[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Notices]
[Pages 47681-47688]
[FR Doc No: 2012-19489]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67592; File No. SR-BOX-2012-003]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing of Proposed Rule Change To Amend the Price Improvement Period

August 3, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 25, 2012, BOX Options Exchange LLC (the ``Exchange'') 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 self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule 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

    The Exchange proposes to amend Rule 7150 (The Price Improvement
Period (``PIP'')) to modify the execution of quotes and orders that are
on the BOX Book prior to a PIP. The text of the proposed rule change is
available at the principal office of the Exchange, on the Exchange's
Web site at http://boxexchange.com, at the Commission's Public
Reference Room, and on the Commission's Web site at http://www.sec.gov.

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 self-regulatory organization
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 self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to amend the BOX Price Improvement Period
(``PIP'') \3\ Rule 7150 to modify the execution of quotes and orders
that are on the BOX Book prior to a PIP. Currently, Rule 7150(f)
permits a PIP to begin at or better than the National Best Bid or Offer
(``NBBO'') and 7150(f)(1) provides that at the commencement of the PIP,
all quotes and orders on the BOX Book prior to the PIP Broadcast that
are equal to or better than (1) the Single-Priced Primary Improvement
Order price or (2) the PIP Start Price of a Max Improvement Primary
Improvement Order, except any proprietary quote or order from the
Initiating Participant, will be immediately executed against the
customer order designated for the PIP (``PIP Order'') in price/time
priority. The result of the current rule is that when an

order is submitted to the PIP and there is sufficient quantity on the
BOX Book prior to the PIP Broadcast to execute the PIP Order, the PIP
never starts. For example: Submitted PIP Order to sell 100 contracts at
NBBO of $2.00; Orders on the BOX Book prior to the PIP Broadcast:
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    \3\ Capitalized terms not otherwise defined herein shall have
the meaning as defined in the Exchange Rules.
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     Public Customer to buy 30 contracts at $2.00;
     Market Maker A to buy 40 contracts at $2.00; and
     Broker-Dealer to buy 50 contracts at $2.00.

Under the current rule, the PIP Order executes 100 contracts against
the orders on the Book at $2.00 in price/time priority as follows:

     Public Customer for 30 contracts;
     Market Maker A for 40 contracts; and
     Broker-Dealer for 30 contracts.
    The PIP Order misses out on any potential opportunity for an
execution at a better price, or prices, (price improvement) because the
PIP never begins. The Exchange proposes to delete the provision in
7150(f)(1) noted above, amend 7150(f)(1), and 7150(f)(4), and add a new
provision as 7150(g)(3). The proposed rule change to 7150(f)(1) would
specify that at the conclusion of the PIP, the PIP Order shall be
executed as set forth in 7150(f)(3), 7150(f)(4), 7150(g), and 7150(j).
    Rule 7150(f)(4) sets out certain exceptions to time priority in the
execution of the PIP Order. First, at the same price, if better than
the PIP Start Price, Public Customer orders, whether an Improvement
Order or an Unrelated Order, execute before non-market maker broker-
dealer orders and all non-BOX Participant broker-dealer orders. Next, a
proposed addition to 7150(f)(4)(i) would specify that all quotes and
orders on the BOX Book prior to the PIP Broadcast, excluding any
proprietary quote or order from the Initiating Participant, will be
filled in time priority before any other order at the same price.
Another technical, non-substantive change to 7150(f)(4)(i) inserts the
defined term ``Unrelated Order'' in an instance where the undefined
term ``unrelated order'' has been used.
    Proposed new 7150(g)(3) states that the Primary Improvement Order
follows in time priority in the PIP allocation to all quotes and orders
on the BOX Book prior to the PIP Broadcast that are equal to the (A)
Single-Priced Primary Improvement Order price; or (B) execution price
of a Max Improvement Primary Improvement Order that results in the
balance of the PIP Order being fully executed, except any proprietary
quote or order from the Initiating Participant. BOX notes that, similar
