[Federal Register: August 26, 2009 (Volume 74, Number 164)]
[Notices]
[Page 43200-43204]
[DOCID:fr26au09-132]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60530; File No. SR-BX-2009-028]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order
Granting Approval of a Proposed Rule Change To Adopt Rules To Implement
the Options Order Protection and Locked/Crossed Market Plan

August 18, 2009.

I. Introduction

    On June 16, 2009, the NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend and adopt rules to implement the Options Order Protection and
Locked/Crossed Market Plan. The proposed rule change was published for
comment in the Federal Register on June 29, 2009.\3\ The Commission
received no comments on the proposal. This order approves the proposed
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60158 (June 22,
2009), 74 FR 31081 (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to amend and adopt new rules of the Boston
Options Exchange Group, LLC (``BOX'') to implement the Options Order
Protection and Locked/Crossed Market
    Plan (``Plan'').\4\ Specifically, the Exchange proposes to replace
current

Chapter XII of the BOX Rules with new rules implementing the Plan,
amend other Exchange rules to reflect the Plan, and delete rules
rendered unnecessary by the Plan.
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    \4\ The Plan is a national market system plan proposed by the
seven existing options exchanges and approved by the Commission. See
Securities Exchange Act Release No. 59647 (March 30, 2009), 74 FR
15010 (April 2, 2009) (File No. 4-546) (``Plan Notice'') and 60405
(July 30, 2009), 74 FR 39362 (August 6, 2009) (File No. 4-546)
(``Plan Approval''). The seven options exchanges are: Chicago Board
Options Exchange, Incorporated (``CBOE''); International Securities
Exchange, LLC (``ISE''); The NASDAQ Stock Market LLC (``Nasdaq'');
NASDAQ OMX PHLX, Inc. (``Phlx''); NYSE Amex LLC (``NYSE Amex'');
NYSE Arca, Inc. (``NYSE Arca''); and BOX (each exchange individually
a ``Participant'' and, together, the ``Participating Options
Exchanges'').
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The Old Plan

    Each of the Participating Options Exchanges are signatories to the
Plan for the Purpose of Creating and Operating an Intermarket Option
Linkage (``Old Plan'').\5\ In pertinent part, the Old Plan generally
requires its participants to avoid trading at a price inferior to the
national best bid or offer (``trade-through''), although it provides
for a number of exceptions to trade-through liability.\6\ The
Participating Options Exchanges comply with this requirement of the Old
Plan by utilizing a stand alone system (``Linkage Hub'') to send and
receive specific order types,\7\ namely Principal Acting as Agent
Orders (``P/A Orders''), Principal Orders, and Satisfaction Orders.\8\
The Old Plan also provided that dissemination of ``locked'' or
``crossed'' markets should be avoided, and remedial actions that should
be taken to unlock or uncross such market.\9\ Each of the Participating
Options Exchanges, including the Exchange, has submitted an amendment
to the Old Plan to withdraw from such Plan.\10\ The withdrawals will be
effective upon approval by the Commission of such amendments pursuant
to Rule 608 of Regulation NMS under the Act (``Regulation NMS'').\11\
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    \5\ On July 28, 2000, the Commission approved the Old Plan as a
national market system plan for the purpose of creating and
operating an intermarket options market linkage proposed by the
American Stock Exchange LLC (n/k/a NYSE Amex), CBOE, and ISE. See
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR
48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange,
Inc. (n/k/a Phlx), Pacific Exchange, Inc. (n/k/a NYSE Arca), Boston
Stock Exchange, Inc. (n/k/a BOX), and Nasdaq joined the Linkage
Plan. See Securities Exchange Act Release Nos. 43573 (November 16,
2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000),
65 FR 70850 (November 28, 2000); 49198 (February 5, 2004), 69 FR
7029 (February 12, 2004); and 57545 (March 21, 2008), 73 FR 16394
(March 27, 2008).
    \6\ Section 8(c) of the Old Plan.
    \7\ The Linkage Hub is a centralized data communications network
that electronically links the Participating Options Exchanges to one
another. The Options Clearing Corporation (``OCC'') operates the
Linkage Hub.
    \8\ Section 2(16) of the Old Plan.
    \9\ Section 7(a)(i)(C) of the Old Plan.
    \10\ See Securities Exchange Act Release No. 60360 (July 21,
2009) 74 FR 37265 (July 28, 2009) (File No. 4-429).
    \11\ 17 CFR 242.608.
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The Plan

    The Plan does not require a central linkage mechanism akin to the
Old Plan's Linkage Hub. Instead, the Plan includes the framework for
routing orders via private linkages that exist for NMS stocks under
Regulation NMS.\12\ The Plan requires the Participating Options
Exchanges to adopt rules ``reasonably designed to prevent Trade-
Throughs.'' \13\ Participating Options Exchanges are also required to
conduct surveillance of their respective markets on a regular basis to
ascertain the effectiveness of the policies and procedures to prevent
Trade-Throughs and to take prompt action to remedy deficiencies in such
policies and procedures.\14\ As further described below, the Plan
incorporates a number of exceptions to trade-through liability.\15\
Some of these exceptions are carried over from the Old Plan, including
exceptions for trading rotations, non-firm quotes, and complex
trades.\16\ Others are substantially similar to exceptions available
for NMS stocks under Regulation NMS, such as exceptions for systems
issues, crossed markets, quote flickering, customer stopped orders,
benchmark trades and, notably, intermarket sweep orders (``ISOs'').\17\
In addition, the Plan contains a new exception for stopped orders and
price improvement.\18\
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    \12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04); 17 CFR
242.600 et seq. For discussions of the similarities between the
provisions of Regulation NMS and the provisions in the Plan, see
Plan Notice and Plan Approval, supra note 5.
    \13\ Under the Plan, a ``Trade-Through'' is generally defined as
a transaction in an option series, either as principal or agent, at
a price that is lower than a Protected Bid or higher than a
Protected Offer.'' See Section 2(21) of the Plan. A ``Protected
Bid'' and ``Protected Offer'' generally means a bid or offer in an
option series, respectively, that is displayed by a Participant, is
disseminated pursuant to the Options Price Reporting Authority
(``OPRA'') Plan, and is the Best Bid or Best Offer. See Section
2(17) of the Plan. A ``Best Bid'' or ``Best Offer'' means the
highest bid price and the lowest offer price. Section (2)(1) of the
Plan. ``Protected Bid'' and ``Protected Offer,'' together are
referred to herein as ``Protected Quotation.'' See Section 2(18) of
the Plan.
    \14\ Section 5(a)(ii) of the Plan.
    \15\ Section 5(b) of the Plan.
    \16\ Subparagraphs (ii), (vii), and (viii), respectively, of
Section 5(b) of the Plan.
    \17\ Subparagraphs (i), (iii), (vi), (ix), (xi), and (iv)-(v),
respectively, of Section 5(b) of the Plan.
    \18\ Subparagraph (x) of Section 5(b) of the Plan.
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    The Plan also requires each Participant to establish, maintain, and
enforce written rules that: Require its members reasonably to avoid
displaying locked and crossed markets; assure the reconciliation of
locked and crossed markets; and prohibit its members from engaging in a
pattern or practice of displaying locked and crossed markets; subject
to exceptions as may be contained in the rules of the Participant, as
approved by the Commission.\19\
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    \19\ Section 6 of the Plan. The Plan also contains provisions
relating to the operation of the Plan including, for example,
provisions relating to the entry of new parties to the Plan;
withdrawal from the Plan; and amendments to the Plan.
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The Exchange's Proposal

