ETF's share price might rise above the value of its underlying
securities. When this happens, the Authorized Participant believes the
ETF may now be overpriced, so it may buy shares of the component
securities and then sell ETF shares in the open market (i.e.
creations). This may drive the ETF's share price back toward the
underlying net asset value. Likewise, if the ETF share price starts
trading at a discount to the securities it holds, the Authorized
Participant can buy shares of the ETF and redeem them for the
underlying securities (i.e. redemptions). Buying undervalued ETF shares
may drive the share price of the ETF back toward fair value. This
arbitrage process helps to keep an ETF's share price in line with the
value of its underlying portfolio.
Surveillance and Reporting Requirements
    The Exchange believes that increasing the position limits for the
options on the Underlying ETFs and Indexes would lead to a more liquid
and competitive market environment for these options, which will
benefit customers interested in trading these products. The reporting
requirement for the options on the Underlying ETFs and Indexes would
remain unchanged. Thus, the Exchange would still require that each
Trading Permit Holder (``TPH'') or TPH organization that maintains
positions in the options on the same side of the market, for its own
account or for the account of a customer, report certain information to
the Exchange. This information would include, but would not be limited
to, the options' positions, whether such positions are hedged and, if
so, a description of the hedge(s). Market-Makers \30\ (including
Designated Primary Market-Makers (``DPMs'')) \31\ would continue to be
exempt from this reporting requirement, however, the Exchange may
access Market-Maker position information.\32\ Moreover, the Exchange's
requirement that TPHs file reports with the Exchange for any customer
who held aggregate large long or short positions on the same side of
the market of 200 or more options contracts of any single class for the
previous day will remain at this level for the options subject to this
proposal and will continue to serve as an important part of the
Exchange's surveillance efforts.\33\
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    \30\ A Market-Maker ``Trading Permit Holder registered with the
Exchange pursuant to Rule 3.52 for the purpose of making markets in
option contracts traded on the Exchange and that has the rights and
responsibilities set forth in Chapter 5, Section D of the Rules.''
See Rule 1.1.
    \31\ A Designated Primary Market-Maker ``is TPH organization
that is approved by the Exchange to function in allocated securities
as a Market-Maker (as defined in Rule 8.1) and is subject to the
obligations under Rule 5.54 or as otherwise provided under the rules
of the Exchange.'' See Rule 1.1.
    \32\ The Options Clearing Corporation (``OCC'') through the
Large option Position Reporting (``LOPR'') system acts as a
centralized service provider for TPH compliance with position
reporting requirements by collecting data from each TPH or TPH
organization, consolidating the information, and ultimately
providing detailed listings of each TPH's report to the Exchange, as
well as Financial Industry Regulatory Authority, Inc. (``FINRA''),
acting as its agent pursuant to a regulatory services agreement
(``RSA'').
    \33\ See Rule 8.43 for reporting requirements.
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    The Exchange believes that the existing surveillance procedures and