to the current BOX Rules, such proprietary quote or order shall not be
executed against the PIP Order during or at the conclusion of the PIP.
As set forth above, among the quotes or orders on the BOX Book prior to
the PIP Broadcast at the final execution price level, the PIP Order
shall be matched against the quotes or orders in accordance with price/
time priority as set forth in Rule 7130.
    For example: Submitted PIP Order to sell 100 contracts with Single-
Priced Primary Improvement Order to buy at NBBO of $2.00. Orders on the
BOX Book prior to the PIP Broadcast:
     Public Customer to buy 30 contracts at $2.00;
     Market Maker A to buy 40 contracts at $2.00; and
     Broker-Dealer to buy 50 contracts at $2.00.
    Improvement Orders submitted during PIP:
     Market Maker B to buy 40 contracts at $2.01, and
     Market Maker C to buy 30 contracts at $2.02.
    Under the proposed rule change, the PIP Order would execute against
the following:
     Market Maker C for 30 contracts at $2.02;
     Market Maker B for 40 contracts at $2.01; and
     Public Customer for 30 contracts at $2.00.
    In this example, the PIP Order executes 70 contracts at a better
price than it would under the current rule. BOX believes the proposed
rule change will benefit Participants' customer orders by providing
them an opportunity for price improvement they do not currently
receive. Initiating Participants are required to guarantee an execution
of the PIP Order at the NBBO or at a better price. The Initiating
Participant's willingness to guarantee the customer order an execution
at NBBO or a better price is important to the customer order gaining
the opportunity for price improvement. Unfortunately, under the current
BOX Rules, many PIP Orders do not have the opportunity to be exposed to
competition in the PIP and potentially receive an execution at a better
price. As such, BOX believes that the proposed rule change will benefit
customers because it will ensure that more customer orders are exposed
to that PIP competition and thus, more likely that such orders may
receive price improvement. Orders on the BOX Book prior to the PIP,
however, retain their priority over the Initiating Participant for
allocation at the conclusion of the PIP at the same price. Such orders
execute based on their time priority on the BOX Book prior to the PIP
Broadcast. Options Participants' orders submitted to BOX are ranked and
maintained in the BOX Book according to price/time priority, such that
within each price level, all orders are organized by time of order
entry. No distinction is made to this priority with regard to account
designation (Public Customer, Broker/Dealer, or Market Maker). BOX
believes that price/time priority provides an incentive for all market
participants to post their best prices quickly.
    The PIP has saved investors more than $388 million versus the
prevailing NBBO since 2004, a monthly average of more than $3.8
million. BOX believes that the proposed rule change will result in
additional PIP transactions, and thus, in customers having a greater
opportunity to benefit from price improvement.
Max Improvement Primary Improvement Orders
    Currently, if an Initiating Participant enters a Max Improvement
Primary Improvement Order as defined in 7150(f), such an order
automatically matches both the price and size of all competing quotes
and orders at any price level achieved during the PIP, or up to a limit
price as set by the Initiating Participant. At the conclusion of the
PIP, a Max Improvement Primary Improvement Order will be allocated an
equal number of contracts as the aggregate size of competing quotes and
orders at each price level until a price level is reached where the
balance of the PIP Order can be fully executed, except that the
Initiating Participant will retain priority for 40% of the remaining
PIP Order at the final price level. Otherwise, at the conclusion of the
PIP, the PIP Order shall be matched against quotes and orders as set
forth in 7150(f)(3)-(4), 7150(g), and 7150(j).
    The Exchange proposes to amend 7150(g)(3) to provide that a Primary
Improvement Order would yield priority to all quotes and orders on the
BOX Book prior to the PIP Broadcast that are equal to or better than
the execution price of a Max Improvement Primary Improvement Order that
results in the balance of the PIP Order being fully executed, except
any proprietary quote or order from the Initiating Participant. Similar
to the current BOX Rules, such proprietary quote or order shall not be
executed against the PIP Order during or at the conclusion of the PIP.
    For example, a PIP Order is submitted to sell 100 contracts at NBBO
of $2.00