    To implement the Plan, the Exchange proposes to replace its current
rules relating to the Old Plan with new rules relating to the Plan, and
makes amendments to other rules as necessary to conform to the
requirements of the Plan.\20\ As such, the Exchange proposes to adopt
all applicable definitions from the Plan into the Exchange's rules.\21\
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    \20\ A more detailed description of the Exchange's proposed rule
change may be found in the Notice, supra note 3.
    \21\ Proposed BOX Chapter XII, Section 1.
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    In addition, the Exchange proposes to prohibit its members from
effecting Trade-Throughs, unless an exception applies.\22\ Consistent
with the Plan, the Exchange also proposes exceptions to the prohibition
on trade throughs relating to: System issues; trading rotations;
crossed markets; intermarket sweep orders; quote flickering; non-firm
quotes; complex trades; customer stopped orders; stopped orders and
price improvement; and benchmark trades.\23\
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    \22\ Proposed BOX Chapter XII, Section 2(a).
    \23\ Proposed BOX Chapter XII, Section 2(b)(1)-(10). In
addition, the Exchange proposes to add ISOs as a new type of order
under proposed BOX Chapter V, Section 14(c)(vi).
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    The Exchange also proposes a rule to address locked and crossed
markets, as required by the Plan.\24\ Specifically, the Exchange
proposes that, except for quotations that fall within a stated
exception, members shall reasonably avoid displaying, and shall not
engage in a pattern or practice of displaying, any quotations that lock
or cross a Protected Quote.\25\
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    \24\ A ``locked market'' is defined as a quoted market in which
a Protected Bid is equal to a Protected Offer. Proposed BOX Chapter
XII, Section 1(h). A ``crossed market'' is defined as a quoted
market in which a Protected Bid is higher than a Protected Offer.
Proposed BOX Chapter XII, Section 1(e).
    \25\ Proposed BOX Chapter XII, Section 3(a).
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    The Exchange proposes four exceptions to the prohibition against
locked and crossed markets: When the Exchange is experiencing a
failure, material delay, or malfunction of its systems or equipment;
when the locking or crossing quotation was displayed at

a time where there is a crossed market; when an Exchange member
simultaneously routes an ISO to execute against the full displayed size
of any locked or crossed Protected Bid or Protected Offer; and, with
respect to a locking quotation, when the order entered on the Exchange
that will lock a Protected Bid or Protected Offer, is (i) not a
customer order, and the Exchange can determine via identification
available pursuant to the OPRA Plan that such Protected Bid or
Protected Offer does not represent, in whole or in part, a customer
order; or (ii) a customer order, and the Exchange can determine via
identification available pursuant to the OPRA Plan that such Protected
Bid or Protected Offer does not represent, in whole or in part, a
customer order, and, on a case-by-case basis, the customer specifically
authorizes the member to lock such Protected Bid or Protected
Offer.\26\
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    \26\ Proposed BOX Chapter XII, Section 3(b)(1)-(4).
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    The Exchange also proposes rules to permit it to continue to accept
P/A Orders and Principal Orders from Participating Options Exchanges
that are not able to send ISOs in order to avoid Trade-Throughs.\27\ In
addition, BOX has proposed to include provisions that would permit the
Exchange to send Principal Orders and P/A Orders to away markets for a
temporary period,\28\ which BOX states would allow it and its Options
Participants to seek the best available price for customers.\29\
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    \27\ Proposed BOX Chapter XII, Temporary Section 4.
    \28\ The Exchange anticipates such temporary period to be
between two to eight weeks past implementation of the Plan.
    \29\ The Exchange has stated that it intends to request
exemptive relief from the Plan for a temporary period to accommodate
this temporary use of Principal Orders and P/A Orders.
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    The Exchange also proposes to delete and/or modify certain
provisions of BOX rules to reflect the Exchange's withdrawal from the
Old Plan, and to amend certain provisions of BOX rules to reflect the
Plan.\30\
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    \30\ See Notice, supra note 3, at 31084, discussing proposed
changes to: BOX Chapter I, Section I; BOX Chapter V, Sections 14,
16, 20, and 29; BOX Chapter VI, Section 5; and BOX Chapter X,
Section 2.
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    The Exchange has represented that this proposed rule change would
become effective upon the Exchange's withdrawal from the Old Plan and
the effectiveness of the Plan.

II. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\31\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act \32\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest. The Commission also finds that the
proposal is consistent with Rule 608(c) of Regulation NMS under the
Act, which requires that each exchange comply with the terms of any
effective national market system plan of which it is a participant.\33\
Finally, the Commission finds that the proposed rule change is
consistent with the requirements of the Plan.\34\
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    \31\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \32\ 15 U.S.C. 78f(b)(5).
    \33\ 17 CFR 242.608(c). Section 1 of the Plan provides in
pertinent part that, ``The Participants will submit to the
[Commission] for approval their respective rules that will implement
the framework of the Plan.''
    \34\ See, supra note 4.
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    Proposed BOX Chapter XII, Section 1 would define applicable terms
in a manner that are substantively identical to the defined terms of
the Plan. As such, the Commission finds that proposed BOX Chapter XII,
Section 1 is consistent with the Act and the Plan.
    Proposed BOX Chapter XII, Section 2(a) would prohibit members from
effecting Trade-Throughs unless an exception applies. Proposed BOX
Chapter XII, Section 2(b) would provide for ten exceptions to the
general Trade-Through prohibition, relating to systems issues, trading
rotations, crossed markets, ISOs, quote flickering, non-firm quotes,
complex trades, customer stopped orders, stopped orders and price
improvement, and benchmark trades.\35\ Aside from the proposed
exception relating to systems issues, each proposed exception would be
substantively identical to the parallel exception under Section 5(b) of
the Plan.
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    \35\ Proposed BOX Chapter XII, Section 2(b)(1)-(10).
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    The systems issues exception under proposed BOX Chapter XII,
Section 2(b)(1) would implement the parallel exception available under
Section 5(b)(i) of the Plan and would permit the Exchange to bypass the
Protected Quotation of another Participant if such other Participant
repeatedly fails to respond within one second to incoming orders
attempting to access its Protected Quotations. The Exchange's rule
would require the Exchange to notify such non-responding Participant
immediately after (or at the same time as) electing self-help, and
assess whether the cause of the problem lies with the Exchange's own
systems and, if so, take immediate steps to resolve the problem.
Finally, the Exchange would be required to promptly document its
reasons supporting any such determination to bypass a Protected
Quotation. The Commission believes that this exception should provide
the Exchange with the necessary flexibility for dealing with problems
that occur on an away market during the trading day. At the same time,
the exception's requirements to immediately notify such away market of
its determination and also assess its own system should help prevent
the use of this exception when there in fact is a problem with the
Exchange's own systems, rather than those of an away market.
    The Commission notes that included among the exception in proposed
BOX Chapter XII, Section 2(b) would be an exception for certain
transactions involving ISOs.\36\ An order identified as an ISO would be
immediately executable by the Exchange (or any other Plan Participant
that received such an order) based on the premise that the market
participant sending the ISO has already attempted to access all better-
priced Protected Quotations up to their displayed size. The Commission
believes that this exception should help ensure more efficient and
faster executions in the options markets.
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    \36\ Proposed BOX Chapter XII, Section 2(b)(4).
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    The Commission notes that, in addition to these rules regarding
Trade-Throughs, the Plan requires that each Participant establish,
maintain and enforce written policies and procedures that are
reasonably designed to prevent Trade-Throughs in that Participant's
market that do not fall within an applicable exception and, if relying
on such exception, that are reasonably designed to assure compliance
with the terms of the exception. In addition, the Commission notes that
the Plan requires each Participant to conduct surveillance of its
market on a regular basis to ascertain the effectiveness of such
policies and procedures and to take prompt action to remedy any
deficiencies in such policies and procedures.
    Accordingly, the Commission finds that proposed BOX Chapter XII,
Section 2 is consistent with Section 5 of the Plan and Section 6(b)(5)
of the Act \37\

