                 HISTORY OF RELEVANT COMPLIANCE CERTIFICATION
                              REGULATORY LANGUAGE

Note that in the following, highlighted text (in blue) is included to indicate the relevant text and there is often a footnote to explain the relevance or additional background information is included.  Also note that parallel changes were also made to part 71 for all of these rulemaking actions but only part 70 changes are shown below for the sake of clarity.

Original Promulgation of Part 70 Rule, 1992

The 1992 part 70 rule, in part, required the owner or operator to include the following in compliance certifications [see 40 CFR 70.6(c)(5)(iii)]:

      (iii)  A requirement that the compliance certification include the following:
      (A)  The identification of each term or condition of the permit that is the basis of the certification;
      (B)  The compliance status;
      (C)  Whether compliance was continuous or intermittent;
      (D)  The method(s) used for determining the compliance status of the source, currently and over the reporting period consistent with paragraph (a)(3) of this section; and
      (E)  Such other facts as the permitting authority may require to determine the compliance status of the source;

October 1997 Revisions to Part 70 and 71 Rules in the Context of the Final CAM Rule

As part of the rulemaking to promulgate the final CAM rule (62 FR 54900, October 22, 1997), changes were also made to the compliance certification requirements of parts 70 and 71. These changes to parts 70 and 71 were intended to make the compliance certification requirements consistent with the Credible Evidence and CAM rules; section 113(c)(2) of the Act, concerning criminal penalties for violations; and the section 114(a)(3) compliance certification requirements. Only §§70.6(c)(5)(iii)(B) and (C) are relevant to this discussion:

      	(B) The identification of the method(s) or other means used by the owner or operator for determining the compliance status with each term and condition during the certification period, and whether such methods or other means provide continuous or intermittent data. Such methods and other means shall include, at a minimum, the methods and means required under paragraph (a)(3) of this section. If necessary, the owner or operator also shall identify any other material information that must be included in the certification to comply with section 113(c)(2) of the Act, which prohibits knowingly making a false certification or omitting material information;

      	(C) The status of compliance with the terms and conditions of the permit for the period covered by the certification, based on the method or means designated in paragraph (c)(5)(iii)(B) of this section. The certification shall identify each deviation and take it into account in the compliance certification. The certification shall also identify as possible exceptions to compliance any periods during which compliance is required and in which an excursion or exceedance as defined under part 64 of this chapter occurred; and

March 1, 2001, Proposal and Direct Final Rule

On March 1, 2001, the EPA published a direct final rule (66 FR 12872) and a parallel proposal (66 FR 12916) to respond to a court remand (Natural Resources Defense Council v. EPA, 194 F.3d 130 (D.C. Cir.1999)) on certain changes made in the context of the CAM rule to the compliance certification requirements of the part 70 and 71 rules. The court pointed out that section 114(a)(3)(D) of the Act requires the compliance certification to identify "whether compliance is continuous or intermittent." Accordingly, this language was proposed to be added to paragraph (c)(5)(iii)(C) of both §§70.6 and 71.6. Due to significant comment received on the parallel proposal, the direct final rule was withdrawn. Note that in the preamble, the EPA misidentified the paragraphs to be revised.

PREAMBLE:

      	In response to the court's remand, we have added text to sections, §§ 70.6(c)(5)(iii)(B) and 71.6(c)(5)(iii)(B), to require that the responsible official for the affected facility include in the annual (or more frequent) compliance certification whether compliance during the period was continuous or intermittent. Specifically, the revised text, including the introductory language for both sections reads: "Permits shall include each of the following * * *: A requirement that the compliance certification include all of the following * * *: The status of compliance with the terms and conditions of the permit for the period covered by the certification, including whether compliance during the period was continuous or intermittent. The certification shall be based on the method or means designated in paragraph (c)(5)(iii)(B) of this section." The italicized text indicates the revisions made in response to the Court decision. Other text within both of these sections remains as promulgated in 1997. Under this revised language, the responsible official must include in the compliance certification a statement as to whether compliance during the period was continuous or intermittent. We believe these revisions respond directly and adequately to the Court's decision to remand the compliance certification requirements to us and are consistent with the requirements of the Act.

REGULATORY CHANGES:

      2. Sections 70.6 is amended by revising paragraph (c)(5)(iii)(C) to read as follows:

      §70.6  Permit content.
      * * * * *
      	(c) * * *
      	(5) * * *
      	(iii) * * *
      	(C) The status of compliance with the terms and conditions of the permit for the period covered by the certification, including whether compliance during the period was continuous or intermittent. The certification shall be based on the method or means designated in paragraph (c)(5)(iii)(B) of this section. The certification shall identify each deviation and take it into account in the compliance certification. The certification shall also identify as possible exceptions to compliance any periods during which compliance is required and in which an excursion or exceedance as defined under part 64 of this chapter occurred; and
	* * * * *

June 27, 2003, Final Rule

In its June 27, 2003, final rule (68 FR 38518), the EPA finalized paragraph (C) as proposed above. However, in response to comments, we revised paragraph (B) to remove from the first sentence the reference to whether the methods or other means used by the source to determine compliance "provide continuous or intermittent data." The preamble stated:

      	In response to the comments, we have deleted the second clause after the comma in the first sentence from §§ 70.6(c)(5)(iii)(B) and 71.6(c)(5)(iii)(B). This removes the requirement that the responsible official for the affected facility identify in the annual (or more frequent) compliance certification whether the methods provide continuous or intermittent data. ... Other text within §§ 70.6(c)(5)(iii)(B), 71.6(c)(5)(iii)(B), 70.6(c)(5)(iii)(C), and 71.6(c)(5)(iii)(C) remains as proposed in March 2001. The language in this final rule requires responsible officials to identify in the compliance certification whether compliance during the covered period was continuous or intermittent, but responsible officials do not need to state whether the methods used for determining compliance provide continuous or intermittent data. We believe these revisions respond directly and adequately to the Court's decision to remand the compliance certification requirements to us and are consistent with the requirements of the Act.

68 FR 38521

However, the amendatory language set forth in the FR notice resulted in the inadvertent deletion of the last sentence of paragraph (B), concerning the use of "other material information" in compliance certifications, despite the fact that the preamble did not state that any changes were being made to that sentence. [The paragraph (B) text that was deleted can be seen above in the version of the rules that accompanied the CAM rule]. That is the error that we seek to correct with the current action.

      * * * * *
      2. Section 70.6 is amended by revising paragraphs (c)(5)(iii)(B) and (c)(5)(iii)(C) to read as follows:

      Sec. 70.6   Permit content.
      * * * * *
      	(c) * * *
      	(5) * * *
      	(iii) * * *
      	(B) The identification of the method(s) or other means used by the owner or operator for determining the compliance status with each term and condition during the certification period. Such methods and other means shall include, at a minimum, the methods and means required under paragraph (a)(3) of this section;
      	(C) The status of compliance with the terms and conditions of the permit for the period covered by the certification, including whether compliance during the period was continuous or intermittent. The certification shall be based on the method or means designated in paragraph (c)(5)(iii)(B) of this section. The certification shall identify each deviation and take it into account in the compliance certification. The certification shall also identify as possible exceptions to compliance any periods during which compliance is required and in which an excursion or exceedance as defined under part 64 of this chapter occurred; and
      * * * * *

68 FR 38523

The Current Action

Thus, the sentence referring to the use of "other material information" in compliance certifications was inadvertently deleted from paragraph (c)(5)(iii)(B) in the June 27, 2003 Final Rule. The purpose of this current action is to correct the deletion by restoring the deleted language to the title V rules.