with Max Improvement Primary Improvement Order to buy at prices up to
$2.03, with a PIP Start Price of $2.00.
    Orders on the BOX Book prior to the PIP Broadcast:
     Public Customer to buy 30 contracts at $2.00;
     Market Maker A to buy 40 contracts at $2.00; and
     Broker-Dealer to buy 50 contracts at $2.00.
    Improvement Orders submitted during PIP:
     Market Maker B to buy 20 contracts at $2.01, and
     Market Maker C to buy 10 contracts at $2.02.
    Under the proposed rule change, the PIP Order would execute against
the following:
     Market Maker C for 10 contracts at $2.02;
     Initiating Participant for 10 contracts at $2.02;
     Market Maker B for 20 contracts at $2.01;
     Initiating Participant for 20 contracts at $2.01
     Public Customer for 30 contracts at $2.00; and
     Market Maker A for 10 contracts at $2.00.
    In this example, the PIP Order executes 60 contracts at a better
price than it would under the current rule. It is possible that the
orders on the Book at NBBO prior to the PIP would not execute against
the PIP Order that is submitted to the PIP at NBBO. The PIP Order,
however, is still guaranteed an execution by the Initiating
Participant, and receives price improvement better than the NBBO for a
portion of the PIP Order. BOX notes, however, that the PIP Order could
potentially receive improvement for the entire quantity of the order.
    In the example above, the Initiating Participant is entitled to
receive 10 contracts at $2.02 (matching the 10 contracts that are
allocated $2.02), and 20 contracts at $2.01 (matching the 20 contracts
allocated at $2.01). Because $2.00 is the final price level where the
PIP Order is fully executed, the Public Customer is allocated 30
contracts and Market Maker A is allocated 10 contracts based on their
price/time priority on the BOX Book prior to the PIP Broadcast. These
orders on the BOX Book, however, retain their priority over the
Initiating Participant at the final price level.
    Rule 7150(g)(2) provides that when submitting a Max Improvement
Primary Improvement Order, the Initiating Participant retains priority
over other Improvement Orders for 40% of the remaining size of the PIP
Order at the price where the PIP Order can be fully executed.
    For example, a PIP Order is submitted to sell 100 contracts at NBBO
of $2.00 with Max Improvement Primary Improvement Order to buy at
prices up to $2.03, with a PIP Start Price of $2.00. Orders on the BOX
Book prior to the PIP Broadcast:
     Public Customer to buy 10 contracts at $2.00;
    Improvement Orders submitted during PIP:
     Market Maker B to buy 20 contracts at $2.01;
     Market Maker C to buy 10 contracts at $2.02;
     Broker-dealer to buy 25 contracts at $2.00.
    Under the proposed rule change, the PIP Order would execute against
the following:
     Market Maker C for 10 contracts at $2.02;
     Initiating Participant for 10 contracts at $2.02;
     Market Maker B for 20 contracts at $2.01;
     Initiating Participant for 20 contracts at $2.01
     Public Customer for 10 contracts at $2.00;
     Initiating Participant for 12 contracts at $2.00; and
     Broker-dealer for 18 contracts at $2.00
    In this example, the PIP Order also executes 60 contracts at a
price better than NBBO. The Initiating Participant is entitled to
receive 10 contracts at $2.02 (matching the 10 contracts that are
allocated $2.02), and 20 contracts at $2.01 (matching the 20 contracts
allocated at $2.01). Because $2.00 is the final price level where the
PIP Order is fully executed, the Public Customer on the BOX Book prior
to the PIP Broadcast retains his priority over the Initiating
Participant at the final price level and is allocated his 10 contracts.
Finally, among the Improvement Orders at the final price of $2.00, the
Initiating Participant retains priority for 40% of the remaining 30
contracts. Thus, the Initiating Participant is allocated 12 contracts
at $2.00 and the Broker-dealer that submitted the Improvement Order is
allocated the final 18 contracts at $2.00. As noted above, additional
quantity on the BOX Book at the final execution price ($2.00 in this
instance) prior to the PIP Broadcast, regardless of account type (e.g.,
Public Customer, Market Maker, or Broker-dealer), would retain priority
over the Initiating Participant at that price and trade in price/time
priority in the same fashion as they otherwise would on the BOX Book.
    BOX notes that Unrelated Orders submitted to BOX will continue to
execute with the PIP as they do within the current BOX Rules 7150(i)
and 7150(j). The Exchange is not proposing any change to these Rules
regarding Unrelated Orders. As stated in proposed Rule 7150(f)(4)(i),
``* * * all quotes and orders on the BOX Book prior to the PIP
Broadcast, excluding any proprietary quote or order from the Initiating
Participant, will be filled in time priority before any other order at
the same price.'' As such, Unrelated Orders received after a PIP
Broadcast would execute in time priority after quotes and orders at the
same price that were on the Book prior to the PIP Broadcast.
    Upon Commission approval of the proposal, and at least one week
prior to implementation of the proposed rule change, BOX will issue an
Informational Circular to Participants, informing them of the
implementation date. This will give Participants an opportunity to make
any necessary modifications to coincide with the implementation date.
    In connection with this proposed rule change, the Exchange will
continue to provide to the Commission the following monthly data, and
corresponding analysis, related to the PIP: (1) The number of orders of
50 contracts or greater entered into the PIP auction; (2) the
percentage of all orders of 50 contracts or greater sent to BOX that
are entered into the PIP auction; (3) the spread in the option at the
time an order of 50 contracts or greater is submitted to the PIP
auction; (4) the percentage of PIP trades executed at the NBBO plus
$.01, plus $.02, plus $.03, etc.; and (5) the number of orders
submitted by Order Flow Providers (``OFPs'') and Market Makers when the
spread was at a particular increment (e.g., $.05, $.10, $.15, etc.).
Also, relative to item 5 above, for each spread, the Exchange will
provide the percentage of contracts in orders of fewer than 50
contracts and for orders of 50 contracts or greater submitted to the
PIP that were traded by: (a) The OFP or Market Maker that submitted the
order to the PIP; (b) BOX Market Makers assigned to the class; (c)
other BOX Participants; (d) Public Customer Orders (including Customer
PIP Orders (``CPOs'')); (e) Unrelated Orders (orders in standard
increments entered during the PIP), and (f) quotes and orders on the
BOX Book prior to the PIP Broadcast.
    Further, BOX will provide, for the first and third Wednesday of
each month, the: (a) Total number of PIP auctions on that date; (b)
number of PIP auctions where the order submitted to the PIP was fewer
than 50 contracts; (c) number of PIP auctions where the order

