[Federal Register Volume 79, Number 162 (Thursday, August 21, 2014)]
[Notices]
[Pages 49504-49506]
[FR Doc No: 2014-19863]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. IC14-13-000 and IC14-15-000]

Commission Information Collection Activities (FERC-510 and FERC-
549B) Comment Request

AGENCY: Federal Energy Regulatory Commission.

ACTION: Comment request.

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SUMMARY: In compliance with the requirements of the Paperwork Reduction
Act of 1995, 44 USC 3507(a)(1)(D), the Federal Energy Regulatory
Commission (Commission or FERC) is submitting its information
collection FERC-510 (Application for Surrender of Hydropower License)
and FERC-549B (Gas Pipeline Rates: Capacity Reports and Index of
Customers) to the Office of Management and Budget (OMB) for review of
the information collection requirements. Any interested person may file
comments directly with OMB and should address a copy of those comments
to the Commission as explained below. The Commission previously issued
notices in the Federal Register for FERC-510 (79 FR 32925, 6/9/2014)
and FERC-549B (79 FR 32929, 6/9/2014) requesting public comments. The
Commission received no comments on these collections and is making this
notation in its submittal to OMB.

    Note: The Commission issued both 60-day notices for both the
FERC-510 and FERC-549B separately under different docket numbers.
Both docket numbers (IC14-13-000 and IC14-15-000) are combined in
this notice. This combination has no effect on the requirements
within each information collection.

DATES: Comments on the collection of information are due by September
22, 2014.

ADDRESSES: Comments filed with OMB, identified by the OMB Control No.
1902-0068 (FERC-510) or 1902-0169 (FERC-549B) should be sent via email
to the Office of Information and Regulatory Affairs<EMAIL_ADDRESS>Attention: Federal Energy Regulatory Commission
Desk Officer. The Desk Officer may also be reached via telephone at
202-395-4718.
    A copy of the comments should also be sent to the Commission, in
Docket No. IC14-13-000 or IC14-15-000, by either of the following
methods:
     eFiling at Commission's Web site: http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery/Courier: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: All submissions must be formatted and filed in
accordance with submission guidelines at: http://www.ferc.gov/help/submission-guide.asp. For user assistance contact FERC Online Support
by email at<EMAIL_ADDRESS>or by phone at:<PHONE_NUMBER>
(toll-free), or<PHONE_NUMBER> for TTY.
    Docket: Users interested in receiving automatic notification of
activity in this docket or in viewing/downloading comments and
issuances in this docket may do so at http://www.ferc.gov/docs-filing/docs-filing.asp.

FOR FURTHER INFORMATION: Ellen Brown may be reached by email at
<EMAIL_ADDRESS>by telephone at<PHONE_NUMBER>, and by fax at
(202) 273-0873.

SUPPLEMENTARY INFORMATION:
    Type of Request: Three-year extension of the information collection
requirements for all collections described below with no changes to the
current reporting requirements. Please note that each collection is
distinct from the next.
    Comments: Comments are invited on: (1) Whether the collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information will have
practical utility; (2) the accuracy of the agency's estimates of the
burden and cost of the collections of information, including the
validity of the methodology and assumptions used; (3) ways to enhance
the quality, utility and clarity of the information collections; and
(4) ways to minimize the burden of the collections of information on
those who are to respond, including the use of automated collection
techniques or other forms of information technology.

FERC-510, Application for Surrender of Hydropower License

    OMB Control No.: 1902-0068.
    Abstract: The information collected under the requirements of FERC-
510 is used by the Commission to implement the statutory provisions of
sections 4(e), 6 and 13 of the Federal Power Act (FPA) (16 U.S.C.
sections 797(e), 799 and 806). Section 4(e) gives the Commission
authority to issue licenses for the purposes of constructing, operating
and maintaining dams, water conduits, reservoirs, powerhouses,
transmission lines or other power project works necessary or convenient
for developing and improving navigation, transmission and utilization
of power using bodies of water over which Congress has jurisdiction.
Section 6 gives the Commission the authority to prescribe the
conditions of licenses including the revocation or surrender of the
license. Section 13 defines the Commission's authority to delegate time
periods for when a license must be terminated if project construction
has not begun. Surrender of a license may be desired by a licensee when
a licensed project is retired or not constructed or natural
catastrophes have damaged or destroyed the project facilities.
    FERC-510 is the application for the surrender of a hydropower
license. The information is used by Commission staff to determine the
broad impact of such surrender. The Commission will issue a notice
soliciting comments from the public and other agencies and conduct a
careful review of the application before issuing an order for Surrender
of a License. The order is the result of an analysis of the information
produced, i.e., economic, environmental concerns, etc., which is
examined to determine if the application for surrender is warranted.
The order implements the existing regulations and is inclusive for
surrender of all types of hydropower licenses issued by FERC and its
predecessor, the Federal Power Commission. The Commission implements
these mandatory filing requirements in the Code of Federal Regulations
(CFR) under 18 CFR 6.1-6.4.
    Type of Respondent: Private or Municipal Hydropower Licensees.
    Estimate of Annual Burden: The Commission estimates the annual
public reporting burden for the information collection as:

                            FERC-510, Application for Surrender of Hydropower License
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                                                                                Total annual
                                   Annual number   Total number   Average burden  burden hours &     Cost per
    Number of respondents (1)      of responses    of responses     & cost per     total annual   respondent ($)
                                  per respondent    (1)*(2)=(3)    response \1\        cost           (5)/(1)
                                        (2)                             (4)         (3)*(4)=(5)
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16..............................               1              16              10             160            $705
                                                                            $705         $11,280
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\1\ We estimate that the salary and skill mix is similar to that of Commission employees. The average hourly
  cost of $70.50 (for salary plus benefits) is used. The estimates for cost per response are derived using the
  following formula: Average Burden Hours per Response * $70.50 per Hour = Average Cost per Response.

FERC-549B, Gas Pipeline Rates: Capacity Reports and Index of Customers

    OMB Control No.: 1902-0169
    Abstract: The information collected under the requirements of FERC-
549B includes both the Index of Customers (IOC) report under Commission
regulations at 18 Code of Federal Regulations (CFR) 284.13(c) and three
capacity reporting requirements. One of these is in Commission
regulations at 18 CFR 284.13(b) and requires reports on firm and
interruptible services. The second is at 18 CFR 284.13(d)(1) and
requires pipelines make information on capacity and flow information
available on their Internet Web sites. The third is at 18 CFR
284.13(d)(2) and requires an annual filing of peak day capacity.

Capacity Reports Under 284.13(b) and 284.13(d)(1)

    On April 4, 1992, in Order No. 636 (RM91-11-000), the Commission
established a capacity release mechanism under which shippers could
release firm transportation and storage capacity on either a short- or
long-term basis to other shippers wanting to obtain capacity. Pipelines
posted available firm and interruptible capacity information on their
electronic bulletin boards (EBBs) to inform potential shippers.
    On August 3, 1992, in Order No. 636-A (RM91-11-002), the Commission
determined through staff audits, that the efficiency of the capacity
release mechanism could be enhanced by standardizing the content and
format of capacity release information and the methods by which
shippers accessed this information, which pipelines posted to their
EBBs
    On March 29, 1995, through Order 577 (RM95-5-000), the Commission
amended Sec.  284.243(h) of its regulations to allow shippers the
ability to release capacity without having to comply with the
Commission's advance posting and bidding requirements.
    On February 9, 2000, in Order No. 637 (RM98-10-000), to create
greater substitution between different forms of capacity and to enhance
competition across the pipeline grid, the Commission revised its
capacity release regulations regarding scheduling, segmentation and
flexible point rights, penalties, and reporting requirements. This
resulted in more reliable capacity information availability and price
data that shippers needed to make informed decisions in a competitive
market as well as to improve shipper's and the Commission's ability to
monitor the market for potential abuses.

Peak Day Annual Capacity Report Under 284.13(d)(2)

    18 CFR 284.13(d)(2) requires an annual peak day capacity report of
all interstate pipelines, including natural gas storage only companies.
This report is generally a short report showing the peak day design
capacity or the actual peak day capacity achieved, with a short
explanation, if needed. The regulation states:
    An interstate pipeline must make an annual filing by March 1 of
each year showing the estimated peak day capacity of the pipeline's
system, and the estimated storage capacity and maximum daily delivery
capability of storage facilities under reasonably representative
operating assumptions and the respective assignments of that capacity
to the various firm services provided by the pipeline.
    This annual report/filing is publicly available, while other more
specific interstate pipeline and storage capacity details are filed as
CEII, such as the Annual System Flow Diagram (FERC-567) which are not
publicly available.