which requires, among other things, that the rules of a national
securities exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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    \37\ 15 U.S.C. 78f(b)(5).
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    Proposed BOX Chapter XII, Section 3(a) would require Exchange
members to reasonably avoid displaying, and not engage in a pattern or
practice of displaying, any quotation that locks or crosses a Protected
Quotation, subject to certain exceptions delineated in proposed BOX
Chapter XII, Section 3(b). The Commission recognizes that locked and
crossed markets may occur accidentally and cannot always be avoided.
However, the Commission believes that giving priority to the first-
displayed Protected Bid or Protected Offer, particularly when it
includes a public customer's order, will encourage price discovery and
contribute to fair and orderly markets. Therefore, the Commission
believes that the proposed rule, which corresponds to the Plan's
language, to require members to reasonably avoid displaying, and not
engaging in a pattern or practice of, locks and crosses is appropriate.
    Proposed BOX Chapter XII, Section 3(b) would permit four exceptions
to the Exchange's general rule relating to locked and crossed
markets.\38\ The first three would be similar to analogous certain
trade-through exceptions under proposed BOX Chapter XII, Section 2(b),
and relate to when the Exchange is experiencing systems issues, when
there is exists a crossed market, and when a member simultaneously
routes ISOs against the full displayed size of any locked or crossed
Protected Bid or Protected Offer.
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    \38\ Section 6 of the Plan permits exceptions to the Plan's
locked and crossed market rules as may be contained in the rules of
a Participant approved by the Commission.
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    The fourth exception would permit an order entered onto the
Exchange to lock a Protected Bid or Protected Offer when such order is:
(1) Not a customer order, and the Exchange can determine that such
Protected Bid or Protected Offer does not represent, in whole or in
part, a customer order; or (2) a customer order, and the Exchange can
determine that such Protected Bid or Protected Offer does not
represent, in whole or in part, a customer order and, on a case-by-case
basis, the customer specifically authorizes the Exchange's member to
lock such Protected Bid or Protected Offer. This exception would not
protect a market maker quote or broker-dealer order from being locked.
    The Commission believes that the Exchange's proposed rules relating
to locked and crossed markets are consistent with the Plan and the Act
and should help ensure that the display of locked or crossed markets
will be limited and that any such display will be promptly reconciled.
The Commission also believes that each of the proposed exceptions to
locked and crossed markets relate to circumstances when it is
appropriate to permit a limited, narrow exception to the general locked
and crossed market rule.
    In particular, the Commission believes that the fourth exception is
appropriate because it would protect customer orders that are Protected
Bids or Protected Offers from being locked, and would only permit a
customer order entered on to the Exchange to lock a Protected Bid or
Protected Offer when a customer specifically authorizes an Exchange
member, and only when such Protected Bid or Protected Offer itself does
not represent, in whole or in part, a customer order. Because of the
rapidity with which options quotes are often updated today,
particularly in response to changes in the underlying, there is an
increasing likelihood that market maker quotations will lock each
other. The proposed exception accounts for this dynamic by not
prohibiting such locking instances. Importantly, the proposed exception
in the Exchange's rules that the Commission is approving would allow
non-customer orders to lock an away market's Protected Quotation only
if the Exchange is able to affirmatively determine that the Protected
Quotation on the away market is not, in whole or in part, for the
account of a customer. If any portion of such away market's Protected
Quotation is for the account of a customer, such Protected Quotation
may not be locked. In addition, the Commission notes that the rule
requires that such determination be made via identification available
pursuant to the OPRA Plan, which is working with the participating
options exchanges on a method to so identify customer quotations
through OPRA.
    Therefore, the Commission finds that Exchange's rule regarding
locked and crossed markets appropriately implements Section 6 of the
Plan, and is consistent with Section 6(b)(5) of the Act \39\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
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    \39\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that proposed BOX Chapter XII, Temporary
Section 4, which facilitates the participation of certain Participating
Options Exchanges, including BOX, who may require the use of P/A Orders
and Principal Orders after implementation of the Plan, and would permit
BOX to transmit P/A Orders and Principal Orders, is consistent with the
Act. Although the Commission has already approved the Plan,\40\ the
Commission also recognizes that the Exchange and other Plan
Participants may require a temporary transition period during which
they may want to utilize these order types that exist currently under
the Old Plan.\41\ The Exchange and each of the other Participating
Options Exchanges have proposed substantially identical temporary
provisions to accommodate this.\42\ Further, because the Exchange
intends also to send P/A Orders and Principal Orders for a temporary
period, the Exchange has proposed temporary rules to permit this.\43\
The Commission finds that the proposed rule relating to the Exchange's
receipt and handling, and transmission of P/A Orders and Principal
Orders, and imposing certain obligations on the Exchange with respect
to such orders that are similar to those that exist under the Old Plan,
is appropriate and consistent with Section 6(b)(5) of the Act \44\
which requires, among other things, that the rules of a national
securities exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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    \40\ See Plan Approval, supra note 4.
    \41\ The Commission notes that any Participating Options
Exchange that wishes to utilize such order types in a manner that
would result in a Trade-Through would need to separately request an
exemption from the Plan for such use. See, supra note 29.
    \42\ The Commission notes that the rules contained in BOX
Chapter XII, Temporary Rule 4 are not required by the Plan, but
rather are rules proposed by the Exchange in order to facilitate the
participation in the Plan of certain exchanges, including BOX,
during an initial transition period.
    \43\ See, supra note 29.
    \44\ 15 U.S.C. 78f(b)(5).
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    Finally, the Commission finds that that BOX's other proposed
changes are appropriate and consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\45\ that the proposed rule change (SR-BX-2009-028), as modified by
Amendment No. 1, be, and it hereby is, approved.
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    \45\ 15 U.S.C. 78s(b)(2).
    \46\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\46\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20541 Filed 8-25-09; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: April 7, 2006 (Volume 71, Number 67)]
[Notices]
[Page 17932]
[DOCID:fr07ap06-114]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

Submission for OMB Review; Comment Request

Upon written request, copies available from: Securities and Exchange
Commission, Office of Filings and Information Services, Washington, DC
20549.

Extension:
    Rule 17Ac2-1, SEC File No. 270-95, OMB Control No. 3235-0084.

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget requests for approval of extension on the following rule:
Rule 17Ac2-1.
    Rule 17Ac2-1 (17 CFR 240.17Ac2-1) under the Securities Exchange Act
of 1934 requires transfer agents to register with the Commission, the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, or the Federal Deposit Insurance Corporation, and to
amend their registration.
    It is estimated that on an annual basis, the Commission will
receive approximately 100 applications for registration on Form TA-1
from transfer agents required to register as such with the Commission.
Included in this figure are amendments made to Form TA-1 as required by
Rule 17Ac2-1(c). Based upon past submissions, the staff estimates that
the average number of hours necessary to comply with the requirements
of Rule 17Ac2-1 is one and one-half hours, with a total burden of 150
hours.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid control number.
    Written comments regarding the above information should be directed
to the following persons: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503 or by sending an e-mail to:
<EMAIL_ADDRESS>and (ii) R. Corey Booth, Director/Chief

Information Officer, C/O Shirley Martinson, 6432 General Green Way,
Alexandria, Virginia 22312 or send an e-mail to<EMAIL_ADDRESS>
Comments must be submitted to the Office of Management and Budget
within 30 days of this notice.

    Dated: March 30, 2006
Nancy M. Morris,
Secretary.
 [FR Doc. E6-5082 Filed 4-6-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 844-847]
[FR Doc No: 2015-33312]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76813; File No. SR-FINRA-2015-059]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
the Derivatives and Other Off-Balance Sheet Items Schedule Pursuant to
FINRA Rule 4524 (Supplemental FOCUS Information)

December 31, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on December 23, 2015, Financial Industry Regulatory
Authority, Inc. (``FINRA'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I and II below, which items have been substantially
prepared by FINRA. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to amend the instructions to the Derivatives and
Other Off-Balance Sheet Items Schedule (``OBS'') pursuant to FINRA Rule
4524 (Supplemental FOCUS Information) to expand the application of the
OBS to certain non-carrying/non-clearing firms that have significant
amounts of off-balance sheet obligations. The proposed rule change does
not propose amendments to existing rule text.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared summaries, set forth in sections IIA,
IIB, and IIC below, of the most significant aspects of such statements.