submitted to the PIP was 50 contracts or greater; (d) number of PIP
auctions where the number of Participants (excluding the Initiating
Participant) was zero, one, two, three, four, etc. Finally, the
Exchange will continue to provide information each month with respect
to situations in which the PIP is terminated prematurely or a Market
Order, Limit Order, or BOX-Top Order immediately execute with a PIP
Order before the PIP's conclusion. The following information will be
provided: (1) The number of times that a Market Order, Limit Order, or
BOX-Top Order in the same series on the same side of the market as the
PIP Order prematurely terminated the PIP, and (a) the number of times
such orders were entered by the same (or affiliated) firm that
initiated the PIP that was terminated, and (b) the number of times such
orders were entered by a firm (or an affiliate of such firm) that
participated in the execution of the PIP Order; (2) for the orders
addressed in each of 1(a) and 1(b) above, the percentage of PIP
premature terminations due to the receipt, during the PIP, of a Market
Order, Limit Order, or BOX-Top Order in the same series on the same
side of the market as the PIP Order; and the average amount of price
improvement provided to the PIP Order where the PIP is prematurely
terminated; (3) the number of times that a Market Order, Limit Order,
or BOX-Top Order in the same series on the opposite side of the market
as the PIP Order immediately executed against the PIP Order, and (a)
the number of times such orders were entered by the same (or
affiliated) firm that initiated the PIP, and (b) the number of times
such orders were entered by a firm (or an affiliate of such firm) that
participated in the execution of the PIP Order; (4) for the orders
addressed in each of 3(a) and 3(b) above, the percentage of PIP early
executions due to the receipt, during the PIP, of a Market Order, Limit
Order, or BOX-Top Order in the same series on the opposite side of the
market as the PIP Order; and the average amount of price improvement
provided to the PIP Order where the PIP Order is immediately executed;
and (5) the average amount of price improvement provided to the PIP
Order when the PIP runs for 100 milliseconds.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\4\ in general, and Section
6(b)(5) of the Act,\5\ in particular, that the rules of an exchange be
designed to promote just and equitable principles of trade, to prevent
fraudulent and manipulative acts, to remove impediments to and to
perfect the mechanism for a free and open market and a national market
system, and, in general, to protect investors and the public interest.
In particular, the Exchange believes this proposed rule change is a
reasonable modification designed to provide additional opportunities
for BOX Options Participants to obtain executions with price
improvement for their customers while continuing to provide meaningful
competition within the PIP. The Exchange also believes that the
proposed rule change will increase the number of PIP transactions and
participation in the PIP, which will ultimately enhance competition in
the PIP and provide customers with additional opportunities for price
improvement. The Exchange believes these changes are consistent with
the goals to remove impediments to and to perfect the mechanism for a
free and open market and a national market system.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    Section 11(a) of the Act prohibits a member of a national
securities exchange from effecting transactions on that exchange for
his own account, the account of an associated person, or an account
over which he or his associated person exercises investment discretion
(collectively, ``covered accounts''), unless an exception applies. The
purpose of Section 11(a) is to address trading advantages enjoyed by
the exchange members and conflicts of interest in money management.\6\
In particular, as the Commission has stated, Congress enacted Section
11(a) out of concern about members benefiting in their principal
transactions from special ``time and place'' advantages associated with
floor trading--such as the ability to ``execute decisions faster than
public investors.'' \7\ Section 11(a) includes several exceptions from
the general prohibition for principal transactions that contribute to
the fairness and orderliness of exchange transactions or do not reflect
any time and place advantages. For example, Section 11(a)(1) provides
that the prohibition on principal transactions does not apply to
transactions by a dealer acting in the capacity of a market maker,\8\
bona fide arbitrage, risk arbitrage or hedge transactions,\9\
transactions by an odd lot dealer,\10\ and transactions made to offset
errors.\11\
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    \6\ See Securities Reform Act of 1975, Report of the House Comm.
On Interstate and Foreign Commerce, H.R. Rep. No. 94-123, 94th
Cong., 1st Sess. (1975); Securities Acts Amendments of 1975, Report
of the Senate Comm. On Banking, Housing, and Urban Affairs, S. Rep.
No. 94-75, 94th Cong., 1st Sess. (1975).
    \7\ See Securities Exchange Act Release Nos. 14563 (March 14,
1978), 43 FR 11542, 11543 (March 17, 1978); 14713 (April 27, 1978),
43 FR 18557 (``April 1978 Release''); 15533 (January 29, 1979), 44
FR 6084 (``1979 Release'').
    \8\ Section 11(a)(1)(A).
    \9\ Section 11(a)(1)(D).
    \10\ Section 11(a)(1)(B).
    \11\ Section 11(a)(1)(F).
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    The Commission has stated that it believes that transactions
effected through the BOX PIP are consistent with the requirements in
Section 11(a) of the Act and Rule 11a1-1(T) thereunder because Options
Participants that are not market makers are required to yield priority
in the PIP to all non-member orders, (i.e., to all Public Customer
Orders and non-BOX Participant broker-dealer orders) at the same
price.\12\ Note that Participants, however, in addition to yielding
priority to non-member orders at the same price, must also meet the
other requirements under Section 11(a)(1)(G) of the Act and Rule 11a1-
1(T) thereunder (or satisfy the requirements of another exception) to
effect transactions for their own accounts.
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    \12\ See Securities Exchange Act Release No. 66871 (April 27,
2012), 77 FR 26323, at 26336 (May 3, 2012), In the Matter of the
Application of BOX Options Exchange LLC for Registration as a
National Securities Exchange Findings, Opinion, and Order of the
Commission. See also Securities Exchange Act Release No. 49068
(January 13, 2004), 69 FR 2775, at 2790 (January 20, 2004)
(establishing, among other things, the Boston Options Exchange, LLC
options trading facility of BSE).
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    As discussed below, the Exchange believes the PIP is generally
consistent with Section 11(a)(1)(G) and Rule 11a1-1(T) under the Act
because non-Market Maker Participant orders must yield to Public
Customer orders.\13\ The Exchange also believes, however, that the
proposed change to execute quotes and orders on the BOX Book prior to
the PIP Broadcast against a PIP Order will satisfy the conditions of
Rule 11a2-2(T) under the Act (the ``Rule'').\14\
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    \13\ 15 U.S.C. 78k(a)(1)(G) and 17 CFR. 240.11a1-1(T).
    \14\ 17 CFR 240.11a2-2(T).
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Yielding to Public Customer Orders
    Exchange Rules prohibit any orders for the accounts of non-Market
Maker Options Participants to be executed prior to the execution of
Public Customer Orders, whether an Improvement Order, including a CPO,
or Unrelated Order, and non-BOX-Participant broker-dealer orders at the
same price.\15\ Section 11(a)(1)(G) and Rule 11a1-1(T) under the Act
provide an exception to the general prohibition