Index of Customers Under 284.13(c)

    In Order 581, issued September 28, 1995 (Docket No. RM95-4-000),
the Commission established the IOC quarterly information requirement.
This Order required the reporting of five data elements in the IOC
filing: the customer name, the rate schedule under which service is
rendered, the contract effective date, the contract termination date,
and the maximum daily contract quantity, for either transportation or
storage service, as appropriate.
    In a notice issued separate from Order 581 in Docket No. RM95-4-
000, issued February 29, 1996, the Commission, through technical
conferences with industry, determined that the IOC data reported should
be in tab delimited format on diskette and in a form as proscribed in
Appendix A of the rulemaking. In a departure from past practice, a
three-digit code, instead of a six-digit code, was established to
identify the respondent.
    In Order 637, issued February 9, 2000 (Docket Nos. RM98-10-000 and
RM98-12-000), the Commission required the filing of: the receipt and
delivery points held under contract and the zones or segments in which
the capacity is held, the common transaction point codes, the contract
number, the shipper identification number, an indication whether the
contract includes negotiated rates, the names of any agents or asset
managers that control capacity in a pipeline rate zone, and any
affiliate relationship between the pipeline and the holder of capacity.
It was stated in the Order that the changes to the Commission's
reporting requirements would enhance the reliability of information
about capacity availability and price that shippers need to make
informed decisions in a competitive market as well as improve shippers'
and the Commission's ability to monitor marketplace behavior to detect,
and remedy anti-competitive behavior. Order 637 required a pipeline
post the information quarterly on its Internet Web sites instead of on
the outdated EBBs.
    Type of Respondent: Respondents for this data collection are
interstate pipelines subject to FERC regulation under the Natural Gas
Act and those entities defined as Hinshaw Pipelines under the Natural
Gas Policy Act.
    Estimate of Annual Burden: The Commission estimates the annual
public reporting burden for the information collection as:

                                         FERC-549B (Gas Pipeline Rates: Capacity Reports and Index of Customers)
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                                                                                Total annual
                                                             Number of     Annual number   Total number   Average burden  burden hours &     Cost per
                                                            respondents    of responses    of responses     & cost per     total annual   respondent ($)
                                                                (1)       per respondent    (1)*(2)=(3)    response \2\        cost           (5)/(1)
                                                                                (2)                             (4)         (3)*(4)=(5)
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Capacity Reports under 284.13(b) & 284.13(d)(1).........             185               6           1,110             145         160,950          61,335
                                                                                $10,222.50     $11,346,975
93049344Peak Day Annual Capacity Report under                        185               1             185              10           1,850             705
 284.13(d)(2)...........................................                                                            $705        $130,425
Index of Customers under 284.13(c)......................             185               4             740               3           2,220             846
                                                                                $211.50        $156,510
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............           2,035  ..............         165,020          62,886
                                                                                $11,633,910
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\2\ The estimates for cost per response are derived using the following formula: Average Burden Hours per Response * $70.50 per hour. This cost is based
  on the average FERC employee salary. We assume (based upon consultation of subject matter experts for this industry) that respondents to this
  collection are similarly compensated in terms of salary and benefits.

    Dated: August 15, 2014.
Kimberly D. Bose,
Secretary.
[FR Doc. 2014-19863 Filed 8-20-14; 8:45 am]
BILLING CODE 6717-01-P


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    The proposed rule would provide requirements for determining fair
value in good faith for purposes of section 2(a)(41) and rule 2a-4
thereunder. This determination would involve assessing and managing
material risks associated with fair value determinations; selecting,
applying, and testing fair value methodologies; evaluating any pricing
services used; adopting and implementing policies and procedures; and
maintaining certain records. The proposed rule would permit a fund's
board of directors to assign the fair value determination relating to
any or all fund investments to an investment adviser of the fund, which
would carry out all of these requirements, subject to board oversight
and certain reporting, recordkeeping, and other requirements designed
to facilitate the board's ability effectively to oversee the adviser's
fair value determinations. As relevant here, the rule would require, on
a per fund basis, the adoption and implementation of certain policies
and procedures designed to address the process for determining fair
value in good faith, keeping of certain records regarding the fair
value process, and, if the board assigns the adviser to determine fair
value, adviser reporting to the board in both periodic and as needed
reports with some extra recordkeeping.\252\
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    \252\ Proposed rule 2a-5(a) and (b).
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    The respondents to proposed rule 2a-5 would be registered
investment companies and BDCs.\253\ We estimate that 9,986 funds would
be affected by rule 2a-5, of which 9,501 are not UITs.\254\ Compliance
with rule 2a-5 would be mandatory for any fund that would need to
determine fair value under the Act. To the extent that records would be
required to be created and maintained under the rule are provided to
the Commission in connection with examinations or investigations, such
information would be kept confidential subject to the provisions of
applicable law.
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    \253\ See proposed rule 2a-5(e)(1) (defining ``fund'').
    \254\ See supra footnote 215 and accompanying text.
     The Commission's estimates of the relevant wage rates in the
tables below are based on salary information for the securities
industry compiled by the Securities Industry and Financial Markets
Association's Office Salaries in the Securities Industry 2013. The
estimated wage figures are modified by Commission staff to account
for an 1,800-hour work-year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, overhead, and
adjusted to account for the effects of inflation. See Securities
Industry and Financial Markets Association, Report on Management &
Professional Earnings in the Securities Industry 2013 (``SIFMA
Report'').
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B. Policies and Procedures

    Proposed rule 2a-5 would require the adoption and implementation of
fair value policies and procedures, which would address the process for
the determination of the fair value of the fund's investments under the
proposed rule.\255\ The fair value policies and procedures are designed
to help ensure that the determination of fair value is carried out
effectively and to facilitate board oversight. The policies and
procedures, as proposed, must be reasonably designed to achieve
compliance with the certain requirements of the proposed rule, which
are: (1) Periodically assessing any material risks associated with the
determination of the fair value, including material conflicts of
interest, and managing those identified valuation risks; (2) selecting
and applying in a consistent manner methodologies for determining and
calculating the fair value; (3) testing the appropriateness and
accuracy of the fair value methodologies that have been selected; and
(4) selecting and overseeing pricing service providers, if used.
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    \255\ See supra Section II.E.2.
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    We believe that the fund's board or adviser likely would establish
the fair value policies and procedures by adjusting the current systems
for implementing and enforcing the compliance policies and procedures
of the fund (if the requirements are not assigned) or the adviser's (if
the requirements are assigned). While funds and advisers have policies
and procedures in place to address compliance with the federal
securities laws (among other obligations), including fair value
determinations, they would need to update their existing policies and
procedures to account for the specific requirements of proposed rule
2a-5. To comply with this obligation, we believe that fund boards or
advisers (by assignment by the board) would use in-house legal and
compliance counsel to update existing policies and procedures to
account for the requirements of proposed rule 2a-5. For purposes of
these PRA estimates, we assume that either the fund or the adviser
would review the fair value policies and procedures annually (for
example, to assess whether the fair value methodology requires
adjustments). We therefore have estimated initial and ongoing burdens
associated with the proposed policies and procedures requirement. As
discussed above, we estimate that approximately 9,986 funds may rely on
the proposed rule and therefore would require these funds or their
advisers to adopt and implement fair value policies and procedures.
    Table 1 below summarizes the proposed PRA initial and ongoing
burden estimates associated with the policies and procedures
requirements under proposed rule 2a-5.

                                                Table 1--Fair Value Policies and Procedures PRA Estimates
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                                                                                Initial     Annual
                                       Internal initial       Internal annual                                          Internal    external    external
                                         burden hours         burden hours \1\                   Wage rate \2\        time costs     cost        cost
                                                                                burden      burden
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Establishing and implementing rule  6 hours..............  2 hours..............      x   $329 (senior manager).....     $658.00   $3,000.00   $1,000.00
 2a-5 policies and procedures.
                                    6 hours..............  2 hours..............      x   466 (ass't general              932.00  ..........  ..........
                                                                                counsel).
                                    3 hours..............  1 hour...............      x   530 (chief compliance           530.00  ..........  ..........
                                                                                officer).
                                    3 hours..............  1 hour...............      x   365 (compliance attorney).      365.00  ..........  ..........
Reviewing and updating rule 2a-5    .....................  3 hours..............      x   329 (senior manager)......      987.00  ..........    1,000.00
 policies and procedures.
                                    .....................  3 hour...............      x   466 (ass't general            1,398.00  ..........  ..........
                                                                                counsel).
                                    .....................  1 hour...............      x   530 (chief compliance           530.00  ..........  ..........
                                                                                officer).
                                   ---------------------------------------------------------------------------------------------------------------------

    Total annual burden per fund..  .....................  13 hours.............  ......  ..........................    5,400.00  ..........    2,000.00
Number of affected funds..........  .....................  9,986................  ......  ..........................       9,986  ..........       9,986
                                   ---------------------------------------------------------------------------------------------------------------------
    Total annual burden...........  .....................  129,818 hours........  ......  ..........................  53,924,400  ..........  19,972,000
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Notes:
1. Includes initial burden estimates annualized over a three-year period.
2. See SIFMA Report, supra footnote 254.