[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Page 1376]
[FR Doc No: 2014-00097]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER14-413-000]

ALLETE Clean Energy, Inc.; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
ALLETE Clean Energy, Inc.'s application for market-based rate
authority, with an accompanying rate tariff, noting that such
application includes a request for blanket authorization, under 18 CFR
Part 34, of future issuances of securities and assumptions of
liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is January 22, 2014.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also 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 email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

    Dated: January 2, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-00097 Filed 1-7-14; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60007-60008]
[FR Doc No: 2017-27171]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP18-21-000]

WBI Energy Transmission, Inc.; Notice of Request Under Blanket
Authorization

    Take notice that on November 30, 2017, WBI Energy Transmission,
Inc. (WBI Energy), 1250 West Century Avenue, Bismarck, North Dakota
filed a prior notice application pursuant to sections 157.205, 157.210
of the Federal Energy Regulatory Commission's (Commission) regulations
under the Natural Gas Act (NGA), and WBI Energy's blanket certificate
issued in Docket No. CP82-487-000. WBI Energy requests authorization to
construct and operate Spring Creek Expansion Project. The filing may
also be viewed on the web at http://www.ferc.gov using the ``eLibrary''
link. Enter the docket number excluding the last three digits in the
docket number field to access the document. For assistance, contact
FERC at [email protected] or call toll-free,<PHONE_NUMBER> or
TTY,<PHONE_NUMBER>.
    Specifically, WBI Energy proposes to: (1) construct approximately
12 miles of 24-inch diameter steel pipeline to provide an additional
connection to Northern Border Pipeline Company and add facilities at
its Cherry Creek Valve Setting; (2) expand its Spring Creek Meter
Station; and (3) expand its Wild Basin Meter Station in McKenzie
County, North Dakota.
    Any questions regarding the application should be directed to Lori
Myerchin, Manager, Regulatory Affairs, WBI Energy Transmission, Inc.,
1250 West Century Avenue, Bismarck, North Dakota 58503,<PHONE_NUMBER>
or by email at [email protected]
    Any person or the Commission's staff may, within 60 days after
issuance of the instant notice by the Commission, file pursuant to Rule
214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to
intervene or notice of intervention and pursuant to Section 157.205 of
the regulations under the NGA (18 CFR 157.205), a protest to the
request. If no protest is filed within the time allowed therefore, the
proposed activity shall be deemed to be authorized effective the day
after the time allowed for filing a protest. If a protest is filed and
not withdrawn within 30 days after the allowed time for filing a
protest, the instant request shall be treated as an application for
authorization pursuant to section 7 of the NGA.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
Complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding, or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commenters will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's environmental review process.
Environmental commenters will not be required to serve copies of filed
documents on all other parties.

However, the non-party commenter will not receive copies of all
documents filed by other parties or issued by the Commission (except
for the mailing of environmental documents issued by the Commission)
and will not have the right to seek court review of the Commission's
final order.
    The Commission strongly encourages electronic filings of comments,
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 5 copies of the protest or intervention to the
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426.

    Dated: December 11, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-27171 Filed 12-15-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Notices]
[Page 40263]
[FR Doc No: 2013-16061]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Agency Information Collection Activities: Requests for Comments;
Clearance of Renewed Approval of Information Collection: Automatic
Dependent Surveillance--Broadcast (ADS-B) Out Performance Requirements
to Support Air Traffic Control (ATC) Service

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice and request for comments.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995, FAA
invites public comments about our intention to request the Office of
Management and Budget (OMB) approval to renew an information
collection. The Federal Register Notice with a 60-day comment period
soliciting comments on the following collection of information was
published on April 19, 2013, vol. 78, no. 76, page 23626. The rule
``Automatic Dependent Surveillance--Broadcast (ADS-B) Equipage Mandate
To Support Air Traffic Control Service'' (75 FR 30160) contains
performance requirements for certain equipment on aircraft operating in
specified classes of airspace in the U.S. National Airspace System.

DATES: Written comments should be submitted by August 2, 2013.

FOR FURTHER INFORMATION CONTACT: Kathy DePaepe at<PHONE_NUMBER>, or by
email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    OMB Control Number: 2120-0728
    Title: Automatic Dependent Surveillance--Broadcast (ADS-B) Out
Performance Requirements to Support Air Traffic Control (ATC) Service
    Form Numbers: There are no FAA forms associated with this
collection.
    Type of Review: Renewal of an information collection.
    Background: 14 CFR part 91 includes requirements for certain
avionics equipment on aircraft operating in specified airspace within
the United States National Airspace System (NAS). This collection
supports the needs of the FAA by requiring avionics equipment that
continuously transmits aircraft information to be received by the FAA,
via automation, for use in providing air traffic surveillance services.
    Respondents: Approximately 64,339 aircraft operators will install
ADS-B Out equipment.
    Frequency: Information is collected automatically via the ADS-B Out
equipment.
    Estimated Average Burden per Response: 1 hour (placeholder for
automated collection).
    Estimated Total Annual Burden: 1 hour (placeholder for automated
collection).

ADDRESSES: Interested persons are invited to submit written comments on
the proposed information collection to the Office of Information and
Regulatory Affairs, Office of Management and Budget. Comments should be
addressed to the attention of the Desk Officer, Department of
Transportation/FAA, and sent via electronic mail to<EMAIL_ADDRESS>or faxed to<PHONE_NUMBER>, or mailed to the
Office of Information and Regulatory Affairs, Office of Management and
Budget, Docket Library, Room 10102, 725 17th Street NW., Washington, DC
20503.
    Public Comments Invited: You are asked to comment on any aspect of
this information collection, including (a) Whether the proposed
collection of information is necessary for FAA's performance; (b) the
accuracy of the estimated burden; (c) ways for FAA to enhance the
quality, utility and clarity of the information collection; and (d)
ways that the burden could be minimized without reducing the quality of
the collected information. The agency will summarize and/or include
your comments in the request for OMB's clearance of this information
collection.

    Issued in Washington, DC on June 25, 2013.
Albert R. Spence,
FAA Assistant Information Collection Clearance Officer, IT Enterprises
Business Services Division, AES-200.
[FR Doc. 2013-16061 Filed 7-2-13; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63241-63243]
[FR Doc No: 2016-22028]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78787; File No. SR-BatsBZX-2016-57]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of Bats BZX Exchange, Inc.

September 8, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 31, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ and non-Members of the Exchange pursuant to BZX Rules
15.1(a) and (c).
---------------------------------------------------------------------------

    \5\ A Member is defined as ``any registered broker or dealer
that has been admitted to membership in the Exchange.'' See Exchange
Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to modify its fee schedule applicable to the
Exchange's options platform (``BZX Options'') to: (i) Adopt a new
Quoting Incentive Program Tier under footnote 5; and (ii) adopt a new
NBBO Setter Tier under footnote 4.
Quoting Incentive Program (``QIP'') Tier 4
    The Exchange currently offers three QIP tiers under footnote 5,
which provide an additional rebate per contract for orders that add
liquidity to the BZX Options Book \6\ in options classes in which a
Member is a Market Maker \7\ registered on BZX Options pursuant to Rule
22.2. The Market Maker must be registered with BZX Options in an
average of 20% or more of the associated options series in a class in
order to qualify for QIP rebates for that class. The QIP tiers provide
an enhanced rebate ranging from $0.02 to $0.05 per contract to
qualifying Market Maker orders that yield fee code PM or NM. The
Exchange now proposes to add QIP Tier 4 under which a Market Maker may
receive an additional rebate of $0.03 per contract, where the Member
has an ADAV \8\ in Market Maker orders equal to or greater than 0.40%
of average TCV.\9\
---------------------------------------------------------------------------

    \6\ See Exchange Rule 16.1(a)(9).
    \7\ ``Market Maker'' applies to any transaction identified by a
Member for clearing in the Market Maker range at the OCC, where such
Member is registered with the Exchange as a Market Maker as defined
in Rule 16.1(a)(37).
    \8\ ``ADAV'' means average daily added volume calculated as the
number of contracts added.
    \9\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges to the consolidated transaction
reporting plan for the month for which the fees apply, excluding
volume on any day that the Exchange experiences an Exchange System
Disruption and on any day with a scheduled early market close.
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NBBO Setter Tier
    The Exchange currently offers four NBBO Setter tiers under footnote
4, which provide an additional rebate per contract for non-Customer
orders that add liquidity and establish a new National Best Bid or
Offer (``NBBO''). The NBBO Setter tiers provide an enhanced rebate
ranging from $0.02 to $0.05 per contract to qualifying non-Customer
orders that yield fee code PA, PF, PM, PN, NA, NF, NM or NN. The
Exchange now proposes to add a new NBBO Setter Tier 4 under which a
non-Customer order may receive an additional rebate of $0.03 per
contract where the Member has an ADAV in Market Maker orders equal to
or greater than 0.40% of average TCV. As a result, the current NBBO
Setter Tier 4 will be renamed to NBBO Setter Tier 5.
Implementation Date
    The Exchange proposes to implement these amendments to its fee
schedule as of September 1, 2016.