in Section 11(a) on an exchange member effecting transactions for its
own account. Specifically, a member that ``is primarily engaged in the
business of underwriting and distributing securities issued by other
persons, selling securities to customers, and acting as broker, or any
one or more of such activities, and whose gross income normally is
derived principally from such business and related activities'' \16\
and effects a transaction in compliance with the requirements in Rule
11a1-1(T)(a) \17\ may effect a transaction for its own account. Among
other things, Rule 11a1-1(T)(a) requires that an exchange member
presenting a bid or offer for its own account or the account of another
member shall grant priority to any bid or offer at the same price for
the account of a non-member of the exchange. Because BOX Rules require
Options Participants that are not Market Makers to yield priority in
the PIP to all non-member orders, BOX believes that the execution of
PIP transactions on BOX is consistent with the requirements in Section
11(a) and Rule 11a1-1(T) under the Act.\18\ The Exchange notes that BOX
Options Participants, in addition to yielding priority to non-member
orders at the same price, must also meet the other requirements under
Section 11(a)(1)(G) and Rule 11a1-1(T) (or satisfy the requirements of
another exception) to effect transactions for their own accounts.
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    \15\ See Rule 7150(f)(4) and 7150(g)(3).
    \16\ 15 U.S.C. 78k(a)(1)(G)(i). Paragraph (b) of Rule 11a1-1(T)
under the Act provides that a member shall be deemed to meet the
requirements of Section 11(a)(1)(G)(i) of the Act if during its
preceding fiscal year more than 50% of its gross revenues was
derived from one or more of the sources specified in that section.
In addition to any revenue which independently meets the
requirements of Section 11(a)(1)(G)(i), revenue derived from any
transaction specified in paragraph (A), (B), or (D) of Section
11(a)(1) of the Act or specified in Rule 11a1-4(T) shall be deemed
to be revenue derived from one or more of the sources specified in
Section 11(a)(1)(G)(i).
    \17\ 15 U.S.C. 78k(a)(1)(G)(ii).
    \18\ Supra n.12.
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    Consistent with Section 11(a) of the Act, current BOX PIP Rules
``prohibit any orders for the accounts of non-Market Maker BOX Options
Participants to be executed prior to the execution of Public Customer
Orders, both Public Customer PIP Orders and unrelated Customer Orders,
and non-BOX Options Participant broker-dealer orders at the same
price.'' \19\ Although the Proposal would change when BOX ``sweeps''
the BOX Book in relation to the PIP, it would not change that Public
Customers retain priority over certain other orders at the same price
when executed at the end of a PIP transaction, except for quotes and
orders on the BOX Book prior to the PIP Broadcast.
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    \19\ See Securities Exchange Act Release No. 66871 (April 27,
2012), 77 FR 26323, at 26336 (May 3, 2012), In the Matter of the
Application of BOX Options Exchange LLC for Registration as a
National Securities Exchange Findings, Opinion, and Order of the
Commission.
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Application of ``Effect Versus Execute'' Exemption From Section 11(a)
of the Act
    The Commission has stated that it believes that BOX Option
Participants entering orders into the BOX Trading Host, excluding those
transactions effected through the PIP process, will satisfy the
conditions of Rule 11a2-2(T) (``the Rule'').\20\ The Exchange believes
that the executions of quotes and orders that are on the BOX Book prior
to a PIP Broadcast against a PIP Order will also satisfy the conditions
of the Rule.
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    \20\ Supra n.19 at 26335.
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    Under the proposed rule change, a PIP Order with a matching Primary
Improvement Order submitted to the PIP would automatically initiate a
PIP. Any Improvement Orders at a better price submitted during the PIP
will be executed with the PIP Order, as described above, with Public
Customer orders at that price having priority. If at the conclusion of
the PIP, there is any remaining unexecuted size of the PIP Order, BOX
will ``sweep'' the BOX Book for quotes and orders at the PIP start
price, and the PIP Order remainder will be executed against those
orders according to price/time priority.
    Rule 11a2-2(T) under the Act provides exchange members with an
exemption from the prohibition on principal trading, in addition to the
exceptions delineated in the statute. Known as the ``effect versus
execute'' rule, Rule 11a2-2(T) permits an exchange member, subject to
certain conditions, to effect transactions for covered accounts by
arranging for an unaffiliated member to execute the transactions on the
exchange. To comply with the Rule's conditions, a member:
    (i) May not be affiliated with the executing member;
    (ii) Must transmit the order from off the exchange floor;
    (iii) May not participate in the execution of the transaction once
it has been transmitted to the member performing the execution; \21\
and
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    \21\ The member may, however, participate in clearing and
settling the transaction.
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    (iv) With respect to an account over which the member has
investment discretion, neither the member nor his associated person may
retain any compensation in connection with effecting the transaction
except as provided in the Rule.\22\
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    \22\ 17 CFR 240.11a2-2(T)(a)(2).
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    The Commission has stated that these four requirements of the Rule
are ``designed to put members and non-members on the same footing, to
the extent practicable, in light of the purposes of Section 11(a).''
\23\ If a transaction meets the four conditions of the Rule, it will be
deemed to be in compliance with Section 11(a)(1), the protection of
investors and the maintenance of fair and orderly markets.\24\ For the
reasons set forth below, the Exchange believes the structural and
operational characteristics of the BOX Book are consistent with the
stated objectives of Section 11(a) of the Act, and that all users would
be placed on the ``same footing'', as intended by Rule 11a2-2(T), even
where quotes and orders on the BOX Book prior to a PIP execute against
the PIP Order.
---------------------------------------------------------------------------