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

1. Purpose
    FINRA Rule 4524 requires each firm, as FINRA shall designate, to
file such additional financial or operational schedules or reports as
FINRA may deem necessary or appropriate for the protection of investors
or in the public interest as a supplement to the FOCUS Report.\3\ In
February 2013, the SEC approved FINRA's adoption, pursuant to FINRA
Rule 4524, of the OBS as a supplement to the FOCUS report.\4\ The OBS
captures important information that is not otherwise reported on firms'
balance sheets and requires all firms that carry customer accounts or
self-clear or clear transactions for others (referred to, collectively,
as ``carrying or clearing firms'') to file with FINRA the OBS within 22
business days of the end of each calendar quarter, unless a carrying or
clearing firm meets the de minimis exception set forth in the
instructions to the OBS.\5\
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    \3\ See Securities Exchange Act Release No. 66364 (February 9,
2012), 77 FR 8938 (February 15, 2012) (Order Approving File No. SR-
FINRA-2011-064). FINRA Rule 4524 also provides that FINRA will
specify the content of additional schedules or reports, their
format, and the timing and the frequency of such supplemental
filings in a Regulatory Notice (or similar communication), the
content of which FINRA will file with the Commission pursuant to
Section 19(b) of the Act.
    \4\ See Securities Exchange Act Release No. 68832 (February 5,
2013), 78 FR 9754 (February 11, 2013) (Order Approving File No. SR-
FINRA-2012-050). Carrying or clearing firms were required to file
with FINRA their initial OBS on or before July 31, 2013, to disclose
off-balance sheet information as of June 30, 2013. See Regulatory
Notice 13-10 (March 2013) (Supplemental FOCUS Information).
    \5\ The de minimis exception relieves a carrying or clearing
firm from filing the OBS for the reporting period if the aggregate
of all gross amounts of off-balance sheet items is less than 10
percent of the firm's excess net capital on the last day of the
reporting period. For purposes of the OBS, as well as the proposed
amendments to the OBS, the term ``excess net capital'' means net
capital reduced by the greater of the minimum dollar net capital
requirement or two percent of combined aggregate debit items as
shown in the Formula for Reserve Requirements pursuant to SEA Rule
15c3-3. See Securities Exchange Act Release No. 68832 (February 5,
2013), 78 FR 9754, 9755 (February 11, 2013) (Order Approving File
No. SR-FINRA-2012-050).
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    Pursuant to FINRA Rule 4524, the proposed rule change would amend
the instructions to the OBS to expand its application beyond carrying
or clearing firms to include firms that neither carry customer accounts
nor clear transactions (referred to, collectively, as ``non-clearing
firms'') that have, pursuant to SEA Rule 15c3-1,\6\ a

minimum dollar net capital requirement equal to or greater than
$100,000, and at least $10 million in reportable items pursuant to the
OBS. As discussed in more detail below, FINRA believes this proposed
expansion is necessary to effectively examine for compliance with, and
enforce, its rules on capital adequacy. The proposed rule change does
not otherwise change the OBS or its instructions, including the de
minimis exception. Accordingly, consistent with the current OBS, any
firm (i.e., either a carrying or clearing firm or a non-clearing firm)
that meets the de minimis exception need not file the OBS for the
reporting period.\7\ Further, under the proposed rule change, as under
the current OBS, any firm that is required to file the OBS must do so
as of the last day of a reporting period within 22 business days of the
end of each calendar quarter.
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    \6\ See 17 CFR 240.15c3-1 (Net Capital Requirements for Brokers
or Dealers). SEA Rule 15c3-1(a)(2)(iii) requires a ``dealer'' (as
defined in SEA Rule 15c3-1(a)(2)(iii)) to maintain net capital of
not less than $100,000.
    \7\ However, a firm that claims the de minimis exception must
affirmatively indicate through the eFOCUS system that no filing is
required for the reporting period. See Regulatory Notice 13-10
(March 2013) (Supplemental FOCUS Information).
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    When FINRA proposed the OBS, FINRA noted the need, in the aftermath
of the financial crisis, to obtain more comprehensive and consistent
information regarding carrying or clearing firms' off-balance sheet
assets, liabilities and other commitments.\8\ By requiring carrying or
clearing firms to report their gross exposures in financing
transactions (e.g., reverse repos, repos and other transactions that
are otherwise netted under generally accepted accounting principles,
reverse repos and repos to maturity and collateral swap transactions),
interests in and exposure to variable interest entities, non-regular
way settlement transactions (including to-be-announced or TBA \9\
securities and delayed delivery/settlement transactions), underwriting
and other financing commitments, and gross notional amounts in
centrally cleared and non-centrally cleared derivative transactions on
the OBS, FINRA has been able to more effectively monitor on an ongoing
basis the potential impact that such off-balance sheet activities may
have on carrying or clearing firms' net capital, leverage and
liquidity, and their ability to fulfill their customer protection
obligations.
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    \8\ See Securities Exchange Act Release No. 68270 (November 20,
2012), 77 FR 70860 (November 27, 2012) (Notice of Filing File No.
SR-FINRA-2012-050).
    \9\ FINRA Rule 6710(u) defines ``TBA'' to mean a transaction in
an Agency Pass-Through Mortgage-Backed Security (``MBS'') or a Small
Business Administration (``SBA'')-Backed Asset-Backed Security
(``ABS'') where the parties agree that the seller will deliver to
the buyer a pool or pools of a specified face amount and meeting
certain other criteria but the specific pool or pools to be
delivered at settlement is not specified at the Time of Execution,
and includes TBA transactions for good delivery and TBA transactions
not for good delivery. Agency Pass-Through MBS and SBA-Backed ABS
are defined under FINRA Rule 6710(v) and FINRA Rule 6710(bb),
respectively. The term ``Time of Execution'' is defined under FINRA
Rule 6710(d).
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    Since the OBS became effective, however, FINRA has observed
considerable principal trading activities of some non-clearing firms.
In particular, through its efforts to establish margin requirements for
the TBA market \10\ and subsequent examinations of firms' margining
practices related to all securities transactions with extended
settlement dates, FINRA has become aware of non-clearing firms with
both material TBA transactions as well as other types of securities
transactions with extended settlement dates. In the case of TBA
transactions, non-clearing firms may have entered into a Master
Securities Forward Transaction Agreement (``MSFTA'') \11\ with their
clients and are principal to the TBA transactions. In the case of other
transactions with extended settlement dates cleared through a clearing
firm, non-clearing firms are principal to the trades and financially
responsible to the clearing firms for any losses that may result from
clients' failures to complete the transactions on the date of
settlement. Therefore, these transactions may present significant
financial exposure for non-clearing firms. FINRA is concerned about
firms appropriately monitoring their financial exposure and applying
capital charges for these transactions as required for compliance with
SEA Rule 15c3-1.\12\ Further, such transactions are not reported on
non-clearing firms' balance sheets, making it difficult to monitor
their compliance with capital requirements.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 76148 (October 14,
2015), 80 FR 63603 (October 20, 2015) (Notice of Filing File No. SR-
FINRA-2015-036).
    \11\ The Securities Industry and Financial Markets Association
(``SIFMA'') developed, and subsequently updated, in coordination
with the Treasury Market Practices Group (``TMPG''), the MSFTA as a
standard industry template for forward and other delayed delivery
transactions involving mortgage-backed and asset-backed securities.
See, e.g., SIFMA Guidance Notes to the Master Securities Forward
Transaction Agreement (December 2012), available at: http://www.sifma.org/services/standard-forms-and-documentation/mra,-gmra,-msla-and-msftas/.
    \12\ 17 CFR 240.15c3-1.
---------------------------------------------------------------------------

    As a result of these concerns, and to ensure that all firms with
significant derivative and off-balance sheet positions report these
positions to FINRA on a consistent and regular basis, FINRA is
proposing to expand the reporting requirements of the OBS to non-
clearing firms that have a minimum dollar net capital requirement equal
to or greater than $100,000, and at least $10 million in reportable
items pursuant to the OBS. The current de minimis exception would
remain available to any firm that conducts limited off-balance sheet
activity.\13\
---------------------------------------------------------------------------

    \13\ See supra note 5.
---------------------------------------------------------------------------

    If the Commission approves the proposed rule change, FINRA will
announce the implementation date (i.e., the first quarterly reporting
period for newly affected firms \14\) in a Regulatory Notice to be
published no later than 60 days following Commission approval of the
proposed rule change. The implementation date will be no later than 210
days following Commission approval of the proposed rule change.
---------------------------------------------------------------------------

    \14\ Carrying or clearing firms that are currently subject to
the OBS's reporting requirements would not be impacted by the
proposed rule change and shall continue to file on a quarterly
basis, as required, without interruption.
---------------------------------------------------------------------------

2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\15\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change is
consistent with the Act because expanding the reporting requirements of
the OBS to the proposed non-clearing firms would permit FINRA to assess
effectively on an ongoing basis the potential impact off-balance sheet
activities may have on these firms' net capital, leverage and
liquidity, and ability to fulfill obligations to other members and
counterparties. FINRA also expects that impacted non-clearing firms, as
well as their correspondent clearing firms, would benefit from
increased awareness of their open trade exposures, which may reduce
their potential for losses, encourage better counterparty risk
management and promote firms' financial stability. The proposed rule
change is also consistent with Section 712(b)(3)(B) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act in that it is necessary
to enable FINRA to more effectively examine for compliance with, and
enforce, its rules on capital adequacy.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78o-3(b)(6).
    \16\ Public Law 111-203, 124 Stat. 1376 (2010).