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6 of the Act.\10\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\11\ in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and other persons using any facility or system which the
Exchange operates or controls. The Exchange notes that it operates in a
highly competitive market in which market participants can readily
direct order flow to competing venues if they deem fee levels to be
excessive.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Volume-based rebates such as those currently maintained on the
Exchange have been widely adopted by equities and options exchanges and
are equitable because they are open to all Members on an equal basis
and provide additional benefits or discounts that are reasonably
related to the value to an exchange's market quality associated with
higher levels of market activity, such as higher levels of liquidity
provision and/or growth patterns, and introduction of higher volumes of
orders into the price and volume discovery processes.
    The Exchange believes that its proposal to add a new QIP Tier 4
under footnote 5 is reasonable, fair and equitable and non-
discriminatory, for the reasons set forth above with respect to volume-
based pricing generally. In addition, the Exchange believes the amount
of the proposed rebate offered under QIP Tier 4 is equitable and
reasonable because it is generally in line with the rebates offered
pursuant to QIP Tiers 1 to 3. The Exchange also notes that although
registration as a Market Maker is required to qualify for QIP, such
registration is available to all Members on an equal basis. The
Exchange also believes that the proposed tier is reasonable, fair and
equitable, and non-discriminatory because it, like the QIP generally,
is aimed to incentivize active market making on the Exchange.
    The Exchange believes that its proposal to add a new NBBO Setter
Tier 4 under footnote 4 is reasonable, fair and equitable and non-
discriminatory, for the reasons set forth above with respect to volume-
based pricing generally. Similar to the pricing tiers discussed above,
this incentive is reasonably related to the value to the Exchange's
market quality associated with higher levels of market activity,
including liquidity provision and the introduction of higher volumes of
orders into the price and volume discovery processes. In particular,
the enhanced rebate will encourage Market Maker orders at the NBBO, and
is therefore directly focused on encouraging aggressively priced
liquidity provision on BZX Options. The proposed differentiation
between Market Makers and other market participants recognizes the
differing contributions made to the liquidity and trading environment
on the Exchange by these market participants. Market Makers, unlike
other market participants, have obligations to the market and
regulatory requirements,\12\ which normally do not apply to other
market participants. A Market Maker has the obligation to make
continuous markets, engage in course of dealings reasonably calculated
to contribute to the maintenance of a fair and orderly market, and not
make bids or offers or enter into transactions that are inconsistent
with such course of dealings. On the other hand, other market
participants do not have such obligations on the Exchange. For the same
reasons, the Exchange believes it is reasonable to provide an
additional incentive in the form of the proposed new NBBO Setter Tier 4
to Members submitting Market Maker orders.
---------------------------------------------------------------------------

    \12\ See Exchange Rule 22.5, Obligations of Market Makers.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed amendments to its fee schedule
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
the Exchange has designed the proposed amendments to its fee schedule
in order to enhance its ability to compete with other exchanges. Also,
the Exchange believes that the expansion of criteria required to
qualify for volume-tiered rebates by the Exchange contributes to rather
than burdens competition, as such changes are intended to incentivize
participants to increase their participation on the Exchange.
Similarly, the introduction of a new QIP and NBBO Setter tier are
intended to provide incentives to Market Makers to encourage them to
enter orders to the Exchange, and thus is again intended to enhance
competition.
    Additionally, Members may opt to disfavor the Exchange's pricing if
they believe that alternatives offer them better value. Accordingly,
the Exchange does not believe that the proposed change will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets. Additionally, Members may opt to
disfavor the Exchange's pricing if they believe that alternatives offer
them better value. Accordingly, the Exchange does not believe that the
proposed changes to the Exchange's tiered pricing structure burdens
competition, but instead, enhances competition as it is intended to
increase the competitiveness of the Exchange. Also, the Exchange
believes that the price changes contribute to, rather than burden
competition, as such changes are broadly intended to incentivize
participants to increase their participation on the Exchange, which
will increase the liquidity and market quality on the Exchange, which
will then further enhance the Exchange's ability to compete with other
exchanges.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and paragraph (f) of Rule 19b-4
thereunder.\14\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BatsBZX-2016-57 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BatsBZX-2016-57. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsBZX-2016-57 and should
be submitted on or before October 5, 2016.

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

    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22028 Filed 9-13-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Notices]
[Pages 15229-15230]
[FR Doc No: 2021-05806]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4586-DR; Docket ID FEMA-2021-0001]

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

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Texas (FEMA-4586-DR), dated
    February 19, 2021, and related determinations.

DATES: This amendment was issued February 22, 2021.

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

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Texas is hereby amended to

include the following areas among those areas determined to have been
adversely affected by the event declared a major disaster by the
President in his declaration of February 19, 2021.

    Anderson, Austin, Bosque, Bowie, Burnet, Cherokee, Colorado,
Erath, Fannin, Freestone, Gonzalez, Grayson, Gregg, Harrison, Hill,
Houston, Hunt, Jackson, Jim Wells, Jones, Limestone, Lubbock,
Medina, Milam, Navarro, Rusk, Taylor, Tom Green, Val Verde,
Washington, and Wood Counties for Individual Assistance (already
designated for emergency protective measures [Category B], including
direct federal assistance, under the Public Assistance program).

    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households In Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050 Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

Robert J. Fenton,
Senior Official Performing the Duties of the Administrator, Federal
Emergency Management Agency.
[FR Doc. 2021-05806 Filed 3-19-21; 8:45 am]
BILLING CODE 9111-23-P


burdens imposed by other rules applicable to broker-dealers, such as
Regulation SHO. However, the Commission preliminarily believes that
the policies and procedures under the proposed floor member hedging
exemption will be substantially less burdensome than those required
by the Amendments to Regulation SHO because those policies and
procedures require certain technology and real-time monitoring
components. In contrast, the policies and procedures under the
proposed amendments to Rule 15b9-1 do not involve a real-time
monitoring or technology component. See infra note 273.
    \241\ See Section VI.D.
    \242\ For firms that perform this work internally, the initial
cost estimate assumes 4 hours of work performed by a Compliance
Manager at an hourly rate of $283 and 12 hours performed by
Compliance Attorneys at an hourly rate of $334. The annual cost
estimate assumes 48 hours of work by Compliance Clerks at an hourly
rate of $64, 32 hours by Compliance Attorneys, and 16 hours by
Compliance Managers. Hourly salary figure is from SIFMA's Management
& Professional Earnings in the Securities Industry 2013, modified by
Commission staff to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
---------------------------------------------------------------------------

e. Indirect Costs
    In addition to possibly incurring costs related to joining
exchanges, Non-Member Firms that choose not to join an Association will
lose the benefits of trading in the off-exchange market, unless they
meet the exemption for hedging. As mentioned above, Non-Member Firms
are significant participants in ATS activity. Much of this trading is
attributed to 14 Non-Member Firms, and the activity level across those
firms varies widely. Assuming that order volume is proportional to
trade volume, the

Commission estimates that the smallest of the 14 firms executed 11
shares on ATSs during the fourth quarter of 2014.\243\ The largest firm
executed 13.3 billion shares. The median firm in the group of 14 large
Non-Member Firms is estimated to have executed 167.6 million shares.
Although these share volumes are large, the Commission does not have
adequate data on these firms to estimate the proportion of their
trading activity and revenues that occurs on exchanges versus off-
exchange. The Commission cannot judge the likelihood of these firms
choosing to cease off-exchange activity rather than joining an
Association.
---------------------------------------------------------------------------