C. Board Reporting

    The proposed rule would require, if the board assigns the fair
value determinations to an adviser of the fund, that the adviser report
to the fund's board in writing (1) a quarterly report containing an
assessment of the adequacy and effectiveness of the adviser's process
for determining the fair value of the assigned portfolio of investments
and (2) promptly (but in no event later than three business days after
the adviser becomes aware of the matter) on matters associated with the
adviser's process that materially affect or could have materially
affected the fair value of the assigned portfolio of investments. These
reports would be required to include such information as may be
reasonably necessary for the board to evaluate the matters covered in
the report.\256\ The periodic reports that would be required by the
proposed rule would have a minimum of five items required as part of
the report,\257\ and the prompt reports must include material
weaknesses in the design or implementation of the adviser's fair value
determination process or material changes in the fund's risks as would
be required elsewhere under the proposal.\258\ UITs could not assign
fair value determinations to an adviser under the proposed rule because
they are unmanaged and therefore would not be subject to this
collection of information.\259\ We estimate that 9,501 funds would
utilize the proposed rule and therefore be subject to these
requirements.\260\
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    \256\ See proposed rule 2a-5(b)(1); supra section II.B.2
(discussing the proposed board reporting requirements).
    \257\ See proposed rule 2a-5(b)(1)(i).
    \258\ See proposed rule 2a-5(b)(1)(ii).
    \259\ See proposed rule 2a-5(d).
    \260\ See supra footnote 215.
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    Table 2 below summarizes the proposed PRA initial and ongoing
burden estimates associated with the board reporting requirements under
proposed rule 2a-5.

                                                         Table 2--Board Reporting PRA Estimates
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                                                                                Initial     Annual
                                       Internal initial       Internal annual                                          Internal    external    external
                                         burden hours           burden hours                    Wage rate \1\         time costs     cost        cost
                                                                                burden      burden
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                                                                   PROPOSED ESTIMATES
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Adviser written reports \2\.......  0 hours..............  8 hours..............      x   $329 (senior manager)....       $2,632      $2,000      $2,000
                                    0 hours..............  1 hour...............      x   17,860 (combined rate for       17,860  ..........  ..........
                                                                                4 directors).
                                    0 hours..............  1 hour...............      x   365 (compliance attorney)          365  ..........  ..........
                                   ---------------------------------------------------------------------------------------------------------------------
    Total annual burden per fund..  .....................  10 hours.............  ......  .........................       20,857  ..........       2,000
Number of funds...................  .....................  x 9,501..............  ......  .........................      x 9,501  ..........     x 9,501
                                   ---------------------------------------------------------------------------------------------------------------------
    Total annual burden...........  .....................  95,010 hours.........  ......  .........................  198,162,357  ..........  19,002,000
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Notes:
1. See SIFMA Report, supra footnote 254.
2. See supra footnotes 245-247 and accompanying text.

D. Recordkeeping

    Proposed rule 2a-5 would require the maintenance of certain
records, specifically (1) appropriate documentation to support fair
value determinations, including information regarding the specific
methodologies applied and the assumptions and inputs considered when
making fair value determinations and (2) copies of the policies and
procedures as required elsewhere under the proposed rule.\261\ Further,
if the board assigns fair value determinations to an adviser, the fund
must maintain copies of (3) the reports and other information provided
to the board as required elsewhere under the proposed rule and (4) a
specified list of the investments or investment types whose fair value
determination has been assigned to the adviser.\262\ We estimate that
9,986 funds would be subject to the proposed rule and therefore to
these requirements.\263\
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    \261\ See proposed rule 2a-5(a)(6); supra section II.A.6.
    \262\ See proposed rule 2a-5(b)(3); supra section II.B.6.
    \263\ While only 9,501 of these 9,986 funds would be subject to
the last two of these recordkeeping requirements, we believe that
this distinction is immaterial for this purpose and would result in
only a de minimis lowering of the estimate. See also supra footnote
215 and accompanying text.
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    Table 3 below summarizes the proposed PRA initial and ongoing

burden estimates associated with the recordkeeping requirements under
proposed rule 2a-5.

                                                          Table 3--Recordkeeping PRA Estimates
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                                                                                Initial     Annual
                                       Internal initial       Internal annual                                          Internal    external    external
                                         burden hours         burden hours \1\                   Wage rate \2\        time costs     cost        cost
                                                                                burden      burden
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                                                                   PROPOSED ESTIMATES
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Establishing recordkeeping          1.5..................  .5...................  ......  $62 (general clerk).......         $31      $1,800      $1,800
 policies and procedures.
                                    1.5..................  .5...................  ......  95 (senior computer              47.50  ..........  ..........
                                                                                operator).
Recordkeeping.....................  0 hours..............  2 hours..............      x   62 (general clerk)........          31           0           0
                                    0 hours..............  2 hours..............      x   95 (senior computer              47.50  ..........  ..........
                                                                                operator).
                                   ---------------------------------------------------------------------------------------------------------------------
    Total annual burden per fund..  .....................  5 hours..............  ......  ..........................         157  ..........         600
Number of funds...................  .....................  x 9,986..............  ......  ..........................     x 9,986  ..........     x 9,986
                                   ---------------------------------------------------------------------------------------------------------------------
    Total annual burden...........  .....................  49,930 hours.........  ......  ..........................   1,567,802  ..........   5,991,600
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Notes:
1. For ``Establishing Recordkeeping Policies and Procedures,'' these estimates include initial burden estimates annualized over a three-year period.
2. See SIFMA Report, supra footnote 254.

E. Proposed Rule 2a-5 Total Estimated Burden

    As summarized in Table 4 below, we estimate that the total hour
burdens and time costs associated with proposed rule 2a-5, including
the burden associated with the adoption and implementation of fair
value policies and procedures, board reporting, and recordkeeping
requirements, amortized over three years, would result in an average
aggregate annual burden of 274,758 hours and an average aggregate
annual monetized time cost of $253,654,559. We also estimate that,
amortized over three years, there would be external costs of
$44,965,600 associated with this collection of information. Therefore,
each fund required to comply with the rule would incur an average
annual burden of approximately 27.51 hours, at an average annual
monetized time cost of approximately $25,401, and an external cost of
$4,503 to comply with proposed rule 2a-5.

                                 Table 4--Proposed Rule 2a-5 Total PRA Estimates
----------------------------------------------------------------------------------------------------------------
                                                                             Internal burden     External  cost
                                                  Internal hour burden          time cost            burden
----------------------------------------------------------------------------------------------------------------
Policies and Procedures....................  129,818 hours................        $53,924,400        $19,972,000
Board reporting............................  95,010 hours.................        198,162,357         19,002,000
Recordkeeping requirements.................  49,930 hours.................          1,567,802          5,991,600
                                            --------------------------------------------------------------------
    Total annual burden....................  274,758......................        253,654,559         44,965,600
Number of funds............................  / 9,986......................            / 9,986            / 9,986
                                            --------------------------------------------------------------------
    Average annual burden per fund.........  27.51 hours..................             25,401              4,503
----------------------------------------------------------------------------------------------------------------

F. Request for Comment

    We request comment on whether these estimates are reasonable.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments
in order to: (1) Evaluate whether the proposed collections of
information are necessary for the proper performance of the functions
of the Commission, including whether the information will have
practical utility; (2) evaluate the accuracy of the Commission's
estimate of the burden of the proposed collections of information; (3)
determine whether there are ways to enhance the quality, utility, and
clarity of the information to be collected; and (4) determine whether
there are ways to minimize the burden of the collections of information
on those who are to respond, including through the use of automated
collection techniques or other forms of information technology.
    Persons wishing to submit comments on the collection of information
requirements of the proposed rules and amendments should direct them to
the OMB<EMAIL_ADDRESS>and should send a
copy of their comments to, Vanessa Countryman, Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090,
with reference to File No. S7-07-20. OMB is required to make a decision
concerning the collections of information between 30 and 60 days after
publication of this release; therefore a comment to OMB is best assured
of having its full effect if OMB receives it within 30 days after
publication of this release. Requests for materials submitted to OMB by
the Commission with regard to these collections of information should
be in writing, refer to File No. S7-07-20, and be submitted to the
Securities and Exchange Commission, Office of FOIA Services, 100 F
Street NE, Washington, DC 20549-2736.