reporting requirements at the Exchange and other SROs are capable of
properly identifying disruptive and/or manipulative trading activity.
The Exchange also represents that it has adequate surveillances in
place to detect potential manipulation, as well as reviews in place to
identify potential changes in composition of the Underlying ETFs and
Indexes and continued compliance with the Exchange's listing standards.
These procedures utilize daily monitoring of market activity via
automated surveillance techniques to identify unusual activity in both
options and the underlyings, as applicable.\34\ The Exchange also notes
that large stock holdings must be disclosed to the Commission by way of
Schedules 13D or 13G,\35\ which are used to report ownership of stock
which exceeds 5% of a company's total stock issue and may assist in
providing information in monitoring for any potential manipulative
schemes.
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    \34\ The Exchange believes these procedures have been effective
for the surveillance of trading the options subject to this
proposal, and will continue to employ them.
    \35\ 17 CFR 240.13d-1.
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    The Exchange believes that the current financial requirements
imposed by the Exchange and by the Commission adequately address
concerns regarding potentially large, unhedged positions in the options
on the Underlying ETFs and Indexes. Current margin and risk-based
haircut methodologies serve to limit the size of positions maintained
by any one account by increasing the margin and/or capital that a TPH
must maintain for a large position held by itself or by its
customer.\36\ In addition, Rule 15c3-1\37\ imposes a capital charge on
TPHs to the extent of any margin deficiency resulting from the higher
margin requirement.
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    \36\ See Rule 10.3 for a description of margin requirements.
    \37\ 17 CFR 240.15c3-1.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\38\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5)\39\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \40\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \38\ 15 U.S.C. 78f(b).
    \39\ 15 U.S.C. 78f(b)(5).
    \40\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposed increase in position limits
for options on the Underlying ETFs and Indexes will remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, protect investors and the public
interest, because it will provide market participants with the ability
to more effectively execute their trading and hedging activities. The
proposed increases will allow market participants to more fully
implement hedging strategies in related derivative products and to
further use options to achieve investment strategies (e.g., there are
Exchange-Traded Products (``ETPs'') that use options on the Underlying
ETFs or Indexes as part of their investment strategy, and the
applicable position limits as they stand today may inhibit these ETPs
in achieving their investment objectives, to the detriment of
investors). Also, increasing the applicable position limits may allow
Market-Makers to provide the markets for these options with more
liquidity in amounts commensurate with increased consumer demand in
such markets. The proposed position limit increases may also encourage
other liquidity providers to shift liquidity, as well as encourage
consumers to shift demand, from over the counter markets onto the
Exchange, which will enhance the process of price discovery conducted
on the Exchange through increased order flow.
    In addition, the Exchange believes that the structure of the
Underlying ETFs and Indexes, the considerable market capitalization of
the funds, underlying component securities, and/or indexed component
securities, and the liquidity of the markets for the applicable options
and underlying component securities will mitigate concerns regarding
potential manipulation of the products and/or disruption of the
underlying markets upon increasing the relevant position limits. As a
general principle, increases in market capitalizations, active trading
volume, and deep liquidity of securities do not lead to manipulation
and/or disruption. This general principle applies to the [sic] Given
the recently observed increased levels of market capitalization,
trading volume, and liquidity in shares of the Underlying ETFs, and the
components of the Underlying ETFs and Indexes (as described above), the
Exchange does not believe that the options markets or underlying
markets would become susceptible to manipulation and/or disruption as a
result of the proposed position limit increases. Indeed, the Commission
has previously expressed the belief that removing position and exercise
limits may bring additional depth and liquidity to the options markets
without increasing concerns regarding intermarket manipulation or
disruption of the options or the underlying securities.\41\
---------------------------------------------------------------------------

    \41\ See Securities Exchange Act Release No. 62147 (October 28,
2005) (SR-CBOE-2005-41), at 62149.
---------------------------------------------------------------------------

    Further, the Exchange notes that the proposed rule change to
increase position limits for select actively traded options, is not
novel and has been previously approved by the Commission. For example,
the Commission has previously approved, on a pilot basis, eliminating
position limits for options on SPY.\42\ Additionally, the Commission
has approved similar proposed rule changes by the Exchange to increase
position limits for options on highly liquid, actively traded ETFs,\43\
and has approved similar proposals to eliminate position limits
(including near-term restrictions) for options overlaying SPX, S&P 100
Index (``OEX''), European-style S&P 100 Index (``XEO''), Dow Jones
Industrial Average (``DJI''), and Nasdaq 100 Index (``NDX''), and
Russell 2000 Index (``RUT''), among others.\44\ In approving the
permanent elimination of position (and exercise limits) for such
options, the Commission relied heavily upon the Exchange's surveillance
capabilities, expressing trust in the enhanced surveillances and
reporting safeguards that the Exchange took in order to detect and
deter possible manipulative behavior which might arise from eliminating
position and