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

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

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA has carefully crafted the
proposed rule change to achieve its intended and necessary regulatory
purpose while minimizing the burden on firms.

Economic Impact Assessment

    The purpose of the proposal is to ensure that all firms with
significant derivative and off-balance sheet positions report these
positions to FINRA on a consistent and regular basis. Specifically, the
proposal extends the reporting requirement to non-clearing firms that
have a minimum dollar net capital requirement equal to or greater than
$100,000, and at least $10 million in reportable items pursuant to the
OBS. The primary anticipated net benefit of the proposal is better
insights into the size and nature of firms' open exposures in TBA and
other extended settlement transactions or other off-balance sheet
exposures. This information would enable FINRA to more efficiently
monitor on an ongoing basis the financial condition of member firms,
including firms' compliance with capital adequacy rules. FINRA also
expects that impacted non-clearing firms, as well as their
correspondent clearing firms, would benefit from increased awareness of
their open trade exposures, which may reduce their potential for
losses. Accordingly, FINRA's experience suggests that firms may apply
better counterparty risk management practices as a result of extending
the OBS to the additional firms.
    FINRA estimates that approximately 100 additional firms will be
required to file the OBS under the proposal, though the actual number
will fluctuate as off-balance sheet items and excess net capital vary
depending on firms' reporting figures. However, the filing of the OBS
is not expected to have significant compliance costs for the newly
affected firms and will not impact member firms currently required to
file the OBS.\17\ The information required for proposed newly affected
firms to complete the OBS should be accessible to firms due to firms'
obligations to maintain books and records and to take applicable
capital charges in relation to off-balance sheet transactions. Further,
FINRA understands that correspondent clearing firms typically provide
non-clearing firms with information on all open trades or provide non-
clearing firms with ready access to such information, either of which
could serve as a potential source for the required information for non-
clearing firms. Finally, as discussed above, for those firms that
conduct limited off-balance sheet activity, the proposed amended OBS
retains the de minimis exception for each reporting period.\18\
---------------------------------------------------------------------------

    \17\ For example, in discussions with non-clearing firms
regarding the proposal, several firms estimated that it would take
no more than a few hours per quarter and cost $5,000 to $10,000 per
year to file the OBS.
    \18\ See supra note 5.
---------------------------------------------------------------------------

    The proposal will ensure that all firms with significant off-
balance sheet obligations are required to report them in a consistent
manner. Further, the reporting requirement is expected to create
positive externalities as firms that currently do not report this
information will be able to better monitor and manage their
counterparty exposures, better manage their participation in off-
balance sheet activities and maintain sufficient net capital to support
such transactions. To the extent that member firms reduce their off-
balance sheet activities as a result of this rule, impacted customers
may incur search costs as they replace their broker counterparties.
    A potential significant benefit of the proposal may arise from
enhanced monitoring of systemic risk that is caused by the
interconnectedness of firms through significant counterparty exposure
and likelihood of correlated defaults in the financial industry. This
enhanced monitoring of systemic risk should also benefit clearing firms
as counterparty risk is partially mitigated for these firms as a result
of better monitoring of financial exposures created by these
transactions. There is academic evidence that banking systems may be
less prone to crises if more comprehensive financial reporting regimes
are in effect, even when the reporting is only to the regulator.\19\
---------------------------------------------------------------------------

    \19\ Solomon A. Tadesse, The Economic Value of Regulated
Disclosure: Evidence from the Banking Sector, 25 J. Acct. & Pub.
Pol'y 32-70 (2006).
---------------------------------------------------------------------------

    FINRA considered alternative thresholds, such as extending the OBS
reporting requirements to non-clearing firms with less than $10 million
in reportable items, when developing the proposed rule change. In
connection with this proposal, FINRA identified 334 firms that
currently do not file the OBS with open exposure in TBA and other
extended settlement transactions totaling approximately $93.3
billion.\20\ FINRA reviewed their aggregate exposures in TBA and other
extended settlement transactions and found that the majority of these
firms (227 firms) had open exposures of less than $10 million, totaling
approximately $363 million, and that the level of firms' exposures
dropped off significantly below the $10 million threshold. In this
regard, of the non-clearing firms identified to have less than $10
million in TBA and other extended settlement exposure, the vast
majority of those (204 firms) had exposure of less than $5 million,
totaling approximately $206 million. Accordingly, the firms with open
TBA and other extended settlement transactions of less than $10 million
collectively account for less than 1% of the total aggregate open TBA
and other extended settlement transactions of the non-clearing firms
identified. FINRA does not believe that the purpose of the proposed
rule change is furthered by requiring firms with relatively immaterial
levels of this type of exposure to file the OBS. Therefore, FINRA
believes that extending the reporting requirements to non-clearing
firms meeting the chosen criteria--that is, those with a minimum dollar
net capital requirement equal to or greater than $100,000 (the required
minimum dollar net capital for dealers under SEA Rule 15c3-1(a)(2)(iii)
\21\) and at least $10 million in reportable items--will capture those
non-clearing firms with the most significant amounts of off-balance
sheet exposure and possible risk to other members and counterparties.
---------------------------------------------------------------------------

    \20\ To assess the potential size of TBA and other extended
settlement transactions of non-clearing firms, FINRA conducted a
survey of some of the largest correspondent clearing firms. The
figures represented are only approximate and represent identified
non-clearing firms' exposures as of a specific date. As exposures in
TBA and other extended settlement trades vary from month to month,
the actual number of firms falling into these categories will
change, as will the number of firms required to file the OBS on any
given month.
    \21\ See supra note 6.
---------------------------------------------------------------------------

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

    Written comments were neither solicited nor received.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory

organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

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-FINRA-2015-059 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-FINRA-2015-059. 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
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2015-059 and should be
submitted on or before January 28, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-33312 Filed 1-6-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 161 (Tuesday, August 22, 2023)]
[Notices]
[Pages 57158-57159]
[FR Doc No: 2023-18012]

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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-137, OMB Control No. 3235-0145]

Proposed Collection; Comment Request; Extension: Regulation 13D
and Regulation 13G; Schedule 13D and Schedule 13G

Upon Written Request Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information summarized below. The Commission plans to submit this
existing collection of information to the office of Management and
Budget for extension and approval.
    Schedules 13D and 13G (17 CFR 240.13d-101 and 240.13d-102) are
filed pursuant to Sections 13(d) and 13(g) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(d) and 78m(g)) (``Exchange Act'') and
Regulations 13D and 13G (17 CFR 240.13d-1--240.13d-7) thereunder to
report beneficial ownership of equity securities registered under
Section 12 (15 U.S.C. 78l) of the Exchange Act. Regulations 13D and 13G
provide investors, the subject issuers, and market participants with
information about the accumulation of equity securities that may have
the potential to change or influence control of an issuer. Schedules
13D and 13G are filed by persons, including small entities, to report
their ownership of more than 5% of a class of equity securities
registered under Section 12. We estimate that it takes approximately
14.5 burden hours to prepare a Schedule 13D and it is filed by
approximately 1,508 filers. In addition, we estimate that 25% of the
14.5 hours per response (3.625 hours per response) is carried
internally by the filer for a total annual reporting burden of 5,467
hours (3.625 hours per response x 1,508 responses).
    We estimate that it takes approximately 12.4 hours per response to
prepare a Schedule 13G and it is filed by approximately 7,079 filers.
In addition, we estimate 25% of the 12.4 hours per response (3.1 hours
per response) is carried internally by the filer for a total annual
reporting burden of 21,945 hours (3.1 hours per response x 7,079
responses).
    The Schedules combined are filed by 8,587 filers and they take
approximately 12.769 hours per response. In addition, we estimate 25%
of the 12.769 (3.19225 hours per response) is carried internally by the
filer for a total annual reporting burden of 27,412 hours (3.1923 hours
per response x 8,587 responses). The estimated burden hours are made
solely for purposes of the Paperwork Reduction Act and are not derived
from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms.
    Written comments are invited on: (a) whether this proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden imposed by the collection of information; (c) ways to
enhance the quality, utility, and clarity of the information collected;
and (d) ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information

technology. Consideration will be given to comments and suggestions
submitted in writing within 60 days of this publication by October 23,
2023.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid control number.
    Please direct your written comment to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to:
[email protected].