V. Initial Regulatory Flexibility Analysis

    The Commission has prepared the following Initial Regulatory
Flexibility

Analysis (``IRFA'') in accordance with section 3(a) of the Regulatory
Flexibility Act (``RFA'').\264\ It relates to proposed rule 2a-5.
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    \264\ 5 U.S.C. 603(a).
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A. Reasons for and Objectives of the Proposed Actions

    The Commission is proposing new rule 2a-5 in order to address
practices and the role of the board of directors with respect to the
fair value of the investments of fund. Under section 2(a)(41), the
board must determine in good faith the fair value of fund assets for
which no market quotations are readily available. The proposed rule is
designed to specify how a board or adviser must make good faith
determinations of fair value as well as when the board can assign this
function to an adviser to the fund, while still ensuring that fund
investments are valued in a way consistent with the Investment Company
Act.
    The proposed rule would provide requirements for determining fair
value in good faith for purposes of section 2(a)(41) of the Act and
rule 2a-4 thereunder. This determination would involve assessing and
managing material risks associated with fair value determinations;
selecting, applying, and testing fair value methodologies; evaluating
any pricing services used; adopting and implementing policies and
procedures; and maintaining certain records. The proposed rule would
permit a fund's board of directors to assign these requirements to an
investment adviser to the fund for some or all of the fund's
investments, subject to board oversight and certain reporting,
recordkeeping, and other requirements designed to facilitate the
board's ability effectively to oversee the adviser's fair value
determinations. The proposed rule would also define when market
quotations are readily available under section 2(a)(41) of the Act.
Lastly, the proposed rule would have the trustee of a UIT carry out the
requirements of the proposed rule. The requirements associated with the
fair value as determined in good faith and readily available market
quotations are designed to protect investors from improper valuations
and reflect our view of current market best practices.\265\ The
requirements associated with the assignment of responsibilities to an
adviser are designed to ensure that the board effectively oversees an
assigned adviser, including receiving sufficient information to do
so.\266\ The policies and procedures and recordkeeping requirements are
designed to help ensure compliance with the other requirements.\267\
---------------------------------------------------------------------------

    \265\ See supra sections I, II.A, and II.C.
    \266\ See supra section II.B.
    \267\ See supra sections II.A.6 and II.B.4.
---------------------------------------------------------------------------

    All of these requirements are discussed in detail in section II of
this release. The costs and burdens of these requirements on small
funds and investment advisers are discussed below as well as above in
our Economic Analysis and Paperwork Reduction Act Analysis, which
discuss the applicable costs and burdens on all funds and investment
advisers.\268\
---------------------------------------------------------------------------

    \268\ See supra section III and IV. These sections also discuss
the professional skills that we believe compliance with the proposed
rule would entail.
---------------------------------------------------------------------------

B. Legal Basis

    The Commission is proposing new rule 2a-5 under the authority set
forth in sections 2(a), 6(c), 31(a), 31(c), and 38(a) of the Investment
Company Act of 1940 [15 U.S.C. 80a-2(a), 80a-6(c), 80a-30(a), 80a-
30(c), and 80a-37(a)].

C. Small Entities Subject to Proposed Rules

    For purposes of Commission rulemaking in connection with the
Regulatory Flexibility Act, an investment company is a small entity if,
together with other investment companies in the same group of related
investment companies, it has net assets of $50 million or less as of
the end of its most recent fiscal year (a ``small fund'').\269\
Commission staff estimates that, as of December 2019, approximately 38
registered open-end mutual funds, 8 registered ETFs, 30 registered
closed-end funds, 2 UITs, and 14 BDCs (collectively, 92 funds) are
small entities.\270\
---------------------------------------------------------------------------

    \269\ See rule 0-10(a) under the Investment Company Act [17 CFR
270.0-10(a)].
    \270\ This estimate is derived an analysis of data obtained from
Morningstar Direct as well as data reported to the Commission for
the period ending December 2019.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements

    Proposed rule 2a-5 would require fair value determinations under
the Act be made according to a specific process for affected funds,
including those that are small entities. This process would include the
adoption of policies and procedures reasonably designed to achieve
compliance with the requirements of the proposed rule and certain
recordkeeping requirements. Further, the proposed rule would permit
certain fund boards to assign fair value determinations to an adviser
to the fund if the adviser, in addition to the above, adopts certain
policies and procedures, makes certain reports to the fund's board
regarding the fair value process in writing. Funds would also be
required to keep certain additional records in such circumstances. We
therefore believe that there are three principal reporting,
recordkeeping, or other compliance requirements associated with the
proposed rule: (1) The establishment and implementation of policies and
procedures, including establishing and applying fair value
methodologies, (2) recordkeeping requirements, and (3) board reporting
requirements.
1. Policies and Procedures
    The policies and procedures that would be required under the
proposed rule would need to be reasonably designed to achieve
compliance with the requirements of the rule. Specifically, these
requirements include (1) the assessment and management of risks
associated with the determination of fair value, (2) establishing and
applying fair value methodologies, (3) testing fair value
methodologies, and (4) evaluating pricing services.\271\ Further, if
the board assigns fair value determinations under the proposed rule to
an investment adviser to the fund, the adviser's policies and
procedures must meet certain requirements. In addition to the other
requirements above, these policies and procedures must specify the
titles of the persons responsible for determining the fair value of
assigned investments, including by specifying the particular functions
for which they are responsible, and reasonably segregating the process
of making fair value determinations from the portfolio management of
the fund.\272\
---------------------------------------------------------------------------

    \271\ Proposed rule 2a-5(a)(1)-(5).
    \272\ See proposed rule 2a-5(b)(2).
---------------------------------------------------------------------------

    These requirements are designed to implement the proposed rule's
requirements effectively which, in turn, are designed to protect
investors from improper valuations. They are also designed to
facilitate the board's oversight of these functions when they are
assigned to an adviser to the fund. These requirements will impose
burdens on all funds, including those that are small entities. The
specifics of these burdens are discussed in the Economic Analysis and
Paperwork Reduction Act sections above.\273\
---------------------------------------------------------------------------

    \273\ See supra section III.C.3. This section, along with
section IV, also discusses the professional skills that we believe
compliance with this aspect of the proposal would entail.
---------------------------------------------------------------------------

    There are different factors that would affect whether a smaller
fund incurs costs related to this requirement that are on the higher or
lower end of the estimated range. For example, we would expect that
smaller funds--and more specifically, smaller funds that are not

part of a fund complex--may not have existing policies and procedures
that include all of the elements that would be required of policies and
procedures under the proposed rule. Also, while we would expect larger
funds or funds that are part of a large fund complex to incur higher
costs related to this requirement in absolute terms relative to a
smaller fund or a fund that is part of a smaller fund complex, we would
expect a smaller fund to find it more costly, per dollar managed, to
comply with the proposed requirement because it would not be able to
benefit from a larger fund complex's economies of scale.\274\
---------------------------------------------------------------------------

    \274\ See supra section III.C.1.
---------------------------------------------------------------------------

2. Recordkeeping
    The recordkeeping requirements of the proposed rule are designed to
help ensure compliance with the rule's requirements and aid in
oversight. The proposed rule would require the fund to keep the
following records: (1) Appropriate documentation to support fair value
determinations, including information regarding the specific
methodologies applied and the assumptions and inputs considered when
making fair value determinations for at least five years from the time
the determination was made, the first two years in an easily accessible
place and (2) A copy of the fair value policies and procedures that are
in effect, or were in effect at any time within the past five years, in
an easily accessible place.\275\ Further, should the board assign the
fair value determination, the fund must keep, in addition to the
records above, copies of the reports and other information provided to
the board for at least five years after the end of the fiscal year in
which the documents were made, the first two years in an easily
accessible place and a specified list of the investments or investment
types whose fair value determination has been assigned to the adviser,
in each case for at least five years after the end of the fiscal year
in which the determinations were provided to the board or the
investments or investment types were assigned to the adviser, the first
two years in an accessible place.\276\
---------------------------------------------------------------------------

    \275\ Proposed rule 2a-5(a)(6).
    \276\ Proposed rule 2a-5(b)(3).
---------------------------------------------------------------------------

    These requirements will impose burdens on all funds, including
those that are small entities. The specifics of these burdens are
discussed in the Economic Analysis and Paperwork Reduction Act sections
above.\277\ There are different factors that would affect whether a
smaller fund incurs costs relating to this requirement that are on the
higher or lower end of the estimated range. For example, we would
expect that smaller funds--and more specifically, smaller funds that
are not part of a fund complex--may not have recordkeeping systems that
would meet all the elements that would be required under the proposed
rule. Also, while we would expect larger funds or funds that are part
of a large fund complex to incur higher costs related to this
requirement in absolute terms relative to a smaller fund or a fund that
is part of a smaller fund complex, we would expect a smaller fund to
find it more costly, per dollar managed, to comply with the proposed
requirement because it would not be able to benefit from a larger fund
complex's economies of scale.\278\
---------------------------------------------------------------------------