exercise limits. Furthermore, the Exchange again notes that that the
proposed position limits for options on EFA and FXI are consistent with
existing position limits for options on IWM and EEM, the proposed
limits for options on XLF, HYG, and OIH are consistent with current
position limits for options on EWZ, TLT, and EWJ, and the proposed
position limits for MXEA and MXEF are equal to the current position
limits for options on 20 other indexes, and the proposed elimination of
near-term restrictions currently exists for options on other
indexes.\45\
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    \42\ See supra notes 7 and 8.
    \43\ See supra note 16; see also Securities Exchange Act Release
No. 68086 (October 23, 2012), 77 FR 65600 (October 29, 2012)(SR-
CBOE-2012-066).
    \44\ See Securities Exchange Act Release Nos. 44994 (October 26,
2001), 66 FR 55722 (November 2, 2001)(SR-CBOE-2001-22); 4556 (July
16, 2001), 66 FR 38046 (July 20, 2001) (SR-CBOE-2001-39); 52650
(October 21, 2005), 70 FR 62147 (October 28, 2005)(SR-CBOE-2005-41);
56350 (September 4, 2007), 72 FR 51878 (September 11, 2001)(SR-CBOE-
2007-79); see also supra note 5.
    \45\ See supra note 5.
---------------------------------------------------------------------------

    The Exchange's surveillance and reporting safeguards continue to be
designed to deter and detect possible manipulative behavior that might
arise from increasing or eliminating position and exercise limits in
certain classes. The Exchange believes that the current financial
requirements imposed by the Exchange and by the Commission adequately
address concerns regarding potentially large, unhedged position in the
options on the Underlying ETFs and Indexes, further promoting just and
equitable principles of trading, the maintenance of a fair and orderly
market, and the protection of investors.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the increased position limits (and exercise
limits) will be available to all market participants and apply to each
in the same manner. The Exchange believes that the proposed rule change
will provide additional opportunities for market participants to more
efficiently achieve their investment and trading objectives of market
participants.
    The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the Act. On the contrary, the Exchange
believes the proposal promotes competition because it may attract
additional order flow from the OTC market to exchanges, which would in
turn compete amongst each other for those orders.\46\ The Exchange
believes market participants would benefit from being able to trade
options with increased position limits in an exchange environment in
several ways, including but not limited to the following: (1) enhanced
efficiency in initiating and closing out position; (2) increased market
transparency; and (3) heightened contra-party creditworthiness due to
the role of OCC as issuer and guarantor. The Exchange understands that
other options exchanges intend to file similar proposed rule changes
with the Commission to increase position limits on options on the
Underlying ETFs. This may further contribute to fair competition among
exchanges for multiply listed options.
---------------------------------------------------------------------------

    \46\ Additionally, several other options exchange have the same
position limits as the Exchange, as they incorporate by reference to
the Exchange's position limits, and as a result the position limits
for options on the Underlying ETFs and Indexes will increase at
those exchanges. For example, Nasdaq Options position limits are
determined by the position limits established by the Exchange. See
Nasdaq Stock Market LLC Rules, Options 9, Sec. 13 (Position Limits).
---------------------------------------------------------------------------

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2020-015 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2020-015. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2020-015, and should be submitted
on or before April 6, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\47\
---------------------------------------------------------------------------

    \47\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05236 Filed 3-13-20; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: September 30, 2010 (Volume 75, Number 189)]
[Notices]
[Page 60441]
[DOCID:fr30se10-68]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 13833-000]

Northern Wasco People's Utility District; Notice of Preliminary
Permit Application Accepted For Filing and Soliciting Comments, Motions
To Intervene, and Competing Applications