    Dated: August 17, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18012 Filed 8-21-23; 8:45 am]
BILLING CODE 8011-01-P


Mr. Theodore J. Gordon, Deputy Director DEC 0 7 1998 Department of Health, Environmental Health Administration Lead Based Paint Abatement Program 800 9th Street, S. W., 3rd Floor Washington, D. C. 20024 2493 RE: Comments on the District of Columbia ( DC) Final Authorization Application Dear Mr. Gordon:

The Environmental Protection Agency ( EPA) Review Team has reviewed the District of Columbia's TSCA Section 402/ 404 Lead Based Paint Training and Certification Program Authorization Application dated August 17, 1998. and requests clarification on some areas of the application. Please respond to the following comments no later than January 8, 1999.

General Comments 1. DC must submit to EPA a complete revised application which incorporates the changes or clarifications that have been made since the original was submitted.

2. Page 9 ( C)  Please explain where the post clearance levels are defined in the application. If you are applying EPA's clearance standards, are you planning to include this guidance as part of your application?

3. Page 12, Staffing  Please revise the information in the first paragraph. Specifically to take out the " reprogramming of ' 97" and " carryover funds" issue. believe this is not applicable as a source of funds anymore.

4. Include a copy of the DC Code 56 997.13 ( a) as part of the appendices for this application.

5. Fiscal Impact Statement  Revise the paragraphs under Items No. 2 and 3. They should reflect current information regarding the 404( g) grant ( see comment no. 3 above for reference).

6. Please indicate if DC has the accreditation forms available as of this time.

Customer Service Hotline: 1 800 438 2474 I 2 Proararn Evaluation Comments 7. Explain ifthe Course Certificates can be reproduced? Are these unique? How will you ensure the integrity and adequacy of the certificates? Please provide an example. Will DC use any type of bar coding on its certificates and licenses for certified lead workers and lead professionals?

8. Explain how D. C. will be training their enforcement personnel. How will they be continually trained?

9. Page 26, Compliance Assistance  Please review the last sentence in which the sentence mentions " 6 years old and younger". Explain why this is different from the D. C. regulations which refer to children of 8 years old?

10. Page 27, Sampling Techniques, 2nd paragraph  Please explain what you mean by " the facility ensures." Which facility are you referring to? What type of Laboratory is DC using? Where will DC have its lead samples tested? Give specific laboratory and its address.

11. According to Section 745.327(~)( 7), how will DC monitor or evaluate the applicable disciplines for compliance?

12. Section 745.327 ( c)( 3) of the federal regulations requires that the applicant have access to facilities and equipment necessary for sampling and laboratory analysis. We recommend that a Quality Assurance Project Plan ( QAPP) for sampling during inspections be included as part of the application. The QAPP also should meet requirements for Quality Management Plans set forth in EPA Guidance. This is only an option under Section 745.327(~)( 3) and not a requirement, but if the elements of a QAPP were met, as set forth in the Draft Guidance distributed to DC during the Regional State Lead Program last April, this would ensure that DC is technically capable of conducting a lead based paint compliance and enforcement program and put to rest the issue of what is required to meet the intent of this portion of the federal regulations. Otherwise, documentation is needed that is equivalent to a QAPP.

13. The DC feguiations ( D. C. Law 11 221, Section 5) exempt owners who perform their own lead based paint activities ( abatements) from being required to use certified contractors. Explain how DC's regulations will be equally " as protective as" the federal regulations under Section 404mof TSCA. 2 ? etf 74% t2 220 3 Enforcement Evaluation Comments 14. How does the DC process work to get a warrant?

15. How does DC establish penalties?

16. As part of the Enforcement Response Policy, define what is a civil penalty vs. criminal penalty?

17. Civil infractions seem to be real low, can DC change this? For example, one area that could be better developed is enforcement responses to misrepresentation. First . misrepresentation: automatic suspension, an a fine. Second misrepresentation: termination of license.

18. Section 745.327(~)( 2) of the federal regulations requires that the applicant provide compliance assistance. Section 745.327(~)( 7) of the federal regulations requires that the applicant must demonstrate that it can implement a compliance monitoring program. Provide detailed information on hdw DC plans to inform the public and regulated community so that^ they understand the program ( Compliance Assistance Plan). For example: DC should explain how, where, when and who it will: target in its regulated community, conduct workshops or seminars to provide regulatory and technical information to local governments, trade groups and the regulated community, prepare informational brochures and fact sheets and disseminate this to the interested public. How many communities will DC target? How many outreaches? When and where will these outreaches be held?

Also, if a certain type of violation recurs throughout the state, explain whether DC will take certain steps to inform the regulated community about the need to comply with that particular portion of the law. In addition, please provide information on technological capabilities to ensure compliance. For example will the DC lead inspectors have the capability to check the validity of licenses and certificates while on site? ( e. g; bar coding scanning.)

19. Provide detailed information on how DC will have enough resources'to administer its compliance and enforcement program. Specifically, demonstrate how the program is running right now. What resources is DC using as of this time? Are these resources sufficient to handle the program in the future)?

20. Are inspections conducted only in response to complaints of alleged violations? How many lead abatement notifications does DC project will be received in 1999, .. , .

4 2000, 2001 r etc? HOWmany inspectors will be utilized to perform the inspections? How many inspections are projected by DC for 1999, 2000, 2001 , etc. and how many will each inspector perform? Does DC have a method to neutrally select sites for inspection? DC should state that all sections of DC get targeted for inspections, if that is the case.

21. Provide more information on how DC will conduct the audits. What type of review will DC be doing? Is auditing done before or after accrediting/ re accrediting?

22. Could you explain if audit laws ( self disclosure/ immunity) are applicable to DC? If they are not applicable to ' DC, then have your attorneys or counsel state that such audit laws do not exist for DC, if that is the case.

In summary, Section 745.324( b)( 3) of the federal regulations requires that the Program Description portion of a state's application demonstrate that the State program is as least as protective as the Federal program and that the applicant fulfills the criteria for " adequate enforcement" for EPA approval. Subpart L of the Federal regulations is the baseline against which an applicant for authorization must compare its program in order to demonstrate that a State program is as protective as the Federal program. To demonstrate that a State program provides adequate enforcement, the Program Description and Program Analysis must contain all of the elements specified at Section 745.327 of the federal regulations. DC's Application for Authorization should be revised to clarify the comments listed herein.

If you hav'e any questions, please feel free to call me at ( 215) 814 2067.

Sincerely,

Enid A. Gerena, Project Officer Toxics Programs & Enforcement Branch ( 3WC33)

cc: Shana Arnold ( EPA) Richard Brewster ( DHEHA) Paul Cestone ( EPA) Mary Coe ( EPA) Aquanetta Dickens ( EPA) Dan Gallo ( EPA) Sandra Handon ( DHEHA)


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~ i.~ iQn; Mb; M~ H ! Yn~ e~ rworc~ Pk. ct~ a Sau FranciscoBay Area Phy~ iciarisfox' Social Responsibility ( SF PSk) u~ esThe V S Ernronme~ i1a1Pwiectton Agency ( EPA) to conflnuéits diaIo~ u~ WI?]? the American H~ spi1a~ Asso~ 1ion( A~ HA) about tI'e ~ ramc~ ers ofthe Meniorwtdum of Understanding( MOU) ~ th E1~ ~ ndotlIer stakehok]& s oi health ca1~ pofluzioa prevention ( As you know~ the ongm~ 1MO1. J was ~ don June24,. 1998)

SF PSR, repr~ enungo%' erI~ 5OOphyszciaus~ andother heaJth. poio~ aLs~ nthc SF Bay Ares, encouraged lo hearthat the AHA agreed to i~ on1mne~ tspubhc comn~ iTment to this ~ mpc~ taxit partnership, based on the outcomes oEth~ 1'. 4OU'sEnvironmental Lcades~ hzpCounciIs( ELC) mcct~ ngonJuae ~ 8.2OOji~ Chi~ go We ~ jvders~ ndthat during that meeting there wasconsensus among the ELC members on the folluwing po; nl~