    \243\ The composition of the list of Non-Member Firms that are
identified in ATS trading data changes across time periods. It is
possible that the number of Non-Member Firms trading directly on
ATSs is higher than estimated here. Additional Non-Member Firms may
access ATSs through Member Firms, which would also exclude them from
this analysis.
     To address data limitation, the Commission assumes that ATS
orders from each of the 14 Non-Member Firms observable in the data
are equally likely to be executed.
---------------------------------------------------------------------------

    Finally, those firms that choose not to join an Association would
be limited in their ability to route their own transactions in a manner
so as to comply with the requirements of Regulation NMS.\244\ Their
transactions would have to be routed through a broker-dealer of an
exchange of which they are a member, or routed by a broker-dealer only
to those exchanges of which they are members. The routing of orders of
Non-Member Firms that do not join an Association will be determined by
the routing broker-dealer of the exchanges of which they are members.
This loss in choice could lead to higher costs for routing and costs
associated with increased latency because the exchange's routing
broker-dealer may have a telecommunications infrastructure that is
inferior to that of the broker-dealer that previously provided
connectivity to that exchange to the Non-Member Firm.\245\
---------------------------------------------------------------------------

    \244\ The exemption related to routing to comply with Regulation
NMS is discussed in Section II.E.
    \245\ Firms in the business of providing connectivity to
exchanges are likely to compete on the basis of their technology.
The Commission assumes that some firms that do not join FINRA will
have some orders (those governed under the Regulation NMS provisions
to prevent trade-throughs) routed using technology inferior to the
technology of their firm of choice.
---------------------------------------------------------------------------

D. Alternatives

1. Elimination of the Floor Member Hedging Exemption
    Although the proposed amendments would eliminate the exclusion for
proprietary trading activity for broker-dealers wishing to continue
availing themselves of the exemption from Association membership under
Rule 15b9-1, it would maintain a limited exception for hedging of
floor-based activity.\246\ Currently, Non-Member Firms are able to
hedge their floor-based activity through the exclusion for proprietary
trading in Rule 15b9-1. The Commission does not have data to estimate
the number of Non-Member Firms that use the proprietary trading
exemption in this manner, or the dollar-value of trading that they
hedge through the exemption.
---------------------------------------------------------------------------

    \246\ The floor member hedging exemption is discussed more fully
in Section II.D.
---------------------------------------------------------------------------

    One alternative considered by the Commission was the elimination of
the hedging exemption entirely. Elimination of the floor member hedging
exemption would require any firm that wished to hedge through off-
exchange transactions to join an Association or become a member of each
exchange on which it trades and cease off-exchange trading. This would
improve the Association's ability to monitor cross-market hedging
activity that was conducted off-exchange. The Commission recognizes,
however, that there may be challenges for the Commission, firms, and
exchanges in proving compliance with the exemption. For example, some
broker-dealers may label activity as hedging activity that is not
covered by the exemption. A firm could establish a limited floor-based
business and then inadvertently or deliberately claim the hedging
exemption covers significant trading off-exchange (and trading on
exchange of which the firm is not a member) that did not reduce or
otherwise mitigate the risk of its floor-based activity. Further, firms
that wish to avail themselves of the hedging exemption will incur costs
to establish, maintain and enforce written policies and procedures
related to its use.\247\ Without the hedging exemption, firms would not
incur these costs, but would incur other costs. In particular, without
a hedging exemption, floor brokers on some exchanges might find that
hedging positions obtained through their normal activity limited to the
floor of a single exchange is less cost-effective. For example, a floor
broker on an options exchange is currently exempt from FINRA membership
if he trades off-exchange under the exclusion for proprietary trading.
After entering an options position, the floor broker can enter an
offsetting equity position by trading on an exchange of which he is not
a member (through a member broker-dealer) or in the off-exchange
market. Under the proposed amendments without the hedging exemption,
the floor broker would not be able to make such a hedging transaction
without joining at least one additional SRO (FINRA or another exchange
where he could transact in equities). If participants have less
opportunity to hedge their positions, they may be less willing to
provide liquidity in their capacity as floor brokers. Therefore, the
Commission is proposing a narrow hedging exemption that covers only the
activity it intends to exclude.
---------------------------------------------------------------------------

    \247\ See Section V.C.2.d.
---------------------------------------------------------------------------

2. Improve Off-Exchange Supervision Through Action of Other SROs With
or Without CAT
    The Commission also considered whether an alternative approach to
achieving the objectives of the proposed amendments would be to address
the limitations in regulatory oversight of off-exchange activity of
Non-Member Firms through exchanges that act as their DEAs or all
exchanges of which they are members. The Commission preliminarily
believes either of these alternatives would frustrate the regulatory
structure established by Congress and would be inefficient. As
discussed in detail above, exchanges traditionally have not assumed the
role of regulating the totality of the trading of their member-broker-
dealers, and exchanges are currently not well-positioned to assume that
role, in light of the statutory framework and, among other things,
their limited access to data and the lack of a proper rule set to
regulate off-exchange trading.\248\ Exchanges generally do not have as
detailed a set of member conduct rules and do not have non-exchange-
specific trading rules, thus allowing such broker-dealers and their
personnel to conduct business under a less specific regulatory regime
than FINRA members.\249\ As discussed above, in this context and
consistent with the statutory framework, the Commission preliminarily
believes that an Association is better suited to regulate off-exchange
trading.\250\
---------------------------------------------------------------------------

    \248\ See supra notes 82-95 and accompanying text.
    \249\ See supra note 75 and accompanying text.
    \250\ See supra notes 82-95 and accompanying text.
---------------------------------------------------------------------------

    With respect to having Non-Member Firms' DEAs assume the regulatory
oversight responsibilities, the Commission could require the Non-Member
Firm's DEA to oversee the off-exchange activity of the firm. This
alternative may offer some benefit in terms of providing efficient
supervision. Non-Member Firms' DEAs may have specialized knowledge of
Non-Member Firms' businesses and operations that would facilitate
efficient supervision of

their off-exchange activity.\251\ Similarly, requiring all SROs to
supervise the off-exchange activity of their members might bring
certain benefits. First, there might be innovation in surveillance
methodology because exchange SROs could need new surveillance systems
and procedures tailored to current market structure and practice.
Second, this could foster competition among SROs to provide regulatory
services, which could lower costs to members.
---------------------------------------------------------------------------

    \251\ See Allston Letter, supra note 106.
---------------------------------------------------------------------------

    However, with respect to DEAs, the supervision of trading activity
is outside the scope of typical DEA oversight responsibilities \252\
and the Commission believes most exchanges contract with FINRA to
perform these examinations. Consequently, if exchange SROs were
expected to supervise the off-exchange activities of firms assigned to
them for DEA examinations, the exchanges would need to acquire the
resources to provide this supervision.
---------------------------------------------------------------------------

    \252\ See supra note 164.
---------------------------------------------------------------------------

    Requiring all SROs to supervise their members' off-exchange trading
would also entail substantial costs and create inefficiencies. As
discussed previously, exchange SROs have not generally supervised their
members' activity outside of the markets they operate.\253\ As
discussed above, FINRA has invested in the technological
infrastructure, cooperative agreements with other SROs, and specialized
regulatory personnel to provide surveillance and supervision of
activity in off-exchange markets.\254\ If each of the exchanges were
required to supervise the off-exchange activities of some or all of
their members, the exchanges each would need to invest in similar
regulatory infrastructure. This investment would be costly to the
exchanges; presumably these costs would be passed on to exchange
members and ultimately the investing public through higher trading
costs. In addition, assigning regulatory responsibility to an exchange
SRO, which may in turn contract with FINRA to provide those services,
would be costly and inefficient. Further, notwithstanding the potential
benefits to innovation, the duplication in regulatory oversight would
also be duplication in regulatory resources as multiple SROs would
surveil the off-exchange trading of some firms. This approach also
could be inconsistent with the allocation of regulatory
responsibilities contemplated by Section 17(d) of the Exchange
Act.\255\
---------------------------------------------------------------------------