September 22, 2010.
    On August 23, 2010, Northern Wasco People's Utility District
(Northern Wasco PUD) filed an application for a preliminary permit,
pursuant to section 4(f) of the Federal Power Act (FPA), proposing to
study the feasibility of the White River Falls Hydroelectric project
near Maupin, Wasco County, Oregon. The sole purpose of a preliminary
permit, if issued, is to grant the permit holder priority to file a
license application during the permit term. A preliminary permit does
not authorize the permit holder to perform any land-disturbing
activities or otherwise enter upon lands or waters owned by others
without the owners' express permission.
    The proposed project calls for redevelopment of a hydroelectric
project constructed in 1902 and decommissioned in 1963. Northern Wasco
PUD proposes to reconstruct, replace, and repair some existing
features, as well as build new features at the site.
    The proposed project will consist of the following: (1) New head
works; (2) anchors placed throughout the existing weir; (3) a new 600-
foot-long, 6-foot-diameter penstock to be constructed at the site of
the old structure; (4) a new powerhouse with two turbine/generator
units with an installed capacity of 3.4 to 4.0-megawatts; (5) a 4.15-
kilovolt, 1,800-foot-long, underground transmission line connecting to
an existing substation; and (6) appurtenant facilities. The estimated
annual generation of the White River Falls project is 16,000 megawatt-
hours.
    Applicant Contact: Bob Guidinger, Hydro Dept Manager, Northern
Wasco PUD, 2345 River Road, The Dalles, OR 97058; phone: (541) 298-
3325.
    FERC Contact: Patrick Murphy<PHONE_NUMBER>.
    Deadline for filing comments, motions to intervene, competing
applications (without notices of intent), or notices of intent to file
competing applications: 60 days from the issuance of this notice.
Competing applications and notices of intent must meet the requirements
of 18 CFR 4.36. Comments, motions to intervene, notices of intent, and
competing applications may be filed electronically via the Internet.
See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's
Web site http://www.ferc.gov/docs-filing/efiling.asp. Commenters can
submit brief comments up to 6,000 characters, without prior
registration, using the eComment system at http://www.ferc.gov/docs-
filing/ecomment.asp. You must include your name and contact information
at the end of your comments. For assistance, please contact FERC Online
Support. Although the Commission strongly encourages electronic filing,
documents may also be paper-filed. To paper-file, mail an original and
seven copies to: Kimberly D. Bose, Secretary, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
    More information about this project, including a copy of the
application, can be viewed or printed on the ``eLibrary'' link of the
Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp.
Enter the docket number (P-13833-000) in the docket number field to
access the document. For assistance, contact FERC Online Support.

Kimberly D. Bose,
Secretary.
[FR Doc. 2010-24513 Filed 9-29-10; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 81 (Tuesday, April 28, 2015)]
[Notices]
[Pages 23534-23535]
[FR Doc No: 2015-09751]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 6142-008]

Bradley D. Reeves, Kevin Drone; Notice of Termination of
Exemption by Implied Surrender and Soliciting Comments, Protests, and
Motions To Intervene