    \23\ April 1978 Release at 18560.
    \24\ 17 CFR 240.11a2-2(T)(e).
---------------------------------------------------------------------------

    The Commission has recognized and accommodated the functioning of
electronic exchange facilities under the Rule.\25\ In addition, the
Commission and its staff have permitted exchanges to sponsor innovative
trading systems in reliance on the Rule, based on the exchanges'
representations that such facilities, by design, do not provide any
special time and place advantage to members.\26\ In particular, the

Commission has stated, in the context of certain automated execution
systems, that where the execution is performed on an automated basis by
the facility itself, ``the member would not retain any ability to
control the timing of the execution or otherwise enjoy the kind of
special order-handling advantages inherent in being on an exchange
floor.\27\ The Commission has applied the Rule in a functional manner,
taking into account the structural characteristics that distinguish the
operation of an automated execution system from traditional exchange
floor activities. This approach represents the sensible conclusion by
the Commission and its Staff that implementation of Section 11(a)
should reflect the ``continuing rapid pace of economic, technological
and regulatory changes in the market.'' \28\
---------------------------------------------------------------------------

    \25\ See Securities Exchange Act Release Nos. 61152 (December
10, 2009), 74 FR 66699 (December 16, 2009) (File No. 10-191)
(Findings, Opinion, and Order of the Commission In the Matter of the
Application of C2 Options Exchange, Incorporated for Registration as
a National Securities Exchange) (``C2 Approval Order'') at note 170;
57478 (March 12, 2008), 73 FR 14521 (March 18, 2008) (File No. SR-
NASDAQ-2007-004) (approval order concerning the establishment of the
NASDAQ Options Market LLC (``NOM'')) (``NOM Approval Order''); Order
approving the rules of the Boston Options Exchange, supra n.12;
54552 (September 29, 2006) (AMEX AEMI trading system), 71 FR 59546
(October 10, 2006); 54550 (September 29, 2006), 71 FR 59563 (October
10, 2006) (Chicago Stock Exchange trading system); 54528 (September
28, 2006), 71 FR 58650 (October 4, 2006) (International Securities
Exchange trading system); and 49747 (May 20, 2004), 69 FR 30344 (May
27, 2004) (AMEX electronic options trading system).
    \26\ See e.g., Securities Exchange Act Release No. 44983
(October 25, 2001) (Archipelago Exchange), citing Letter from Paula
R. Jenson, Deputy Chief Counsel, Division of Market Regulation, SEC,
to Kathryn L. Beck, Senior Vice President, Special Counsel and
Antitrust Compliance Officer, Pacific Exchange, Inc. (October 25,
2001) (``Arca Letter''); Letter from Larry E. Bergmann, Senior
Associate Director, Division of Market Regulation, SEC, to Edith
Hallahan, Associate General Counsel, Philadelphia Stock Exchange,
Inc. (March 24, 1999) (``VWAP Letter''); Letter from Catherine
McGuire, Chief Counsel, Division of Market Regulation, SEC, to David
E. Rosedahl, PCX (November 30, 1998) (``OptiMark Letter''); Letter
from Brandon Becker, Director, Division of Market Regulation, SEC,
to George T. Simon, Partner, Foley & Lardner (November 30, 1994)
(``Chicago Match Letter''); Securities Exchange Act Release No.
29237 (May 24, 1991), 56 FR 24853 (May 31, 1991) (NYSE's Off-Hours
Trading Facility (October 25, 2001).
    \27\ 1979 Release, supra n. 7 at 6087, n. 35
    \28\ 1979 Release, supra n. 7 at 6087.
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Application of the Rule to Quotes and Orders on the BOX Book Prior to
the PIP That Execute With the PIP Order
    In light of the automated execution of orders submitted to BOX, no
Options Participant will enjoy any special control over the timing and
execution or special order handling advantages in effecting
transactions in orders submitted to the BOX Book. All orders are
processed for execution by computer, rather than being handled manually
by an Options Participant. Because these processes prevent Options
Participants from gaining any time and place advantage once an order is
submitted to BOX, the Exchange believes that the BOX Book process
satisfies three of the four conditions of the Rule, as well as the
general policy objectives of Section 11(a) of the Act. Of course, as
discussed below, BOX Options Participants relying on the Rule also must
comply with the fourth condition of the Rule with respect to
discretionary accounts, and the Exchange will enforce this requirement
pursuant to its obligation under Section 6(b)(1) of the Act to enforce
compliance with the federal securities laws.
(i) Execution Through Unaffiliated Member
    The Rule's first condition is that the order be executed by an
exchange member that is unaffiliated with the member initiating the
order.\29\ The Commission has repeatedly stated that this requirement
is satisfied when automated exchange facilities, such as BOX, are used,
so long as the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the system.\30\ In considering the
operation of NOM and C2, the Commission noted, while there is no
independent executing exchange member, the execution of an order is
automatic once it has been transmitted to the system.\31\ Because the
design of these systems ensures members do not possess any special or
unique trading advantages in handling their orders after transmitting
them to the exchange, the Commission has stated executions obtained
through these systems satisfy the independent execution requirement of
Rule 11a2-2(T).\32\
---------------------------------------------------------------------------