    \277\ See supra section III.C.3. This section and section IV
also discuss the professional skills that we believe compliance with
this aspect of the proposal would entail.
    \278\ See supra section III.C.1.
---------------------------------------------------------------------------

3. Board Reporting
    The requirement for board reporting by the fund's adviser is
designed to ensure that the board can exercise sufficient oversight
over the fair value process. The proposal would require two general
types of reports, a periodic one and a prompt one. Periodic reports
would consist of the adviser's quarterly assessment in writing of the
adequacy and effectiveness of the adviser's fair value process for
determining the fair value of the assigned portfolio of investments,
including some specific summaries and descriptions. The prompt
reporting requirement would require advisers to promptly inform the
board, but in no event later than three business days after the adviser
becomes aware of the matter, of matters that materially affect or could
materially affect the fair value of the assigned portfolio of
investments, including a significant deficiency or material weakness in
the design or implementation of the adviser's fair value determination
process or material changes in valuation risks.\279\
---------------------------------------------------------------------------

    \279\ See supra section II.B.2 and II.B.3.
---------------------------------------------------------------------------

    These requirements will impose burdens on all funds, including
those that are small entities. The specifics of these burdens are
discussed in the Economic Analysis and Paperwork Reduction Act sections
above.\280\ There are different factors that would affect whether a
smaller fund incurs costs related to this requirement that are on the
higher or lower end of the estimated range. For example, we would
expect that smaller funds--and more specifically, smaller funds that
are not part of a fund complex--may not have an advisory agreement that
has a reporting mechanism that would meet all the elements that would
be required under the proposed rule. Also, while we would expect larger
funds or funds that are part of a large fund complex to incur higher
costs, via increased advisory fees for advisers to take on this
responsibility on behalf of such funds, related to this requirement in
absolute terms relative to a smaller fund or a fund that is part of a
smaller fund complex, we would expect a smaller fund to find it more
costly, per dollar managed, to comply with the proposed requirement
because it would not be able to benefit from a larger fund complex's
economies of scale.\281\
---------------------------------------------------------------------------

    \280\ See supra section III.C.3.
    \281\ See supra section III.C.1.
---------------------------------------------------------------------------

E. Duplicative, Overlapping, or Conflicting Federal Rules

    Other than as discussed below, Commission staff has not identified
any federal rules that duplicate, overlap, or conflict with proposed
rule 2a-5. As discussed in more detail above,\282\ rule 38a-1 also
would apply to a fund's obligations under the proposed rule. Rule 38a-1
requires a fund's board, including a majority of its independent
directors, to approve the fund's policies and procedures, including
those on fair value, and those of each investment adviser and other
specified service providers, based upon a finding by the board that the
policies and procedures are reasonably designed to prevent violation of
the federal securities laws.\283\ Rule 38a-1 also requires that the
fund's CCO provide an annual report to the fund's board that must
address any material changes to compliance policies and
procedures.\284\
---------------------------------------------------------------------------

    \282\ See supra section II.A.5.
    \283\ Rule 38a-1(a)(2).
    \284\ See rule 38a-1(a)(4)(iii)(A). ``Material'' in this context
is a change that a fund director would reasonably need to know in
order to oversee fund compliance. See rule 38a-1(e)(2). We have also
said that ``serious compliance issues'' must be raised with the
board immediately. See Compliance Rules Adopting Release, supra
footnote 26, at n.33.
---------------------------------------------------------------------------

    Ultimately, we do not believe that the proposed rule adds
cumulative regulatory burdens on small funds without any gain in
regulatory benefits. The proposed rule would differ from the
requirements of rule 38a-1 in that proposed rule 2a-5 would mandate
that funds, including small funds, adhere to more specific fair value
practices as well as policies and procedures, reporting, and
recordkeeping requirements not currently required in the text of rule
38a-1. As we state above, however, to the extent that adviser policies
and procedures under proposed rule 2a-5 would otherwise be duplicative
of fund valuation policies under rule 38a-1, a

fund could adopt the rule 2a-5 policies and procedures of the adviser
in fulfilling its rule 38a-1 obligations to avoid any duplication.\285\
---------------------------------------------------------------------------

    \285\ See supra section II.A.5.
---------------------------------------------------------------------------

F. Significant Alternatives

    The Regulatory Flexibility Act directs the Commission to consider
significant alternatives that would accomplish our stated objective,
while minimizing any significant economic impact on small entities. We
considered the following alternatives for small entities in relation to
our proposal: (1) Exempting funds that are small entities from the
proposed reporting, recordkeeping, and other compliance requirements,
to account for resources available to small entities; (2) establishing
different reporting, recordkeeping, and other compliance requirements
or frequency, to account for resources available to small entities; (3)
clarifying, consolidating, or simplifying the compliance requirements
under the proposal for small entities; and (4) using performance rather
than design standards.
    We do not believe that exempting small funds from the provisions in
proposed rule 2a-5 would permit us to achieve our stated objectives,
principally to protect investors from improper valuations. Further, the
board reporting and additional recordkeeping provisions of proposed
rule 2a-5 only affect fund boards that assign fair value determinations
to a fund adviser and, therefore, the rule would require funds to
comply with these specific requirements only if they assigned
responsibilities to their adviser. However, we expect that most funds
holding securities that must be fair valued will do so. Therefore if a
board to a small entity does not do this and instead performs its
statutory function directly, then the small entity would not be subject
to these provisions of proposed rule 2a-5.
    We estimate that 72% of all funds would be subject to the proposed
rule in making fair value determinations.\286\ This estimate indicates
that some funds, including some small funds, would be unaffected by the
proposed rule. However, for small funds that would be affected by our
proposed rule, providing an exemption for them could subject investors
in small funds to a higher degree of risk than investors to large funds
that would be required to comply with the proposed elements of the
rule.
---------------------------------------------------------------------------

    \286\ See supra footnote 214 and accompanying text.
---------------------------------------------------------------------------

    As discussed throughout this release, we believe that the proposed
rule would result in investor protection benefits, and these benefits
should apply to investors in smaller funds as well as investors in
larger funds. We therefore do not believe it would be appropriate to
exempt small funds from the proposed rule's requirements, or to
establish different requirements applicable to funds of different sizes
under these provisions to account for resources available to small
entities. We believe that all of the proposed elements of rule 2a-5
should work together to produce the anticipated investor protection
benefits, and therefore do not believe it is appropriate to except
smaller funds because we believe this would limit the benefits to
investors in such funds.
    We also do not believe that it would be appropriate to subject
small funds to different reporting, recordkeeping, and other compliance
requirements or frequency. Similar to the concerns discussed above, if
the proposal included different requirements for small funds, it could
raise investor protection concerns for investors in small funds in that
small funds face the same conflicts of interest that can lead to
mispricing and otherwise harm investors that larger funds do.
    We do not believe that clarifying, consolidating, or simplifying
the compliance requirements under the proposal for small funds, beyond
that already proposed for all funds, would permit us to achieve our
stated objectives. Again, this approach would raise investor protection
concerns for investors in small funds. We believe, as outlined above in
the discussion of the proposed rule and the guidance contained in this
release, that the requirements of the proposed rule are, to some
extent, current industry practice under existing rules, with some
changes from current practice. As a result, we think that the proposed
rule could result in a reduction in the current burdens experienced by
small entities to the extent that they are subject to the proposed
rule.
    The costs associated with proposed rule 2a-5 would vary depending
on the fund's particular circumstances, and thus the proposed rule
could result in different burdens on funds' resources. In particular,
we expect that a fund that does not have policies and procedures,
reporting, or recordkeeping practices similar to those proposed in the
rule would need to modify those practices. Thus, to the extent a fund
that is a small entity already has a fair value process that is
consistent with the requirements of the proposed rule, we believe it
would incur relatively low costs to comply with it. However, we believe
that it is appropriate to correlate the costs associated with the
proposed rule with the fund's actual fair value process, and not
necessarily with the fund's size in light of our investor protection
objectives.
    Finally, with respect to the use of performance rather than design
standards, the proposed rule generally uses performance standards for
all funds subject to the proposed rule, regardless of size. We believe
that providing funds with the flexibility permitted in the proposal
with respect to designing specific fair value process is appropriate
because of the fact-specific nature of making fair value
determinations.

G. Request for Comment

    73. The Commission requests comment regarding this analysis. We
request comment on the number of small entities that would be subject
to our proposal and whether our proposal would have any effects that
have not been discussed. We request that commenters describe the nature
of any effects on small entities subject to our proposal and provide
empirical data to support the nature and extent of such effects. We
also request comment on the estimated compliance burdens of our
proposal and how they would affect small entities.