    Take notice that the following hydroelectric proceeding has been
initiated by the Commission:
    a. Type of Proceeding: Termination of exemption by implied
surrender
    b. Project No.: 6142-008
    c. Date Initiated: April 16, 2015
    d. Exemptees: Bradley D. Reeves and Kevin Drone
    e. Name and Location of Project: The Dardanelles Creek
Hydroelectric Project is located on the Dardanelles and Pond Creeks, in
Placer County, California, on federal lands managed by the U.S.
Department of the Interior's Bureau of Land Management (BLM) and Bureau
of Reclamation (BOR).
    f. Issued Pursuant to: 18 CFR 4.106 (Standard Article 1 of the
Exemption)
    g. Exemptee Contact Information: Bradley D. Reeves, 6335 Broken Bow
Court Foresthill, CA 95631,<PHONE_NUMBER>, and Kevin Drone, 22234 Todd
Valley Road Foresthill, CA 95631,<PHONE_NUMBER> Or c/o Sackheim
Consulting, 5096 Cocoa Palm Way, Fair Oaks, CA 95628,<PHONE_NUMBER>.
    h. FERC Contact: M. Joseph Fayyad,<PHONE_NUMBER>,
<EMAIL_ADDRESS>    i. Deadline for filing comments, motions to intervene and protests,
is 30 days from the issuance date of this notice. The Commission
strongly encourages electronic filing. All documents may be filed using
the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to 6,000
characters, without prior registration, using the eComment system at
http://www.ferc.gov/docs-filing/ecomment.asp. You must include your
name and contact information at the end of your comments. For
assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>(866) 208-3676 (toll free), or (202) 502-
8659 (TTY). In lieu of electronic filing, please send a paper copy to:
Secretary, Federal Energy Regulatory Commission, 888 First Street NE.,
Washington, DC 20426. Please include the project number (P-6142-008) on
any comments, motions to intervene, protests, or recommendations filed.
    j. Description of Project Facilities: (1) A 5-foot-high by 20-foot-
long diversion structure on Dardanelles Creek and a 2-foot-high by 8-
foot-long diversion structure on Pond Creek; (2) a 8-inch-diameter,
4,000-foot-long conduit from Dardanelles Creek, and a 2-foot-wide,
2,700-foot-long ditch from Pond Creek; (3) a settling basin, 60-foot-
long, 30-foot-wide, and 8-foot-deep; (4) a 6-inch-diameter, 1,660-foot-
long penstock; (5) a powerhouse with a single Canyon turbine unit rated
at 224 kilowatts (kW), and connected to a Toshiba induction generator
rated at 240 kW; and (6) appurtenant facilities.
    k. Description of Proceeding: The exemptee is in violation of
Standard Article 1 of its exemption, which was granted on October 8,
1982 (21 FERC ]62,018). Article 1 provides, among other things, that
the Commission may terminate an exemption if any term or condition of
the exemption is violated.
    Commission records show The Dardanelles Creek Hydroelectric Project
has been non-operational since before 2009. The project is located on
lands managed by the Bureau of Land Management (BLM) and the Bureau of
Reclamation (BOR) and has ongoing compliance issues with both agencies.
By letter dated September 26, 2011, BLM copied the Commission on a
fully executed duplicate original 5-year license (permit to use federal
lands) to Mr. Bradley Reeves, exemptee for the project. On October 17,
2011, Mr. Reeves advised the Commission that he had sold the project to
Mr. Kevin Drone as of September 15, 2011. By letter dated October 28,
2011, to the new owner, Mr. Drone, the Commission requested the filing
of documentation he has the rights to use or occupy the federal lands
affected by the project, and a plan and schedule for making the project
operational. On March 6, 2012, Mr. Drone filed a letter with the
Commission stating he declined the exemption transfer until Mr. Reeves
resolves non-compliance and outstanding debt liability issues.
Commission, BLM, and BOR staff has tried to contact both parties. The
parties have shown no movement towards restoring project operation or
removing abandoned equipment, and no longer claim ownership of the
project. Last correspondence with Mr. Reeves was returned with no
forwarding address. The Commission is pursuing an implied surrender of
the exemption due to noncompliance with its Standard Article 1. Doing
so will also facilitate the BLM and/or the BOR efforts to pursue
legally the current and/or the previous owner of the project.
    l. This notice is available for review and reproduction at the
Commission in the Public Reference Room, Room 2A, 888 First Street NE.,
Washington, DC 20426. The filing may also be viewed on the Commission's
Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the
Docket number (P-6142-008) excluding the last three digits in the
docket number field to access the notice. You may also register online
at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via
email of new filings and issuances related to this or other pending
projects. For assistance, call toll-free 1-866-208-3676 or email
<EMAIL_ADDRESS>For TTY, call<PHONE_NUMBER>.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments and Protests--Anyone may submit comments, protests or a
motion to intervene in accordance with the requirements of Rules of
Practice and Procedure, 18 CFR 385.210 and 385.211. In determining the
appropriate action to take, the Commission will consider all protests
or other comments filed, but only those who file a motion to intervene
in accordance with the Commission's Rules may become a party to the
proceeding. Any comments, protests, or motions to intervene must be
received on or before the specified deadline date for the particular
proceeding.
    o. Filing and Service of Responsive Documents--Any filing must (1)
bear in all capital letters the title ``COMMENTS, PROTEST, or MOTION TO
INTERVE'',

as applicable; (2) set forth in the heading the project number of the
proceeding to which the filing responds; (3) furnish the name, address,
and telephone number of the person commenting or protesting; and (4)
otherwise comply with the requirements of 18 CFR 385.2001 through
385.2005. All comments, protests, or motion to intervene must set forth
their evidentiary basis and otherwise comply with the requirements of
18 CFR 4.34(b). All comments or protests should relate to project works
which are the subject of the termination of exemption. A copy of any
protest must be served upon each representative of the exemptee
specified in item g above. A copy of all other filings in reference to
this notice must be accompanied by proof of service on all persons
listed in the service list prepared by the Commission in this
proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.
    p. Agency Comments--Federal, state, and local agencies are invited
to file comments on the described proceeding. If any agency does not
file comments within the time specified for filing comments, it will be
presumed to have no comments.

    Dated: April 16, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015-09751 Filed 4-27-15; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 154 (Wednesday, August 10, 2016)]
[Notices]
[Pages 52960-52961]
[FR Doc No: 2016-18198]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

Special Permit Applications

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

ACTION: Notice of actions on special permit applications.