    \253\ See supra note 68-69 and accompanying text.
    \254\ Id.
    \255\ 15 U.S.C. 78q(d).
---------------------------------------------------------------------------

    Furthermore, FINRA has adopted rules that govern off-exchange
trading, recognizing the complexity and opacity of the off-exchange
marketplace. If exchanges were required to supervise the off-exchange
activity of their members, exchanges would need to adopt rules that
were tailored to the institutional detail of the off-exchange market.
This could result in off-exchange trading rules that varied depending
on the exchange membership status of individual participants, resulting
in inconsistent rules governing the same off-exchange trading activity.
    Finally, the Commission has also considered whether the possibility
that the exchanges could obtain additional data through the CAT, or
through a FINRA rule change if implemented,\256\ affects the
Commission's preliminary belief that an Association is better suited to
regulate off-exchange trading. Although there may thereby be additional
data, these changes would not address the underlying statutory scheme
and resource issues that make FINRA well-positioned to regulate off-
exchange trading.
---------------------------------------------------------------------------

    \256\ See supra note 84.
---------------------------------------------------------------------------

3. Exchange Membership Alternative
    The proposed amendments would, in accordance with Section 15(b)(8),
preclude any firm that is not a member of an Association from trading
on exchanges of which it is not a member.\257\ Further, under the
proposed amendments, if a firm becomes a member of an Association, it
would not have to become a member of each exchange upon which it
trades.\258\ The Commission has also considered requiring broker-
dealers to become a member of every exchange on which they trade and to
become a member of an Association in order to trade off-exchange
(``Exchange Membership Alternative''). In other words, under this
alternative, becoming a member of an Association would not alone allow
firms to trade on exchanges of which they are not members (as would be
permitted under the proposed amendments).
---------------------------------------------------------------------------

    \257\ The proposed amendments provide limited exemptions for
hedging of floor-based activity and order routing to satisfy certain
provisions of Regulation NMS.
    \258\ In order to trade on exchanges of which it is not a
member, the firm would have to trade with or through another broker-
dealer that is a member of that exchange.
---------------------------------------------------------------------------

    In considering the Exchange Membership Alternative, the Commission
weighed whether the same issue of off-exchange activity not being
subject to effective regulatory oversight that exists when a Non-Member
Firm trades off-exchange is present when a Member or Non-Member Firm
trades on an exchange of which it is not a member (through a member of
that exchange). The Commission preliminarily believes that the proposed
amendments adequately address the issue of establishing effective
oversight of off-exchange activity and that the more onerous Exchange
Membership Alternative would not provide any additional regulatory
benefit beyond the proposed amendments for several reasons. First,
while exchanges lack the data, surveillance technology and specialized
regulatory personnel to surveil their members' trading off-exchange,
FINRA has these resources to surveil the activity of Member Firms both
on exchanges and off-exchange. Accordingly, requiring Member Firms to
also become members of each exchange on which they effect transactions,
including indirectly, would be unnecessarily duplicative because FINRA
can already surveil the activity of a Member Firm trading on an
exchange of which it is not a member. In addition, while exchanges do
not have a specialized rule set to govern their members' activity in
the off-exchange market, FINRA's rules are consistent with requiring
Member Firms to adhere to the trading rules of exchanges on which they
transact. If a Member Firm were to violate an exchange rule on an
exchange of which it is not a member, FINRA would have the jurisdiction
needed to address the resulting violation. Therefore, requiring that
the Member Firm also become a member of that exchange would not prevent
FINRA from exercising jurisdiction over the matter.
    The Commission notes that the Exchange Membership Alternative might
require firms to become members of more SROs than required under the
proposed amendments, which would impose additional costs. In
particular, some Non-Member Firms that would become Member Firms under
the Proposal would also need to become members of additional exchanges
or cease trading on these exchanges. In addition, some current Member
Firms would also need to become members of additional exchanges.
4. Retaining the De Minimis Allowance
    The Commission considered retaining the $1,000 de minimis allowance
for trading other than on an exchange of which the Non-Member Firm is a
member. The Commission also considered retaining the $1,000 de minimis
allowance, but removing the exception for proprietary trading conducted
with or through another registered broker-dealer. As discussed

above,\259\ the Commission believes that the magnitude of the de
minimis allowance is no longer economically meaningful. Furthermore,
the Commission believes that the commission sharing arrangements
discussed previously \260\ are rarely if ever used. However, the
Commission believes that floor members on some exchanges may rely upon
the exception for proprietary trading conducted with or through another
registered broker-dealer to hedge risks associated with floor-based
activities. Consequently, the proposed amendments include a hedging
exemption for floor-based activity but no longer include a de minimis
dollar amount associated with transactions that do not fall under the
limited hedging exemption.
---------------------------------------------------------------------------

    \259\ See Section II.C.
    \260\ Id.
---------------------------------------------------------------------------

5. The Commission Assumes Regulatory Oversight Role for Non-Member
Firms
    The Commission considered assuming the role of providing direct
primary regulatory oversight for Non-Member Firms. We do not believe,
however, that this is a reasonably available alternative because of the
judgments reflected in Congress's determinations over time about where
to locate that oversight function and our own understanding of the
entity best suited to that role. As discussed in detail above, the
Exchange Act, as originally adopted in 1934, left regulation of the
off-exchange market to the Commission.\261\ In 1938, Congress provided
for the creation of Associations,\262\ and from 1965 until 1983,
broker-dealers engaged in off-exchange trading could become members of
NASD or opt to be regulated directly by the Commission under the SECO
program.\263\ In 1983, the Commission recommended that Congress
eliminate the SECO program because, among other things, only a limited
number of broker-dealers chose to be regulated under the SECO program
\264\ and maintaining the program disproportionately affected the
Commission's resources. Congress then amended the Act to eliminate the
SECO program,\265\ which had the effect of making the regulation of
off-exchange trading under the Exchange Act the responsibility of an
Association.\266\ Consistent with this, in this rulemaking the
Commission is proposing to modify the Rule 15b9-1 exemption so that,
with limited exceptions, the off-exchange transactions of broker-
dealers will be subject to the oversight and rules of an Association,
the SRO primarily responsible for regulating trading in the off-
exchange market. As discussed throughout, we believe an Association is
best positioned to regulate that trading. Based on the foregoing,
including the Congress's determination to eliminate the SECO
Program,\267\ the Commission does not view assumption of direct
responsibility for off-exchange broker-dealer oversight by the
Commission as a reasonably available alternative.
---------------------------------------------------------------------------

    \261\ See supra note 27 and accompanying text
    \262\ See supra notes 31-33 and accompanying text.
    \263\ As previously noted, broker-dealers that traded
exclusively on the floor of an exchange were exempt from broker-
dealer registration with the Commission until the 1975 Amendments,
which extended the Commission's SECO rulemaking authority to any
exchange member trading on an exchange other than an exchange of
which it was a member. See supra note 41 and accompanying text.
Broker-dealers registering with the Commission as a result of the
1975 Amendments became subject to the SECO rules in 1976, but could
remain exempt from such rules pursuant to Rule 15b8-1. See supra
note 43 and accompanying text.
    \264\ Because many broker-dealers chose to become members of
NASD rather than participating in the SECO Program, only 12 percent
of all active Commission-registered broker-dealers effecting
transactions off-exchange were SECO broker-dealers by May 1982.
House Comm. on Energy and Commerce, ``Authorization of
Appropriations for the Securities and Exchange Commission,'' H.R.
Rep. No. 98-106, at 597 (1983).
    \265\ Pub. L. 98-38, 97 Stat. 205 (1983).
    \266\ See supra note 31 and accompanying text.
    \267\ The report accompanying the amendments made to the Act in
1983 cited a preference for self-regulation over direct regulation
by the Commission. See supra note 46 and accompanying text.
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E. Request for Comment on Economic Analysis