VI. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''), the Commission must advise OMB whether a
proposed regulation constitutes a ``major'' rule. Under SBREFA, a rule
is considered ``major'' where, if adopted, it results in or is likely
to result in:
     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment, or
innovation.
    We request comment on whether our proposal would be a ``major
rule'' for purposes of SBREFA. We solicit comment and empirical data
on:
     The potential effect on the U.S. economy on an annual
basis;
     Any potential increase in costs or prices for consumers or
individual industries; and
     Any potential effect on competition, investment, or
innovation.
    Commenters are requested to provide empirical data and other
factual support for their views to the extent possible.

VII. Statutory Authority

    The Commission is proposing new rule 2a-5 under the authority set
forth

in sections 2(a), 6(c), 31(a), 31(c), and 38(a) of the Investment
Company Act of 1940 [15 U.S.C. 80a-2(a), 80a-6(c), 80a-30(a), 80a-
31(c), and 80a-37(a)].

List of Subjects

17 CFR Part 210

    Accountants, Accounting, Banks, banking, Employee benefit plans,
Holding companies, Insurance companies, Investment companies, Oil and
gas exploration, Reporting and recordkeeping requirements, Securities,
Utilities.

17 CFR Part 270

    Investment companies, Reporting and recordkeeping requirements,
Securities.

    For the reasons set out in the preamble, title 17, chapter II of
the Code of Federal Regulation is proposed to be amended as follows:

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF
1934, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF
1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

0
1. The authority citation for part 210 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78l, 78m, 78n,
78o(d), 78q, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30,
80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, and sec. 102(c),
Pub. L. 112-106, 126 Stat. 310 (2012), unless otherwise noted.
* * * * *
0
2. Section 210.6-03 is amended by revising paragraph (d) to read as
follows:

Sec.  210.6-03   Special rules of general application to registered
investment companies and business development companies.

* * * * *
    (d) Valuation of investments. The balance sheets of registered
investment companies, other than issuers of face-amount certificates,
and business development companies, shall reflect all investments at
value, with the aggregate cost of each category of investment reported
under Sec. Sec.  210.6-04.1, 6-04.2, 6-04.3, and 6-04.9 or the
aggregate cost of each category of investment reported under Sec.
210.6-05.1 shown parenthetically. State in a note the methods used in
determining the value of investments. As required by section 28(b) of
the Investment Company Act of 1940 (15 U.S.C. 80a-28(b)), qualified
assets of face-amount certificate companies shall be valued in
accordance with certain provisions of the Code of the District of
Columbia.
* * * * *

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
3. The authority citation for part 270 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39,
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
* * * * *
0
4. Section 270.2a-5 is added to read as follows:

Sec.  270.2a-5   Fair value determination and readily available market
quotations.

    (a) Fair value determination. For purposes of section 2(a)(41) of
the Act (15 U.S.C. 80a-2(a)(41)) and Sec.  270.2a-4, determining fair
value in good faith with respect to a fund requires:
    (1) Assess and manage risks. Periodically assessing any material
risks associated with the determination of the fair value of fund
investments (``valuation risks''), including material conflicts of
interest, and managing those identified valuation risks;
    (2) Establish and apply fair value methodologies. Performing each
of the following, taking into account the fund's valuation risks:
    (i) Selecting and applying in a consistent manner an appropriate
methodology or methodologies for determining (and calculating) the fair
value of fund investments, including specifying:
    (A) The key inputs and assumptions specific to each asset class or
portfolio holding; and
    (B) Which methodologies apply to new types of fund investments in
which a fund intends to invest;
    (ii) Periodically reviewing the appropriateness and accuracy of the
methodologies selected and making any necessary adjustments thereto;
    (iii) Monitoring for circumstances that may necessitate the use of
fair value; and
    (iv) Establishing criteria for determining when market quotations
are no longer reliable;
    (3) Test fair value methodologies. Testing the appropriateness and
accuracy of the fair value methodologies that have been selected,
including identifying the testing methods to be used and the minimum
frequency with which such testing methods are used;
    (4) Evaluate pricing services. Overseeing pricing service
providers, if used, including establishing:
    (i) The process for the approval, monitoring, and evaluation of
each pricing service provider, and
    (ii) Criteria for initiating price challenges;
    (5) Fair value policies and procedures. Adopting and implementing
written policies and procedures addressing the determination of the
fair value of fund investments that are reasonably designed to achieve
compliance with the requirements described in paragraphs (a)(1) through
(4) of this section; and
    (6) Recordkeeping. Maintaining:
    (i) Appropriate documentation to support fair value determinations,
including information regarding the specific methodologies applied and
the assumptions and inputs considered when making fair value
determinations, as well as any necessary or appropriate adjustments in
methodologies, for at least five years from the time the determination
was made, the first two years in an easily accessible place; and
    (ii) A copy of policies and procedures as required under paragraph
(a)(5) of this section that are in effect, or were in effect at any
time within the past five years, in an easily accessible place.
    (b) Performance of fair value determinations. The board of the fund
must determine fair value in good faith for any or all fund investments
by carrying out the functions required in paragraph (a) of this
section. The board may choose to assign the fair value determination
relating to any or all fund investments to an investment adviser of the
fund, which would carry out all of the functions required in paragraphs
(a)(1) through (5) of this section, subject to the requirements of this
paragraph (b). If the board of the fund does not assign fair value
determinations to an adviser to the fund, the fund must adopt and
implement the policies and procedures required under paragraph (a)(5)
of this section and maintain the records required by paragraph (a)(6)
of this section.
    (1) Oversight and reporting. The board oversees the adviser, and
the adviser reports to the fund's board, in writing, including such
information as may be reasonably necessary for the board to evaluate
the matters covered in the report, as follows:
    (i) Periodic reporting. At least quarterly, an assessment of the
adequacy and effectiveness of the investment adviser's process for
determining the fair value of the assigned portfolio of investments,
including, at a minimum, a summary or description of:
    (A) The assessment and management of material valuation risks
required

under paragraph (a)(1) of this section, including any material
conflicts of interest of the investment adviser (and any other service
provider);
    (B) Any material changes to, or material deviations from, the fair
value methodologies established under paragraph (a)(2) of this section;
    (C) The results of the testing of fair value methodologies required
under paragraph (a)(3) of this section;
    (D) The adequacy of resources allocated to the process for
determining the fair value of assigned investments, including any
material changes to the roles or functions of the persons responsible
for determining fair value under paragraph (b)(2) of this section;
    (E) Any material changes to the adviser's process for selecting and
overseeing pricing services, as well as material events related to the
adviser's oversight of pricing services (such as changes in the service
providers used or price overrides); and
    (F) Any other materials requested by the board related to the
adviser's process for determining the fair value of assigned
investments; and
    (ii) Prompt board reporting. The adviser reports promptly (but in
no event later than three business days after the adviser becomes aware
of the matter) on matters associated with the adviser's process that
materially affect or could have materially affected the fair value of
the assigned portfolio of investments, including a significant
deficiency or material weakness in the design or implementation of the
adviser's fair value determination process or material changes in the
fund's valuation risks under paragraph (a)(1) of this section;
    (2) Specify responsibilities. The adviser specifies the titles of
the persons responsible for determining the fair value of the assigned
investments, including by specifying the particular functions for which
they are responsible, and reasonably segregates the process of making
fair value determinations from the portfolio management of the fund;
and
    (3) Records when assigning. In addition to the records required in
paragraph (a)(6) of this section, the fund maintains copies of:
    (i) The reports and other information provided to the board as
required under paragraph (b)(1) of this section; and
    (ii) A specified list of the investments or investment types whose
fair value determination has been assigned to the adviser pursuant to
this paragraph (b), in each case for at least five years after the end
of the fiscal year in which the documents were provided to the board or
the investments or investment types were assigned to the adviser, the
first two years in an easily accessible place.
    (c) Readily available market quotations. For purposes of section
2(a)(41) of the Act (15 U.S.C. 80a-2(a)(41)), a market quotation is
readily available only when that quotation is a quoted price
(unadjusted) in active markets for identical investments that the fund
can access at the measurement date, provided that a quotation will not
be readily available if it is not reliable.
    (d) Unit investment trusts. If the fund is a unit investment trust,
the fund's trustee must carry out the requirements of paragraph (a) of
this section.
    (e) Definitions. For purposes of this section:
    (1) Fund means a registered investment company or business
development company.
    (2) Fair value means the value of a portfolio investment for which
market quotations are not readily available under paragraph (c) of this
section.
    (3) Board means either the fund's entire board of directors or a
designated committee of such board composed of a majority of directors
who are not interested persons of the fund.