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SUMMARY: In accordance with the procedures governing the application
for, and the processing of, special permits from the Department of
Transportation's Hazardous Material Regulations (49 CFR part 107,
subpart B), notice is hereby given of the actions on special permits
applications in (June to June 2016). The mode of transportation
involved are identified by a number in the ``Nature of Application''
portion of the table below as follows: 1--Motor vehicle, 2--Rail
freight, 3--Cargo vessel, 4--Cargo aircraft only, 5--Passenger-carrying
aircraft. Application numbers prefixed by the letters EE represent
applications for Emergency Special Permits. It should be noted that
some of the sections cited were those in effect at the time certain
special permits were issued.

    Issued in Washington, DC, on July 19, 2016.
Donald Burger,
Chief, Special Permits and Approvals Branch.

----------------------------------------------------------------------------------------------------------------
                                                                                Nature of special permit
           S.P. No.                    Applicant               Regulation(s)                  thereof
----------------------------------------------------------------------------------------------------------------
                                       MODIFICATION SPECIAL PERMIT GRANTED
----------------------------------------------------------------------------------------------------------------
12399-M......................  Linde Gas North America,  49 CFR 180.209..........  To modify the special permit
                                LLC Murray Hill, NJ.                                to authorize DOT
                                                                                Specification 3AL cylinders
                                                                                made of 6351-T6 aluminum to
                                                                                be requalified by ultrasonic
                                                                                examination and eddy current
                                                                                examination in accordance
                                                                                with 49 CFR Appendix C to
                                                                                Part 180.
14206-M......................  Digital Wave Corporation  49 CFR 172.203(a),        To modify the special permit
                                Centennial, CO.           172.301(c), and 180.205.  to add DOT Specification
                                                                                3AX, 3AAX cylinders and 3T
                                                                                tubes which exceed 125 lbs
                                                                                water capacity for
                                                                                requalification by
                                                                                ultrasonic examination once
                                                                                every ten years.
16469-M......................  ACS UE Testing LLC        49 CFR 172.203(a),        To modify the special permit
                                Denver, CO.               172.301(c), 180.205.      to authorize the UE system
                                                                                to perform a 3 pass scan.
9232-M.......................  U.S. Department of        49 CFR Part 107, Subpart  To modify the special permit
                                Defense Scott AFB, IL.    B, Part 172, Subparts     to identify the DOD as an
                                                          C, D except 172.312.      offeror of hazardous
                                                                                materials and to clarify
                                                                                certain operational
                                                                                requirements by replacing
                                                                                AFR 71-4 with AFMAN 24-204
                                                                                PREPARING HAZARDOUS
                                                                                MATERIALS FOR MILITARY AIR
                                                                                SHIPMENTS.
7573-M.......................  U.S. Department of        49 CFR Part 107, Subpart  To modify the special permit
                                Defense Scott AFB, IL.    B, IL Part 172.           to identify the DOD Part 175
                                                                                as an offeror of hazardous
                                                                                materials and to clarify the
                                                                                authorized airports and
                                                                                update the loading and
                                                                                stowage requirements.
16146-M......................  U.S. Department of        49 CFR 171.22(e),         To modify the special permit
                                Defense Scott AFB, IL.    172.101 Hazardous         to authorize Division 1.4
                                                          Materials Table Column    explosives and add optional
                                                          (9B), International       packaging requirements AFMAN
                                                          Civil Aviation            24-204 PREPARING HAZARDOUS
                                                          Organization's            MATERIALS FOR MILITARY AIR
                                                          Technical Instructions    SHIPMENTS.
                                                          Part 3, Chapter 2,
                                                          Table 3-1 Columns 12
                                                          and 13.
----------------------------------------------------------------------------------------------------------------