    \29\ 17 CFR 240.11a2-2(T)(a)(2)(i).
    \30\ See e.g., C2 Approval Order and NOM Approval Order, supra
n. 25, and Order approving rules of the Boston Options Exchange,
supra n. 12.
    \31\ See, NOM Approval Order and C2 Approval Order.
    \32\ Id.
---------------------------------------------------------------------------

    This principle is directly applicable to the BOX Book, including
the quotes and orders on the Book prior to a PIP that may execute
against the PIP Order. The design of the BOX Book ensures that broker-
dealers do not have any special or unique trading advantages in
handling their orders after transmission. Accordingly, the Exchange
believes that a broker-dealer effecting a transaction through the BOX
Book, even where the quote or order on the Book prior to a PIP executes
against the PIP Order, satisfies the requirement for execution through
an unaffiliated member.
    The design of BOX ensures that no BOX Options Participant will
enjoy any special control over the timing of execution or special order
handling advantages after order transmission. All orders on the BOX
Book and through the PIP, are centrally processed and executed
automatically by BOX. Specifically, orders sent to BOX will be
transmitted from remote terminals directly to the system by electronic
means. Once an order is submitted to the BOX Book, the order is
executed against another order based on the established matching
algorithms for the Book. And, as proposed, those quotes and orders on
the Book prior to a PIP, may trade with the PIP Order, or will execute
when orders or quotations on BOX match one another based on price/time
priority. The execution does not depend on the Options Participant but
rather upon what other orders are entered into BOX at or around the
same time as the subject order, what orders are on the BOX Book, or if
a PIP is initiated, and where the order is ranked based on the priority
ranking algorithm. At no time following the submission of an order to
the BOX Book is an Options Participant able to acquire control or
influence over the result or timing of order execution. Accordingly,
Participants do not control or influence the result or timing of orders
submitted to the BOX Book, even if such an order were to match with the
PIP Order.
(ii) Off-Floor Transmission
    The Rule requires that orders for a covered account transaction be
transmitted from off the exchange floor.\33\ Again, the Commission has
considered this requirement in the context of various automated trading
and electronic order-handling facilities operated by national
securities exchanges.\34\ In these contexts, the Commission determined
that a covered account order sent through such an exchange facility
would be deemed to be transmitted from off the floor. Like these other
automated systems, orders sent to BOX, regardless of where it executes
within the BOX system, including the Book or the PIP, will be
transmitted from remote terminals directly to BOX by electronic means.
OFPs and BOX Market Makers will only submit orders and quotes to BOX
from electronic systems from remote locations, separate from BOX. There
are no other Options Participants that are able to submit orders to BOX
other than OFPs or Market Makers. Therefore, the Exchange believes that
Participants' orders electronically received by BOX satisfy the off-
floor transmission requirement for the purposes of the Rule.\35\
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    \33\ 17 CFR 240.11a2-2(T)(a)(2)(ii).
    \34\ See e.g., Release Nos. 29237 (May 24, 1991), 56 FR 24853
(May 31, 1991) (File Nos. SR-NYSE-90-52 and SR-NYSE-90-53)
(regarding NYSE's Off-Hours Trading Facility); 61419 (January 26,
2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-031) (approving
BATS options trading); 59154 (December 28, 2008), 73 FR 80468
(December 31, 2008) (SR-BSE-2008-48) (approving equity securities
listing and trading on BSE); NOM Approval Order; 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006) (File No. 10-131) (approving
The Nasdaq Stock Market LLC); 44983 (October 25, 2001), 66 FR 55225
(November 1, 2001) (SR-PCX-00-25) (approving Archipelago Exchange);
29237 (May 24, 1991), 56 FR 24853 (May 31, 1991) (SR-NYSE-90-52 and
SR-NYSE-90-53) (approving NYSE's Off-Hours Trading Facility); and
1979 Release.
    \35\ The Commission has not considered the lack of a traditional
physical floor to be an impediment to the satisfaction of the off-
floor requirement. See, e.g., 1979 Release.
---------------------------------------------------------------------------