    By the Commission.

    Dated: April 21, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-08854 Filed 5-12-20; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: March 26, 2009 (Volume 74, Number 57)]
[Notices]
[Page 13203-13204]
[DOCID:fr26mr09-66]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER09-768-000]

Saranac Power Partners, LP; Notice of Filing

March 19, 2009.
    Take notice that, on March 16, 2009, Saranac Power Partners, LP
filed to amend, its filing in the above-captioned docket with
information required under the Commission's regulations. Such filing
served to reset the filing date in this proceeding.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Applicant and all the parties in this proceeding.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://
www.ferc.gov. Persons unable to file electronically should submit an
original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.

    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time on April 6, 2009.

Kimberly D. Bose,
Secretary.
[FR Doc. E9-6697 Filed 3-25-09; 8:45 am]


[Federal Register Volume 80, Number 17 (Tuesday, January 27, 2015)]
[Notices]
[Pages 4321-4324]
[FR Doc No: 2015-01384]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74110; File No. 4-631]

Joint Industry Plan; Notice of Filing of the Eighth Amendment to
the National Market System Plan To Address Extraordinary Market
Volatility by BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board
Options Exchange, Inc., Chicago Stock Exchange, Inc., EDGA Exchange,
Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority,
Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The Nasdaq Stock Market
LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE
MKT LLC, and NYSE Arca, Inc.

January 21, 2015.

I. Introduction

    On December 24, 2014, Financial Industry Regulatory Authority, Inc.
(``FINRA''), on behalf of the following parties to the National Market
System Plan: BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board
Options Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA
Exchange, Inc., EDGX Exchange, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, the Nasdaq Stock Market LLC, and National Stock Exchange,
Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.
(collectively with FINRA, the ``Participants''), filed with the
Securities and Exchange Commission (``Commission'') pursuant to Section
11A of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 608
thereunder,\2\ a proposal to amend the Plan to Address Extraordinary
Market Volatility (``Plan'').\3\ The proposal represents the eighth
amendment to the Plan (``Eighth Amendment''), and reflects changes
unanimously approved by the Participants. The Eighth Amendment to the
Plan proposes to: (i) Establish a requirement for the Participants to
submit a supplemental joint assessment to the Commission by May 29,
2015; and (ii) extend the end date of the pilot period of the Plan from
February 20, 2015 to October 23, 2015. A copy of the Plan, as proposed
to be amended is attached as Exhibit A hereto. The Commission is
publishing this notice to solicit comments from interested

persons on the Eighth Amendment to the Plan.\4\
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ See Letter from Christopher B. Stone, Vice President, FINRA,
to Brent Fields, Secretary, Commission, dated December 24, 2014
(``Transmittal Letter'').
    \4\ ``Any two or more self-regulatory organizations, acting
jointly, . . . may propose an amendment to an effective national
market system plan [] by submitting the text of the plan or
amendment to the Secretary of the Commission, together with a
statement of the purpose of such plan or amendment . . .'' 17 CFR
242.608(a)(1) The Commission is required to publish notice of the
filing of any proposed amendment to any effective national market
system plan, together with the terms of substance of the filing or a
description of the subjects and issues involved, and shall provide
interested persons an opportunity to submit written comments. See 17
CFR 242.608(b)(1). No amendment to a national market system plan
shall become effective unless approved by the Commission or
otherwise permitted in accordance with Rule 608(b)(3). See id.
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II. Description of the Proposal

A. Purpose of the Plan

    The Participants filed the Plan in order to create a market-wide
limit up-limit down mechanism that is intended to address extraordinary
market volatility in ``NMS Stocks,'' as defined in Rule 600(b)(47) of
Regulation NMS under the Act.\5\ The Plan sets forth procedures that
provide for market-wide limit up-limit down requirements that are
designed to prevent trades in individual NMS Stocks from occurring
outside of the specified price bands.\6\ These limit up-limit down
requirements are coupled with Trading Pauses, as defined in Section
I(Y) of the Plan, to accommodate more fundamental price moves (as
opposed to erroneous trades or momentary gaps in liquidity).
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    \5\ 17 CFR 242.600(b)(47). See also Section I(H) of the Plan.
    \6\ See Section V of the Plan.
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    As set forth in Section V of the Plan, the price bands consist of a
Lower Price Band and an Upper Price Band for each NMS Stock.\7\ The
price bands are calculated by the Securities Information Processors
(``SIPs'' or ``Processors'') responsible for consolidation of
information for an NMS Stock pursuant to Rule 603(b) of Regulation NMS
under the Act.\8\ Those price bands are based on a Reference Price \9\
for each NMS Stock that equals the arithmetic mean price of Eligible
Reported Transactions for the NMS Stock over the immediately preceding
five-minute period. The price bands for an NMS Stock are calculated by
applying the Percentage Parameter for such NMS Stock to the Reference
Price, with the Lower Price Band being a Percentage Parameter \10\
below the Reference Price, and the Upper Price Band being a Percentage
Parameter above the Reference Price. Between 9:30 a.m. and 9:45 a.m. ET
and 3:35 p.m. and 4:00 p.m. ET, the price bands are calculated by
applying double the Percentage Parameters as set forth in Appendix A of
the Plan.
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    \7\ Capitalized terms used herein but not otherwise defined
shall have the meaning ascribed to such terms in the Plan. See
Exhibit A, infra.
    \8\ 17 CFR 242.603(b). The Plan refers to this entity as the
Processor.
    \9\ See Section I(T) of the Plan.
    \10\ As initially proposed by the Participants, the Percentage
Parameters for Tier 1 NMS Stocks (i.e., stocks in the S&P 500 Index
or Russell 1000 Index and certain ETPs) with a Reference Price of
$1.00 or more would be five percent and less than $1.00 would be the
lesser of (a) $0.15 or (b) 75 percent. The Percentage Parameters for
Tier 2 NMS Stocks (i.e., all NMS Stocks other than those in Tier 1)
with a Reference Price of $1.00 or more would be 10 percent and less
than $1.00 would be the lesser of (a) $0.15 or (b) 75 percent. The
Percentage Parameters for a Tier 2 NMS Stock that is a leveraged ETP
would be the applicable Percentage Parameter set forth above
multiplied by the leverage ratio of such product. On May 24, 2012,
the Participants amended the Plan to create a 20% price band for
Tier 1 and Tier 2 stocks with a Reference Price of $0.75 or more and
up to and including $3.00. The Percentage Parameter for stocks with
a Reference Price below $0.75 would be the lesser of (a) $0.15 or
(b) 75 percent. See Letter from Janet M. McGinness, Senior Vice
President, Legal and Corporate Secretary, NYSE Euronext, to
Elizabeth M. Murphy, Secretary, Commission, dated May 24, 2012.
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    The Processors also calculate a Pro-Forma Reference Price for each
NMS Stock on a continuous basis during Regular Trading Hours. If a Pro-
Forma Reference Price does not move by one percent or more from the
Reference Price in effect, no new price bands are disseminated, and the
current Reference Price remains the effective Reference Price. If the
Pro-Forma Reference Price moves by one percent or more from the
Reference Price in effect, the Pro-Forma Reference Price becomes the
Reference Price, and the Processors disseminate new price bands based
on the new Reference Price. Each new Reference Price remains in effect
for at least 30 seconds.
    When one side of the market for an individual security is outside
the applicable price band, the Processors are required to disseminate
such National Best Bid \11\ or National Best Offer \12\ with an
appropriate flag identifying it as non-executable. When the other side
of the market reaches the applicable price band, the market for an
individual security enters a Limit State,\13\ and the Processors are
required to disseminate such National Best Offer or National Best Bid
with an appropriate flag identifying it as a Limit State Quotation.\14\
All trading immediately enters a Limit State if the National Best Offer
equals the Lower Limit Band and does not cross the National Best Bid,
or the National Best Bid equals the Upper Limit Band and does not cross
the National Best Offer. Trading for an NMS Stock exits a Limit State
if, within 15 seconds of entering the Limit State, all Limit State
Quotations are executed or canceled in their entirety. If the market
does not exit a Limit State within 15 seconds, then the Primary Listing
Exchange declares a five-minute Trading Pause, which is applicable to
all markets trading the security.
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    \11\ 17 CFR 242.600(b)(42). See also Section I(G) of the Plan.
    \12\ Id.
    \13\ A stock enters the Limit State if the National Best Offer
equals the Lower Price Band and does not cross the National Best
Bid, or the National Best Bid equals the Upper Price Band and does
not cross the National Best Offer. See Section VI(B) of the Plan.
    \14\ See Section I(D) of the Plan.
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    These limit up-limit down requirements are coupled with Trading
Pauses \15\ to accommodate more fundamental price moves (as opposed to
erroneous trades or momentary gaps in liquidity). As set forth in more
detail in the Plan, all trading centers \16\ in NMS Stocks, including
both those operated by Participants and those operated by members of
Participants, are required to establish, maintain, and enforce written
policies and procedures that are reasonably designed to comply with the
limit up-limit down and Trading Pause requirements specified in the
Plan.
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    \15\ The primary listing market declares a Trading Pause in an
NMS Stock; upon notification by the primary listing market, the
Processor disseminates this information to the public. No trades in
that NMS Stock could occur during the Trading Pause, but all bids
and offers may be displayed. See Section VII(A) of the Plan.
    \16\ As defined in Section I(X) of the Plan, a trading center
shall have the meaning provided in Rule 600(b)(78) of Regulation NMS
under the Act.
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    Under the Plan, all trading centers are required to establish,
maintain, and enforce written policies and procedures reasonably
designed to prevent the display of offers below the Lower Price Band
and bids above the Upper Price Band for an NMS Stock. The Processors
disseminate an offer below the Lower Price Band or bid above the Upper
Price Band that nevertheless inadvertently may be submitted despite
such reasonable policies and procedures, but with an appropriate flag
identifying it as non-executable; such bid or offer would not be
included in National Best Bid or National Best Offer calculations. In
addition, all trading centers are required to develop, maintain, and
enforce policies and procedures reasonably designed to prevent trades
at prices outside the price bands, with the exception of single-priced
opening, reopening, and closing transactions on the Primary Listing
Exchange.
    As stated by the Participants in the Plan, the limit up-limit down
mechanism is intended to reduce the negative impacts of sudden,
unanticipated price movements in NMS