                                           NEW SPECIAL PERMIT GRANTED
----------------------------------------------------------------------------------------------------------------
16560-N......................  LightSail Energy, Inc.    49 CFR 173.302(a).......  To authorize the manufacture,
                                Berkeley, CA.                                       mark, sale and use of a non-
                                                                                DOT specification fully
                                                                                wrapped carbon fiber
                                                                                reinforced composite
                                                                                cylinder with a non-lead
                                                                                sharing plastic liner for
                                                                                the purpose of transporting
                                                                                certain non-liquefied
                                                                                compressed gases in
                                                                                commerce. This cylinder
                                                                                meets all of the
                                                                                requirements of the ISO
                                                                                11515 Standard with the
                                                                                exception of the design
                                                                                water capacity and the
                                                                                design safety factor. (modes
                                                                                1, 2, 3).
16618-N......................  Farmers Grain Company     49 CFR 173.24b(a)(1),     To authorize the
                                Pond Creek, OK.           173.315(m)(1)(iv).        transportation in commerce
                                                                                of anhydrous ammonia in four
                                                                                (4) existing non-DOT
                                                                                specification cargo tanks
                                                                                commonly known as ``nurse
                                                                                tanks'' and considered an
                                                                                implement in husbandry. The
                                                                                tanks exceed the authorized
                                                                                capacity and are loaded by
                                                                                volume rather than by weight
                                                                                as required by the Hazardous
                                                                                Materials Regulations (HMR).
                                                                                (mode 1).
----------------------------------------------------------------------------------------------------------------
                                     MODIFICATIONS SPECIAL PERMIT WITHDRAWN
----------------------------------------------------------------------------------------------------------------
16572-M......................  Samsung Austin            49 CFR 173.158(b),        To modify the special permit
                                Semiconductor, LLC        173.158(e), 173.158(f).   originally issued on an
                                Austin, TX.                                         emergency basis to authorize
                                                                                an additional two years and
                                                                                to authorize drums to be
                                                                                emptied no more than 26
                                                                                weeks after the initial date
                                                                                of filling instead of the
                                                                                current 6 months.
14429-M......................  Bayer HealthCare, LLC     49 CFR 173.306(a)(3)(v).  To modify the special permit
                                Cleveland, TN.                                      to authorize an additional
                                                                                DOT Specification 2P
                                                                                aluminum non-refillable
                                                                                inside container, add an
                                                                                additional Division 2.2
                                                                                material, update ``Consumer
                                                                                Commodity'' to ``Limited
                                                                                Quantity'', change the
                                                                                capacity from volumetric
                                                                                ``ounces'' to ``Net Weight
                                                                                Ounces'' and update the
                                                                                drawing numbers of the
                                                                                inside containers.
----------------------------------------------------------------------------------------------------------------
                                                     DENIED
----------------------------------------------------------------------------------------------------------------
16572-M......................  Request by Samsung Austin Semiconductor, LLC Austin, TX June 03, 2016. To modify
                                the special permit to authorize removing unnecessary restrictions contained in
                                paragraph 7.b. safety control measures.
16463-N......................  Request by Salco Products Lemont, IL June 15, 2016. We would like to apply for a
                                special permit to approve for use 1-3 thread by thread
                                ball valves on tank cars produced by SW; Part numbers BWEV6666TTSE00100000,
                                BWEV6666TTSELK100000, BWEV6LH20, BWEV6666TTSE00200000, BWEV6666TTSELK200000,
                                BWEV6666TTSE00300000 and BWEV6666TTSE0030LKOO. These valves are currently on AAR
                                approval number E079023 but the facility producing them has inadvertently
                                allowed their facility certification to lapse. The facility is reapplying for
                                facility approval but due to the high demand on the AAR the re-approval will not
                                happen for an additional (6) months. Before the manufacturer realized the
                                facility certification had lapsed valves were sold and placed into service. We
                                are requesting a special permit to allow the continued use of the SVF valves
                                listed above until such time the AAR can approve the facility. The facility has
                                in place a current ISO 9001:2008 and an EC Certificate of Conformity
                                certification from Lloyd's Register in addition to several PED and EC approvals
                                as evidence of an in place quality system and its continued adherence. We do not
                                believe there is any increase in risk by allowing the continued use of these
                                valves based upon the evidence of an in place quality system and a review of the
                                quality performance associated with these valves. There are currently no known
                                open issues with the valves in service. The manufacturer of these valves has
                                been in business and providing these valves for use on tank cars for 20+ years.
                                There has been no change in manufacturing, materials or design. The special
                                permit is for the manufacturer to be applied to all shippers utilizing the above
                                listed valves.
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[FR Doc. 2016-18198 Filed 8-9-16; 8:45 am]
 BILLING CODE 4909-60-M