    The Commission has identified above economic effects associated
with the proposal and requests comment on all aspects of its
preliminary economic analysis. The Commission encourages commenters to
identify, discuss, analyze, and supply relevant data, information, or
statistics regarding any such economic effects. In particular, the
Commission seeks comment on the following:
    47. Do commenters agree with the Commission's analysis of the
potential economic effects of the proposed amendments? Why or why not?
    48. Do commenters agree with the Commission's assessment of the
baseline for the economic effects?
    49. Is the supervision and surveillance of Non-Member Firms with
substantial cross-market or off-exchange trading sufficient under
current rules? Why or why not?
    50. How would further changes to the scope of existing Regulatory
Services Agreements between SROs affect regulators' ability to
effectively surveil cross-market and off-exchange trading?
    51. Do commenters believe that there are additional categories of
benefits or costs that could be quantified or otherwise monetized? If
so, please identify these categories and, if possible, provide specific
estimates or data.
    52. Are there any additional benefits that may arise from the
proposed amendments? Or are there benefits described above that would
not likely result from the proposed amendments? If so, please explain
these benefits or lack of benefits in detail.
    53. Are there any additional costs that may arise from the proposed
amendments? Are there methods by which the Commission could reduce the
costs imposed by the proposed amendments enabling effective regulatory
oversight of Non-Member Firms? Please explain. Are there any other
potential consequences of the proposed amendments? Or are there costs
described above that would not likely result from the proposed
amendments? If so, please explain these costs or lack of costs in
detail.
    54. Does the release appropriately describe the potential effects
of the proposed amendments on the promotion of efficiency, competition,
and capital formation? Why or why not? If possible, commenters should
provide analysis and empirical data to support their views on the
competitive or anticompetitive effects, as well as the efficiency and
capital formation effects, of the proposed amendments.
    55. Are there alternative mechanisms for achieving the Commission's
goal of improving regulatory oversight while promoting competition and
capital formation?
    56. To the extent that there are reasonable alternatives to the
proposed amendments, what are the potential costs and benefits of those
reasonable alternatives relative to the proposed amendments? What are
the potential effects on the promotion of efficiency, competition, and
capital formation of those reasonable alternatives?
    57. Would the cost of FINRA or exchange membership cause some Non-
Member Firms to alter their activities in any way? If so, how would
Non-Member Firms alter their business? How would these changes affect
competition and market efficiency? How would these changes affect
market quality?
    58. Would the proposed amendments cause Non-Member Firms to exit
the marketplace? If so, how many Non-Member Firms would elect to
restrict their operations rather that become members of FINRA or one or
more exchanges? How would these changes affect competition and market
efficiency? How would these changes

affect market quality? What would be the effect on liquidity of Non-
Members Firms exiting the marketplace?
    59. Are there costs related to FINRA membership for Non-Member
Firms that the Commission has not considered? What are these costs?
Please be specific.
    60. For Non-Member Firms, how much will the cost of FINRA
membership vary? Will the cost of FINRA membership cause some firms to
change the scope of their business? If so, in what manner?
    61. Do commenters agree with the assumptions underlying the
Commission's estimates of the range for membership costs for exchanges?
    62. Do commenters agree with the Commission's preliminarily belief
that the TAF collected by FINRA would not be expected to materially
change if the proposed amendments were adopted? What would the effect
of the proposed amendments be on the TAF assessed to current FINRA
members? What would the effect of the proposed amendments be on the TAF
assessed to Non-Member Firms that choose to become FINRA members?
    63. Has the Commission properly accounted for the compliance cost
burden required to achieve the access to exchanges necessary to comply
with the proposed amendments? Would any costs beyond basic membership
be the direct result of the proposed amendments?
    64. If Non-Member Firms were to elect to join additional exchanges
rather than becoming members of FINRA, how many exchanges would they
expect to join?
    65. Is the Commission correct in assuming that the cost of
membership is the relevant compliance cost burden and that connectivity
or trading related costs are optional for most to all of the exchanges?
Are there any exchanges on which connectivity or trading rights costs
are mandatory even if a broker-dealer trades through another member
broker-dealer that is paying the connectivity or trading rights costs?
    66. Are the Commission's assumptions on the manner in which Section
3 fees are allocated in off-exchange transactions with Non-Member Firms
correct? Are there mechanisms in place already that result in these
fees being passed on to Non-Member Firms that transact in ATSs, or
elsewhere in the off-exchange market?
    67. Would a Non-Member Firm elect to become a member of one or more
exchanges rather than become a member of FINRA? If so, please discuss
in detail why a Non-Member Firm would make such an election. Which
exchanges, in particular, are Non-Member Firms likely to join, if they
join additional exchanges, as a result of the proposed amendments? How
would these changes affect competition and market efficiency? How would
these changes affect market quality?
    68. Has the Commission articulated all reasonable alternatives for
the proposed rule? If not, please provide additional alternatives and
how their costs and benefits would compare to the proposed rule. For
the alternatives described above, has the Commission accurately
described the costs and benefits? If not, please provide more accurate
costs and benefits, including any data or statistics that support those
costs and benefits.
    69. One alternative discussed is to effect improved off-exchange
supervision through the action of exchanges. Is this alternative
practical? What resources would exchanges have to acquire to provide
efficient and effective supervision of their members' off-exchange
trading activity?
    70. What effects could the proposed amendments have on FINRA's
oversight of the off-exchange market? How could FINRA's revenues and
cost of regulation be affected? What changes should FINRA consider
implementing should the Commission approve the proposed amendments to
Rule 15b9-1? Please be specific.
    71. Would the proposed amendments create a barrier to entry for new
prospective Associations? Would there be benefits to competition among
Associations?

VI. Paperwork Reduction Act

    Certain provisions of these proposed amendments to Rule 15b9-1
contain ``collection of information requirements'' within the meaning
of the Paperwork Reduction Act of 1995 (``PRA'').\268\ As discussed in
Part II.D, the proposed amendments to Rule 15b9-1 would require dealers
relying on the floor member hedging exemption under Rule 15b9-1 to
establish, maintain, and enforce certain written policies and
procedures. Compliance with these collections of information
requirements would be mandatory for firms relying on the rule. The
Commission is submitting these collections of information to the Office
of Management and Budget (``OMB'') for review in accordance with 44
U.S.C. 3507(d) and 5 CFR 1320.11. The title of new collection of
information is ``Rule 15b9-1 Floor Member Hedging Exemption.'' An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the agency displays a
currently valid control number.
---------------------------------------------------------------------------

    \268\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

A. Summary of Collection of Information

    The proposed amendments to Rule 15b9-1 would include a collection
of information within the meaning of the PRA for broker-dealers relying
on the floor member hedging exemption under the proposed Rule. The
floor member hedging exemption under the proposed amendments to Rule
15b9-1 would permit a qualifying dealer \269\ that conducts business on
the floor of a national securities exchange to effect transactions for
its own account with or through another registered broker or dealer
that are solely for the purpose of hedging the risks of its floor-based
activities, by reducing or otherwise mitigating the risks thereof.
Broker-dealers relying on the floor member hedging exemption must
establish, maintain, and enforce written policies and procedures
reasonably designed to ensure and demonstrate that such hedging
transactions reduce or otherwise mitigate the risks of the financial
exposure the dealer incurs as a result of its floor-based activity. In
addition, such dealers would be required to preserve a copy of their
policies and procedures in a manner consistent with Rule 17a-4 until
three years after the date the policies and procedures are replaced
with updated policies and procedures.
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    \269\ A broker-dealer would have to meet the threshold
requirements of proposed Rule 15b9-1. Specifically, such broker-
dealer would have to: (1) Be a member of a national securities
exchange; (2) carry no customer accounts; and (3) effect
transactions in securities solely on a national securities exchange
of which it is a member, except for transactions complying with the
floor member hedging exemption or the Regulation NMS routing
exemption.
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B. Proposed Use of Information

    The policies and procedures required under Rule 15b9-1 would be
used by the Commission and SROs to understand how dealers relying on
the floor member hedging exemption evaluate whether their off-exchange
transactions are conducted solely for the purpose of hedging risks
incurred from the dealer's floor-based business and that such dealers
are complying with the requirements of Rule 15b9-1. These policies and
procedures will be used generally by the Commission as part of its
ongoing efforts to monitor and enforce compliance with the federal
securities laws, including Section 15(b)(8) and Rule 15b9-1 thereunder.
In addition, SROs may use the information to monitor and enforce
compliance by

their members with applicable SRO rules and the federal securities
laws.