Stocks,\17\ thereby protecting investors and promoting a fair and
orderly market.\18\ In particular, the Plan is designed to address the
type of sudden price movements that the market experienced on the
afternoon of May 6, 2010.\19\ The initial date of Plan operations was
April 8, 2013.\20\
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    \17\ 17 CFR 242.600(b)(47).
    \18\ See Transmittal Letter, supra note 3.
    \19\ The limit up-limit down mechanism set forth in the Plan
replaces the existing single-stock circuit breaker pilot. See e.g.,
Securities Exchange Act Release Nos. 62251 (June 10, 2010), 75 FR
34183 (June 16, 2010) (SR-FINRA-2010-025); 62883 (September 10,
2010), 75 FR 56608 (September 16, 2010) (SR-FINRA-2010-033).
    \20\ See Securities Exchange Act Release No. 68953 (February 20,
2013), 78 FR 13113 (February 26, 2013).
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    The following summarizes the Eighth Amendment to the Plan and the
rationale behind those changes:
Proposed Amendment
    The Eighth Amendment proposes two changes to the Plan. First, the
Participants propose to amend Appendix B of the Plan to state that, by
May 29, 2015, the Participants shall provide to the Commission a
supplemental joint assessment relating to the impact of the Plan. On
September 29, 2014, the Participants submitted a Participant Impact
Assessment,\21\ which provided the Commission with the Participants'
initial observations in each area required to be addressed under
Appendix B to the Plan. Though the Participants have submitted the
Participant Impact Assessment, they believe that a supplemental joint
assessment is appropriate. The supplemental joint assessment would
evaluate the impact of the Plan using the measures set forth in
Appendix B, but would be an extensive assessment based upon a data-
driven analysis across trading centers using methodology agreed upon by
the Participants, which would allow the Participants to make unified
recommendations, where appropriate, that would be of greater value to
the Commission and the public than separate submissions. The
Participants also state that they intend to make the supplemental joint
assessment publicly available.
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    \21\ See Letter from Participants to Brent J. Fields, Secretary,
Commission, dated September 29, 2014 (``Participant Impact
Assessment'').
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    The Participants intend to engage a third-party consultant to
assist in conducting the cross-market analysis and preparing the
supplemental joint assessment. The Participants believe that the
process of selecting, engaging, meeting with, and providing required
data to the ultimate third-party consultant will be time consuming, but
beneficial in that it would facilitate the development of a joint
assessment that, unlike individual Participant submissions, would not
need to be compared and reconciled.
    Second, the Participants propose to amend Section VIII.C the Plan
to extend the pilot period of the Plan from February 20, 2015 through
October 23, 2015. The Participants believe that extension of the pilot
period is necessary and appropriate in the interest of the public,
including because additional time will: (i) Provide a reasonable period
of time for the public to comment on the supplemental joint assessment
and recommendations; (ii) provide Participants time to use the
information collected during the operation of the Plan to perform
further analysis and recommend amendments to the Plan; and (iii) allow
the Commission adequate time to review the supplemental joint
assessment and recommendations provided by the Participants, and
determine if any modifications to the Plan are appropriate. The
Participants also believe that the proposed amendment is consistent
with the approval order for the Plan, in which the Commission stated
that having a pilot period would allow ``the public, the Participants,
and the Commission to assess the operation of the Plan and whether the
Plan should be modified prior to approval on a permanent basis.'' \22\
Finally, the Participants believe that the proposed amendment, which
provides for additional time to observe the operation of the Pilot, as
well as to prepare and submit a supplemental joint assessment, will
facilitate the development of better recommendations and will allow the
Participants to make unified recommendations, where appropriate,
regarding the operation of the Plan.
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    \22\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 at 33508 (June 6, 2012).
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    The Participants note that the amended version of the Plan also
includes the revised Appendix A--Schedule 1, which was updated for
trading beginning July 1, 2014. As set forth in Appendix A--Percentage
Parameters, the Primary Listing Exchange updates Schedule 1 to Appendix
A semi-annually based on the fiscal year and such updates do not
require a Plan amendment.

B. Governing or Constituent Documents

    The governing documents of the Processor, as defined in Section
I(P) of the Plan, will not be affected by the Plan, but once the Plan
is implemented, the Processor's obligations will change, as set forth
in detail in the Plan.

C. Implementation of Plan

    The initial date of the Plan operations was April 8, 2013.

D. Development and Implementation Phases

    The Plan was initially implemented as a one-year pilot program in
two Phases, consistent with Section VIII of the Plan: Phase I of Plan
implementation began on April 8, 2013 and was completed on May 3, 2013.
Implementation of Phase II of the Plan began on August 5, 2013 and was
completed on February 24, 2014. Pursuant to this proposed amendment,
the Participants propose to extend the pilot period so that it is set
to end October 23, 2015.

E. Analysis of Impact on Competition

    The proposed Plan does not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the
Exchange Act. The Participants do not believe that the proposed Plan
introduces terms that are unreasonably discriminatory for the purposes
of Section 11A(c)(1)(D) of the Exchange Act.

F. Written Understanding or Agreements relating to Interpretation of,
or Participation in the Plan

    The Participants have no written understandings or agreements
relating to interpretation of the Plan. Section II(C) of the Plan sets
forth how any entity registered as a national securities exchange or
national securities association may become a Participant.

G. Approval of Amendment of the Plan

    Each of the Plan's Participants has executed a written amended
Plan.

H. Terms and Conditions of Access

    Section II(C) of the Plan provides that any entity registered as a
national securities exchange or national securities association under
the Exchange Act may become a Participant by: (1) Becoming a
participant in the applicable Market Data Plans, as defined in Section
I(F) of the Plan; (2) executing a copy of the Plan, as then in effect;
(3) providing each then-current Participant with a copy of such
executed Plan; and (4) effecting an amendment to the Plan as specified
in Section III(B) of the Plan.

I. Method of Determination and Imposition, and Amount of, Fees and
Charges

    Not applicable.

J. Method and Frequency of Processor Evaluation

    Not applicable.

K. Dispute Resolution

    Section III(C) of the Plan provides for each Participant to
designate an individual to represent the Participant as a member of an
Operating Committee. No later than the initial date of the Plan, the
Operating Committee shall designate one member of the Operating
Committee to act as the Chair of the Operating Committee. Any
recommendation for an amendment to the Plan from the Operating
Committee that receives an affirmative vote of at least two-thirds of
the Participants, but is less than unanimous, shall be submitted to the
Commission as a request for an amendment to the Plan initiated by the
Commission under Rule 608.
    On September 18, 2014, the Operating Committee, duly constituted
and chaired by Mr. Christopher B. Stone of FINRA, met and voted to
amend the Plan as set forth herein in accordance with Section III(C) of
the Plan.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed
Eighth Amendment 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 4-631 on the subject line.

Paper Comments

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

All submissions should refer to File Number 4-631. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the Plan that are filed with the Commission,
and all written communications relating to the Plan between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
Participants' principal offices. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number 4-631 and should be submitted on or before February 17,
2015.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015-01384 Filed 1-26-15; 8:45 am]
BILLING CODE 8011-01-P