The ~ 1OUshould be ~ wntte~ coDmrnuent aniong~ 1spaz~ eis~

* The MOU sbo~ ldc~ n~ ai~ n all the goals ofthe ong~ aa~ MQU. rneluthngJang~ iageabout elimrnanng persistent bjp~ cci~ uJativetoxit s( PBTs) ~ theneverpossille, ath * Thc revisedMO~ Jdoc ~ jepL.~ Jjou1d dearly idenuI~' all the pari nex~ to the memo o( in~ d~ ianthng We also undersrand that theMMstated ZJ~ iatit would qu~ ck1ygenerate a press re1~ isewith thçse ~ n~ portwit ca~ nfications SF PSRis co~ icemed, h~ wevcxthat the press release that A~ subseq~ ntiy released did rw~ e~ pIicitlymake the n~ nitm~ nt~ identified above StithezitCh~ pters ~ nWif~! fl~ rii~ o: av~ s ~ n~ iWQf. CaIit0t5 F~ iS~

` r'~ Ii~~ ~ ~ Jun. 7 20U2 8: 06AM Ho 2239 Ps 3 FROM Julie Silas FRX NO. 5105947616 Jul. a9 2~ 1113BP~ p3 Wehope this t~ lIbe quickly remedied in future public releases and in the development ofthe rtviscd MOl).

A commitment by both EPA and AJIA to develop a work plan for implementing the goals of the original MOU, a vital and influential agreement on health care pollution prevention, is impor~ ntto health provideis and manyinstiwtions concerned about aa anvimninent and the health ofour community.

We look forward to heaiing from you about yourcommitment to thegoals agiced upon at theiuag it meeting ° Sincerely,

Robert M. Gould, MD. PrSdcnt San Francisco Bay Area Physicians for Social Responsibility cc: AHA: lvThe Robinson, Rick Pollack, Neil Jesuele, Becky Maron EPA: Christine ToddWhitman, WilliamR Sanden, TomMunay Jun 7. 2002 8: 06AM ° Mo~ 2239 P 4 HEALTH CARE WITHOUT HARM IHE CAMF~ A~ GNFOR ENV( FWNMENTALLY s~' oM~ I~ LF~ IFAL1~ CARE~

° ° June 12, 2001 B. ebccca Maron PMG Administration American Hospital Association One North Franklin Chicago, IL 60606 °

Dear Ms,, Maron:

I am writing on behalfof Health Care Without I 1~ rmto si ± ongly~ ge youto teconsider your Associations action to terminate the Memorandum of U~ tderstanding( MOU) between the American HospitalAssociation ( AHA) and the Ec~ vironmena1Protection Agency ( EPA). While we understand the American Hospital Association hasexpressed a ilhingnes~ to publicly state its continued commitment to thegoals enumerated in the MOU, we are. concerned that the termination wifi inevitably be perceived as, a retreat from astrong ° commitment to environmental stewardship by the nations hospitals.

The MOU has launched and sewed as thc structure for numerous s~ ite, rc~ onaland ° hospital based initiatives to reduce the environmental impact ofthe health care sector. ° Almost~ J1of these effort~ expllcidyrefercnc~ the MOU. The ripple started by the signiiig. of the agreement has becothe a cascade of activity, guided by the goals articulated in tl~ original. agreement. That cascade has resulted in a significant increase in both awareness ~ tndactions that have zneas~ ablyitnproved the environment. However, theMOU's full potential has not yet been ± ~ a1ized. We fear that the language of" terminating" the MOU scndsthe wrOng ° sign~ 1about the value ~ indimportance of this work,.

The AHA has articulated several ieasons for the termination. Among them, the need for the AFL~ to focu~ on core priorities; resource limitations; and a view that implementation activities. are outside of the expertise of the Association. ` While we understand these & rnstraints, they suggest the possibility to craft another arrangement more suitable to ~ hc. constraintsof th~. AHA, while maintaining a high profile commitment to the goals in the l' 40U,.

Public concern about environmcntal issues shows no signs of abating, and in fact that concern has recently become a national political issue. Increasingly, industry sectors, including Eh~ health care sector as a whole, and individual hospitals, will be measuted not only by their ddivcry of quality care, hut also by the extent to which they are responsive to the needs of their. host communities and the broader public In this climate, the merits HCWH Al ThE ~ J1'~ ~ OF~~ AI 1H, ~ NVlRO,~ M~ N1 ) JF. J~ 1icr~

ro 50x 6606 FALLS CHURCH VA 22040 T: 7C~ 2~ 3/ 2249 F~/ 0~. 23f~ 3°~ LMAIL: NO~ RM~ JATRORC ~ VWWNORAPM. ORG Jun. 7. 20U2 8: 01AM No. 2239 P. 5 ofa continued clear public commitment to a common sense agreement with reasonable environmental goals benefits the nation's hospitals as well as the environment Health Care Without Harm stands ready to launch implementation initiatives with the Al IA, in keeping with the Association's strengths, constraints, and mission, that could further our shared goals We welcome the AHA's interest in collaborating with I J. CWH. Such initiatives might include using the existing communication and education channels of the Al IA to spread the word about available tools, co. bitting efforts on a mercury free medicine pledge, developing a joint list serve or other regular communication tool, developing joint model environmentally preferable purchasing initiatives on PVC and DEHP containing pr6ducts, supporting emerging hospital green buildings initiatives, and encoura~ ngactivity around all of these goals at the state and regional hospital association level, and within hospital systems The actions of the A_ HA in the next few weeks will he watched closely. AHA can signal support and a continued commitment to the environment on behalf of hospitals across America, or it can signal something less than a full commitment. We urge you to send the strongest possible message that the Al IA remains publicly committed in principle, in writing, and in action to environmental stewardship We look forward to a continued conversation about collaboration in an environment that is fully andclearly supportive of the articulated goals of the MOU..

Sincerely, I   ' ~~)

( 7. ` I 7j' ~`

I b~~' /~./~..._ Z ` eharlotte ~ rody,

Coordinal/ Dr Health Ca~ e'WithoutHarm cc: Lindsay Robinson Richardj. Davidson Richard3. Pollack Neil J. Jesuele USEP. A Administrator Christine Todd Whitman William FL Sanders Thomas M Murray Jun. 7. 20U2 8: UJAM No. 2239 P. 6 June 7,2001 Richard J. Davidson Chief Executive Officer American Hospital Association One North Franklin Chicago. IL 60606 Fax~ 312 422 4602 Dear Mr.. Davidsoir.

I am writing as President of the NH Infection Control and epidemiology Professionals, Director of Infection Control at a large hospital in Manchester, NH, and a concerned citizen.. The NHTCEP is a group of over 100 infection control professionals representing New Hampshire hospitals. nursing homes, physiciaxi offices and public health.. Our hospitals are active members of the New Hampshire Hospital Association..

I am writing to you to express our concern and dismay that the American Hospital Association is planning to withdraw from the Memorandum ofUnderstanding ( MOU) with U. S. EPA on healthcare pollution prevention. Since its implementation, the MOU has had major impacts on local hospitals and their communities across the country. Hospitals for a Healthy Environment was created in response to the MOO and a significant numbers ofhospitals have strengthened or begun polLution prevention programs. AHA has had a si~ ificantinfluence throughout the healthcarc industry, especially with the signing of the MOU that strongly influenàed local hospitals' participation in pollution prevention Because of AHAs leadership and involvement related to the MOU, goals like mercury elimmation are now perceived as worthwhile. and achievable and manyNew Hampshire hospiials have pledged to eliminate mercury..

We. feel itwouldbe an irreparable mistake for AHA to withdraw from the MOU. AHA will be hard pressed to explain to hospita's and the American public why they discontinued the opportunity to continue their leadership role on this crucial set of issues. Our hospitals are significant contributors to the waste stream, and need AHA and the MOU as guiding forces to assist in reducing, recycling and reusing valuable resources and keep this within our rathr as important initiatives..