C. Respondents

    The Commission estimates that up to 100 dealers may rely on the
floor member hedging exemption contained in Rule 15b9-1. The Commission
notes that, based on publicly available information reviewed in the
first quarter of 2015, there are currently 125 broker-dealers
registered with the Commission that are not members of an Association.
Of those 125 broker-dealers, 77 broker-dealers currently disclose being
an exchange member engaged in floor activities on Form BD.\270\ The
Commission believes that while not all of these dealers will choose to
avail themselves of the floor member hedging exemption contained in
Rule 15b9-1 because the exemption restricts off-exchange transactions
solely to those that hedge risks incurred as a result of their floor-
based activity, some firms not included in this number may decide to
avail themselves of the floor member hedging exemption. The Commission
preliminarily believes, however, that more of these firms are likely to
want the ability to engage in off-exchange transactions other than
those that hedge the risk of their floor-based activity, and may,
accordingly, choose to join an Association as a result of the proposed
amendments to Rule 15b9-1.
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    \270\ Of the approximately 4,209 total registered broker-dealers
as of March 2015, 182 broker-dealers in total disclose being an
exchange member engaged in floor activities on Form BD (note: The
182 broker-dealers includes the 77 broker-dealers engaged in floor
activities that are not members of an Association). The Commission
preliminarily believes that broker-dealers engaged in floor
activities that are currently members of an Association are unlikely
to withdraw from Association membership and begin relying on the
floor member hedging exemption because such broker-dealers have
already elected to join an Association and reliance on the floor
member hedging exemption would limit their permissible off-exchange
activity solely to hedging risks incurred as a result of their
floor-based business.
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D. Total Initial and Annual Reporting and Recordkeeping Burdens

    The Commission estimates that the one-time, initial burden for a
dealer to establish written policies and procedures as required under
Rule 15b9-1 would be approximately 16 hours.\271\ This figure is based
on the estimated number of hours to develop a set of written policies
and procedures, including review and approval by appropriate legal
personnel. The Commission notes that the policies and procedures
required by the proposed Rule are limited to hedging transactions that
reduce or otherwise mitigate the risks of the financial exposure the
dealer incurs as a result of its floor-based activity. In addition, the
Commission estimates the annual burden of maintaining and enforcing
such policies and procedures, including a review of such policies at
least annually, would be approximately 96 hours for each dealer.\272\
This figure includes an estimate of hours related to reviewing existing
policies and procedures, making necessary updates, conducting ongoing
training, maintaining relevant systems and internal controls,
performing necessary testing and monitoring of off-exchange hedging
transactions as they relate to the broker-dealer's floor-based
activities and maintaining copies of the policies and procedures for
the period of time required by the proposed rule.
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    \271\ This figure is based on the following: (Compliance Manager
at 10 hours) + (Compliance Attorney at 5 hours) + (Director of
Compliance at 1 hour) = 16 burden hours per dealer.
    \272\ This figure is based on the following: (Compliance Manager
at 60 hours) + (Compliance Attorney at 24 hours) + (Director of
Compliance at 12 hours) = 96 burden hours per dealer.
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    The Commission estimates that the initial burden associated with
Rule 15b9-1 would be 112 hours per dealer, which corresponds to an
initial aggregate burden of 11,200 hours.\273\ The Commission estimates
that the ongoing annualized burden associated with Rule 15b9-1 would be
96 hours per dealer, which corresponds to an ongoing annualized
aggregate burden of 9,600 hours.\274\
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    \273\ This figure is based on the following: ((16 burden hours
per dealer) + (96 burden hours per dealer)) x (100 dealers) = 11,200
burden hours during the first year. In estimating these burden
hours, the Commission examined the estimated burdens imposed by
other rules applicable to broker-dealers. For example, amendments to
Regulation SHO adopted in 2010 required broker-dealers to establish,
maintain, and enforce written policies and procedures relating to
Rule 201(c) and Rule 201(d)(6) to ensure short-sale orders are,
among other things, properly marked, are submitted at the proper
price, or are properly off-set (in the case of Rule 201(d)(6). See
Exchange Act Release No. 61595 (February 26, 2010) 75 FR 11232,
11286 (March 10, 2010) (``Amendments to Regulation SHO''). The
policies and procedures relating to Rule 201(c) and Rule 201(d)(6)
required under the Amendments to Regulation SHO estimated an average
initial one-time burden of 160 burden hours per broker-dealer and
ongoing compliance cost of 60 hours annually to ensure the policies
and procedures are up-to-date and remain in compliance as well as an
additional 336 hours annual to monitor, surveil, and enforce trading
in compliance with Rule 201. Id. The Commission preliminarily
believes that the policies and procedures under the proposed floor
member hedging exemption will be substantially less burdensome than
those required by the Amendments to Regulation SHO because those
policies and procedures require certain technology and real-time
monitoring components. For example, under the Amendments to
Regulation SHO described above, broker-dealers' policies and
procedures must be reasonably designed to enable a broker-dealer to
monitor, on a real-time basis, the national best bid so as to
determine the price at which a broker-dealer may submit a short sale
order to a trading center in compliance with Rule 201(c), and off-
setting transactions under the riskless principal provision under
Rule 201(d)(6) must be allocated to a riskless principal or customer
account within 60 seconds of execution. Id. at 11284. In contrast,
the policies and procedures under the proposed amendments to Rule
15b9-1 do not involve a real-time monitoring or technology
component.
    \274\ This figure is based on the following: (96 burden hours
per dealer) x (100 dealers) = 9,600 ongoing, annualized aggregate
burden hours. In estimating these burden hours, the Commission also
examined the estimated initial and ongoing burden hours imposed on
registered security-based swap dealers under Regulation SBSR--
Reporting and Dissemination of Security-Based Swap Information. See
Exchange Act Release No. 74244 (February 11, 2015) 80 FR 14564,
14683 (March 19, 2015) (``Regulation SBSR''). Regulation SBSR
requires registered security-based swap dealers to establish,
maintain, and enforce written policies and procedures that are
reasonably designed to ensure compliance with any security-based
swap transaction reporting obligations. Id. The estimated initial
and ongoing compliance burden on registered security-based swap
dealers under Regulation SBSR were 216 burden hours and 120 burden
hours respectively. Id. The Commission preliminarily believes that
the initial and ongoing burden hours under the proposed floor member
hedging exemption will be substantially less than for registered
security-based swap dealers under Regulation SBSR, because the
policies and procedures under Regulation SBSR require programing
certain systems for transaction reporting and performing testing of
such systems. Id. In contrast, the proposed floor member hedging
exemption would not necessarily require programming or testing of
certain systems and is a much more discrete set of policies and
procedures as compared to the more comprehensive policies and
procedures required by Regulation SBSR, which cover, among other
things, the full scope of reporting security-based swap transactions
by registered security-based swap dealers and others.
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E. Collection of Information Is Mandatory

    All of the collection of information discussed above would be
mandatory.