We strongly urge you to continue AHA's commitment to the Hospitals for a Healthy Environment initiative and the important Memorandum of Understanding thatbegan it. Thank you for your consideration,

Sincerely,   Lynda Z. Caine, RN, BSN, CIC President, NH Infection Control and Epidemiology Professionals Director, infection Control Elliot Hospital 1 Elliot Way Manchester, NH 03106 cc: AHA; Mac Robinson, Rick Pollack, Neil Jesüele, Becky Maron EPA~ Christine Todd Whitman, William H.. Sanders, Tom Murray Jun. 1. 2002 8: 08AM ~ Jo. 2239p. 7 .. juii f~ tjI ` Fq3rM SAFETY ENV PROGRAMS. NO. 035 P 2 . ds.°. DARTMOUTH HITCHCOCKMEDICAL CENTER MARY HITCHCOCK MEMORIAL HOSPITAL OneMedical Center Drive Safety andEnvIronmental Programs Lebanon, New Han2pshire 05756 0001 605 650 1535 6O~. 65O 6616( Fax)

June 7,2001 Richard J. Davidson CitI Executive Offlcer American Hospital Ass ociaffon Via Fax; 312 422 4602 Dear Mr.. Davidson:

I amwriting to express my disappointment that the American Hospital Association is considering a withdrawal from theMemorandum of Understanding ( MQtJ). with U. S. EPA onhealthcare pollution prevention. I sfrongly encourage you to reconsider this and to reflect onits benefits to date.

The Dar~ outhHitchcock Medical Center was one ofthe earlypioneers of polluban prevention. Inourfacility, we have already phased out the use of the sterilant ethylene oxide, and we are almost completely eliminated the use of mercuty. We spend a tremendous amount of time counseling and teachingother hospitals that this is a good idea forour patients, our community, theenvironment&~ 4it saves money. We teach all of ournew ~ tployees our mission to provide excellent care for ourpatients, while preventing bairn to the environment We l~ owfrom our ten years inpollution prevention that protecting public healthand promoting pollithon prevention are the same, and we are couinuitted to this concept Unfortunately, not all hospitals have the adminisfrthve support, enthusiasticemployees or technical skills as we, and theMOU had a sisnilicant impacton getting the information to those facilities that wanted to make a change and needed art additional boost. Acollaborative approachto solving this problem was a perfect solution, and many hospitals have deepcith or begun pollution prevention programs purely because the MOLTwas aeated,

AHA's hospital members have the responsibility to pati~ and the environment that we all sbare to continue with the MOLT and to get the word out to hospithis to begin or maintain theirpollution prevention efforts. Given the EPA's recent regulatory actions against some ~ th] itiesfor their envfronxnentalpractices, it is clear to me that many, niaxty facilities still have a long wayto go.

Thank you far your consideradon.

I'~ 4ãn. vjctgxja Jas, MS. Manager of Biosafety and Environmental Programs Dartmouth Hitchcock Medical Center Lebanon, New Hampshire Dannouth Medical School ° Darzmtuth. Ritchccck Clinic . Mary Ritcheoak Memorial Ho6pital  V. A. Medical Cenff~ V~ 1, iuttvarJwmthn, yr No. 2239 P. 8 Jun. 7. 2U02 8: U8AM / S MENUL sw M~ vE. Fot. i~ Y,, MS.. ~

AMERICAN NURSES / SUiti~ 100 WEST PRESIDENT ASSOCIATION / WASIIINOT0N., DC 20024 2571 / 202 651 7000 FAx 202 651 7001 Lm~ mAJ. STIERLE. MSN. RN, CNAA / http;// www. nursingworld.. org CHIEF L'icLrrIvE OFFICER June 15,2001 Richard J. Davidson ChiefExecutive Officer American Hospitals Association One North Franklin Chicago, IL 60606 By Facsimile: 312 422 4602 Dear Mr.. Davidson The American Nurses Association has just recently learned about the decision ofthe AH_ A not to renew the Memorandum of Understanding with the Environmental Protection Agency. This cause&' ANA geat'concem. because calls into question AHA's commitment to prevent the production ofpollution by the health care mdustrv I am ~ v5itingon behalf ofthe ANAto express our deep disappointment that AEA woald consider this directidrz and to urge that you reconsider this decision. ABA leadership is essential to set and achieve goals that will protect not only the American people but the population of the earth from toxic pollution. AIM's work to assist it's member hospitals with product selection through environmentally responsible purchasing and the implementation of comprehensive waste management sirategies has been not only good forthe environment but good for the relationship ofit's member hospitals with their communities..

Hospitals are in the business to care for patients and cure disease; not to contribute to illness as a result ofpoorstewardship of the products usedto treat patients..

The American Nurses Association strongly urges you to continue AHA's commitment to the Hospitals for a Healthy Environment initiative and the MOLT defining that commitment. LANA pledges our support to assist AMA and it's member hospitals in achieving these goals., Thank you very much foryour reconsideration ofthis very important issue...

Sincerely, ` . , . . . . .`

Linda J. StieUé, MS1'~ EN. CNAA ChiefExe~ utiw. effi& r: , ,

American Nurses Assocjatidn , . . . ,

Thf USMr, Mt~ A ,.` fl, r. b,' I~~ 4.%'.' I1,' zvI, C,' M, ccsi. orN, Iisz~   A'~ LLoj, oIcn, NrWIE'alzn'rm


[Federal Register Volume 78, Number 112 (Tuesday, June 11, 2013)]
[Notices]
[Pages 35021-35022]
[FR Doc No: 2013-13804]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 14486-000]

FFP Project 57, LLC; Notice of Preliminary Permit Application
Accepted for Filing and Soliciting Comments, Motions To Intervene, and
Competing Applications

    On February 1, 2013, FFP Project 57, LLC filed an application for a
preliminary permit, pursuant to section 4(f) of the Federal Power Act
(FPA), proposing to study the feasibility of a hydropower project
located at the U.S. Army Corps of Engineers' (Corps)

Kentucky River Lock & Dam 4, located on the Kentucky River
near the town of Frankfort in Franklin County, Kentucky. The sole
purpose of a preliminary permit, if issued, is to grant the permit
holder priority to file a license application during the permit term. A
preliminary permit does not authorize the permit holder to perform any
land-disturbing activities or otherwise enter upon lands or waters
owned by others without the owners' express permission.
    The proposed project would consist of the following: (1) A 440-
foot-long, 220-foot-wide intake channel with a 145-foot-long retaining
wall; (2) a 140-foot-long, 90-foot-wide powerhouse containing two
generating units with a total capacity of 6.8 megawatts; (3) a 300-
foot-long, 125-foot-wide tailrace with a 145-foot-long retaining wall;
(4) a 4.16/69 kilo-volt (kV) substation; (5) a 200-foot-long, 69kV
transmission line. The proposed project would have an average annual
generation of 26,700 megawatt-hours, and operate as directed by the
Corps.
    Applicant Contact: Ms. Ramya Swaminathan, Free Flow Power
Corporation, 239 Causeway Street, Suite 300, Boston, MA 02114. (978)
283-2822.
    FERC Contact: Christiane Casey<EMAIL_ADDRESS>(202)
502-8577.
    Deadline for filing comments, motions to intervene, competing
applications (without notices of intent), or notices of intent to file
competing applications: 60 days from the issuance of this notice.
Competing applications and notices of intent must meet the requirements
of 18 CFR 4.36. Comments, motions to intervene, notices of intent, and
competing applications may be filed electronically via the Internet.
See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's
Web site http://www.ferc.gov/docs-filing/efiling.asp. Commenters can
submit brief comments up to 6,000 characters, without prior
registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information
at the end of your comments. For assistance, please contact FERC Online
Support at<EMAIL_ADDRESS>or toll free at 1-866-208-3676,
or for TTY,<PHONE_NUMBER>. Although the Commission strongly encourages
electronic filing, documents may also be paper-filed. To paper-file,
mail an original and five copies to: Kimberly D. Bose, Secretary,
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426.
    More information about this project, including a copy of the
application, can be viewed or printed on the ``eLibrary'' link of
Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp.
Enter the docket number (P-14486) in the docket number field to access
the document. For assistance, contact FERC Online Support.

    Dated: June 5, 2013.
 Kimberly D. Bose,
 Secretary.
[FR Doc. 2013-13804 Filed 6-10-13; 8:45 am]
BILLING CODE 6717-01-P