F. Confidentiality of Responses to Collection of Information

    To the extent that the Commission receives confidential information
pursuant to the collection of information, such information will be
kept confidential, subject to the provisions of applicable law.\275\
---------------------------------------------------------------------------

    \275\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing
the public availability of information obtained by the Commission).
---------------------------------------------------------------------------

G. Retention Period for Recordkeeping Requirements

    Dealers seeking to take advantage of the proposed hedging exemption
would be required to preserve a copy of their policies and procedures
in a manner consistent with Rule 17a-4 \276\ until

three years after the date the policies and procedures are replaced
with updated policies and procedures.
---------------------------------------------------------------------------

    \276\ 17 CFR 240.17a-4. Registered brokers and dealers are
already subject to existing recordkeeping and retention requirements
under Rule 17a-4. However, proposed Rule 15b9-1 contains a
requirement that a dealer relying on the floor member hedging
exemption preserve a copy of its policies and procedures in a manner
consistent with Rule 17a-4 until three years after the date the
policies and procedures are replaced with updated policies and
procedures. The burdens associated with this recordkeeping
obligation have been accounted for in the burden estimates discussed
above for Rule 15b9-1.
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H. Request for Comments

    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comment to:
    72. Evaluate whether the proposed collection of information is
necessary for the proper performance of our functions, including
whether the information shall have practical utility;
    73. Evaluate the accuracy of our estimate of the burden of the
proposed collection of information;
    74. Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected; and
    75. Evaluate whether there are ways to minimize the burden of
collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology.
    Persons submitting comments on the collection of information
requirements should direct them to the Office of Management and Budget,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of Information and Regulatory Affairs, Washington, DC 20503, and
should also send a copy of their comments to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090, with reference to File Number [ ]. Requests
for materials submitted to OMB by the Commission with regard to this
collection of information should be in writing, with reference to File
Number [ ] and be submitted to the Securities and Exchange Commission,
Office of FOIA/PA Services, 100 F Street NE., Washington, DC 20549-
2736. As OMB is required to make a decision concerning the collections
of information between 30 and 60 days after publication, a comment to
OMB is best assured of having its full effect if OMB receives it within
30 days of publication.

VII. Consideration of Impact on Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996,\277\ the Commission requests comment on the potential
effect of the proposed amendments to Rule 15b9-1 on the United States
economy on an annual basis. The Commission also requests comment on any
potential increases 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.
---------------------------------------------------------------------------

    \277\ 5 U.S.C. 603.
---------------------------------------------------------------------------

VIII. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act of 1980 \278\
(``RFA'') requires the Commission to undertake an initial regulatory
flexibility analysis of the impact of the proposed rule amendments on
small entities unless the Commission certifies that the rule, if
adopted, would not have a significant economic impact on a substantial
number of small entities.\279\ For purposes of Commission rulemaking in
connection with the RFA,\280\ a small entity includes a broker or
dealer that: (1) Had total capital (net worth plus subordinated
liabilities) of less than $500,000 on the date in the prior fiscal year
as of which its audited financial statements were prepared pursuant to
Rule 17a-5(d) under the Exchange Act,\281\ or, if not required to file
such statements, a broker-dealer with total capital (net worth plus
subordinated liabilities) of less than $500,000 on the last day of the
preceding fiscal year (or in the time that it has been in business, if
shorter); and is not affiliated with any person (other than a natural
person) that is not a small business or small organization.\282\ With
regard to exchanges, a small entity is an exchange that has been exempt
from the reporting requirements of Rule 601 under Regulation NMS, and
is not affiliated with any person (other than a natural person) that is
not a small business or small organization.\283\
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    \278\ 5 U.S.C. 603(a).
    \279\ 5 U.S.C. 605(b).
    \280\ Although Section 601(b) of the RFA defines the term
``small entity,'' the statute permits agencies to formulate their
own definitions. The Commission has adopted definitions for the term
``small entity'' for the purposes of Commission rulemaking in
accordance with the RFA. Those definitions, as relevant to this
proposed rulemaking, are set forth in Rule 0-10 under the Exchange
Act, 17 CFR 240.0-10. See Exchange Act Release No. 18451 (January
28, 1982), 47 FR 5215 (February 4, 1982) (File No. AS-305).
    \281\ 17 CFR 240.17a-5(d).
    \282\ See 17 CFR 240.0-10(c).
    \283\ See 17 CFR 240.0-10(e).
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    The Commission examined recent FOCUS data for the 125 Non-Member
Firms and concluded that at most 11 of the affected entities have net
capital of $500,000 or less, and some of those might not be small
entities because they might be affiliates of larger organizations.
    Although the Commission lacks the data to quantify these firms'
off-exchange activity, it does have FOCUS information on the firms'
disclosed activities. Based on this disclosure, the Commission believes
that many of these firms may be able to trade off-exchange under the
proposed floor member hedging exemption for a number of reasons. First,
a number of firms disclose floor-based activity that may allow them to
trade off-exchange under the floor member hedging exemption: five
report writing options and six disclose floor activity.\284\ Second,
one discloses only trading in government debt securities, so is
unlikely to be affected by the proposed amendments. Finally, only two
of the eleven firms disclose proprietary trading activity. These firms
would be affected only by the elimination of the de minimis allowance,
unless the firms can rely on the floor member hedging exemption for
such activity.\285\ Therefore, the Commission certifies that the
proposed amendments to Rule 15b9-1 would not, if adopted, have a
significant economic impact on a substantial number of small entities.
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    \284\ Firms often disclose multiple activities, so the number of
disclosed activities in this discussion exceeds the number of firms.
    \285\ Hedging activity is proprietary trading activity.
---------------------------------------------------------------------------

    76. We encourage written comments regarding this certification. We
solicit comment as to whether the proposed amendments could have
impacts on small entities that have not been considered. We request
that commenters describe the nature of any impacts on small entities
and provide empirical data to support the extent of such effect.
    Such comments will be placed in the same public file as comments on
the proposed amendments to Rule 15b9-1. Persons wishing to submit
written comments should refer to the instructions for submitting
comments in the front of this release.

IX. Statutory Authority--Text of the Proposed Amendments

    Pursuant to the Exchange Act, 15 U.S.C. 78a et seq., and
particularly Sections 3, 15(b)(9), 15A, 17, 19, 23, and 36 thereof, the
Commission is proposing amendments to Title 17, Chapter II of the Code
of Federal Regulations as follows.

List of Subjects in 17 CFR Part 240

    Brokers, Dealers, Registration, Securities.

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

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

0
1. The authority citation for part 240 continues to read in part as
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78o-4, 78o-10,
78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23,
80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201, et seq.; and 8302; 7
U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L.
111-203, 939A, 124 Stat. 1376 (2010), unless otherwise noted.
* * * * *
0
2. Section 240.15b9-1 is revised to read as follows:

Sec.  240.15b9-1  Exemption for certain exchange members.

    Any broker or dealer required by section 15(b)(8) of the Act (15
U.S.C. 78o(b)(8)) to become a member of a registered national
securities association shall be exempt from such requirement if it:
    (a) Is a member of a national securities exchange;
    (b) Carries no customer accounts; and
    (c) Effects transactions in securities solely on a national
securities exchange of which it is a member, except that with respect
to this paragraph (c):
    (1) A dealer that conducts business on the floor of a national
securities exchange may effect transactions off the exchange, for the
dealer's own account with or through another registered broker or
dealer, that are solely for the purpose of hedging the risks of its
floor-based activities, by reducing or otherwise mitigating the risks
thereof. A dealer seeking to rely on this exception shall establish,
maintain and enforce written policies and procedures reasonably
designed to ensure and demonstrate that such hedging transactions
reduce or otherwise mitigate the risks of the financial exposure the
dealer incurs as a result of its floor-based activity. Such dealer
shall preserve a copy of its policies and procedures in a manner
consistent with 17 CFR 240.17a-4 until three years after the date the
policies and procedures are replaced with updated policies and
procedures; and
    (2) A broker or dealer may effect transactions off the exchange
resulting from orders that are routed by a national securities exchange
of which it is a member, to prevent trade-throughs on that national
securities exchange consistent with 17 CFR 242.611.

    By the Commission.

    Dated: March 25, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-07293 Filed 4-1-15; 8:45 am]
 BILLING CODE 8011-01-P