(iii) Non-Participation in Order Execution
    The Rule further provides the exchange member and his associated
person not participate in the execution of the order once it has been

transmitted.\36\ This requirement originally was intended to prevent
members with their own floor brokers from using those persons to
influence or guide their orders' executions.\37\ A member is not
precluded from canceling or modifying orders, or from modifying
instructions for executing orders, after they have been transmitted;
provided, however, such cancellations or modifications are transmitted
from off the exchange floor.\38\
---------------------------------------------------------------------------

    \36\ 17 CFR 240.11a2-2(T)(a)(2)(iii).
    \37\ See generally April 1978 Release, supra n. 7.
    \38\ Id.
---------------------------------------------------------------------------

    In analyzing the application of the non-participation requirement
to automated execution facilities, the Commission has specifically
noted in regard to BOX that the execution does not depend on the
Participant but rather upon what other orders are entered into BOX at
or around the same time as the subject order, what orders are on the
BOX Book, and where the order is ranked based on the priority ranking
and execution algorithm.\39\ Based on prior Commission interpretations,
orders submitted electronically to the BOX Book will similarly meet the
non-participation requirement. Upon submission to BOX, an order is
executed against another order on the BOX Book or with the PIP Order
based on an established matching algorithm. The execution does not
depend on the Participant but rather upon what other orders are entered
into BOX at or around the same time as the subject order, what orders
are on the BOX Book, whether a PIP is initiated, and where the order is
ranked based on the priority ranking algorithm. At no time following
the submission of an order to the BOX Book is an Options Participant
able to acquire control or influence over the result or timing of order
execution. Accordingly, Participants do not control or influence the
result or timing of orders submitted to BOX, even if their order on the
Book may execute with a PIP Order. As such, the Exchange believes the
non-participation requirement is met when orders are executed
automatically on the BOX Book.
---------------------------------------------------------------------------

    \39\ See Order approving rules of Boston Options Exchange, supra
n. 12.
---------------------------------------------------------------------------

(iv) Non-Retention of Compensation
    Finally, the exemption in Rule 11a2-2(T) states, in the case of a
transaction effected for an account with respect to which an exchange
member or an associated person thereof exercises investment discretion,
neither the member nor any associated person thereof, may retain any
compensation in connection with effecting the transaction without the
express written consent of the person authorized to transact business
for the account, given in accordance with the Rule.\40\ As a
prerequisite for BOX usage, if a Participant is to rely on Rule 11a2-
2(T) for a covered account transaction, the Participant must comply
with the limitations on compensation set forth in the Rule.\41\
---------------------------------------------------------------------------

    \40\ 17 CFR 240.11a2-2(T)(a)(2)(iv).
    \41\ See Exchange Rule 4140.
---------------------------------------------------------------------------

    The Exchange believes that orders executed on the BOX Book,
including those on the Book prior to a PIP that may execute against a
PIP Order, would satisfy the requirements of the ``effect versus
execute'' rule as well as the general policy objectives of Section
11(a) of the Act. Additionally, the Exchange believes that BOX Options
Participant executions that occur through the BOX PIP, would continue
to be consistent with the requirements in Section 11(a)(1)(G) and Rule
11a1-1(T) under the Act. Further, the Exchange believes the policy
concerns Congress sought to address in Section 11(a) of the Act,\42\
the time and place advantage members on exchange floors have over non-
members off the floor and the general public, are not present for these
various transactions entered into BOX where it is executed on the BOX
Book or through the PIP.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78k(a).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is also
consistent with Section 6(b)(8) of the Act in that it does not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. Specifically, the Exchange believes that
the proposal will result in increased liquidity available at improved
prices, with competitive pricing outside the control of the Initiating
Participant. The proposed rule change should promote and foster
competition and provide more options contracts with the opportunity for
price improvement. As a result of the increased opportunities for price
improvement, the Exchange believes that Participants will increasingly
use PIP so that more customer orders are provided the opportunity to
receive price improvement over the NBBO.
    The Exchange notes that submitting orders to the PIP is voluntary
for BOX Options Participants. Additionally, the Exchange notes that
several competing options exchanges offer mechanisms similar to the
PIP, to which any market participant may choose to submit its matched
customer orders. Based on all of the above, the Exchange believes the
proposed rule change does not place an undue burden on competition.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, the Exchange
believes that the proposal will result in increased liquidity available
at improved prices, with competitive pricing outside the control of the
Initiating Participant. The proposed rule change should promote and
foster competition and provide more options contracts with the
opportunity for price improvement. As a result of the increased
opportunities for price improvement, the Exchange believes that
Participants will increasingly use PIP so that more customer orders are
provided the opportunity to receive price improvement over the NBBO.

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

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

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (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 Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File

No. SR-BOX-2012-003 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BOX-2012-003. 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 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 No. SR-BOX-2012-003 and should be
submitted on or before August 30, 2012.
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19489 Filed 8-8-12; 8:45 am]
BILLING CODE 8011-01-P


55252 Federal Register / Vol. 67, No. 167 / Wednesday, August 28, 2002 / Notices ENVIRONMENTAL PROTECTION AGENCY [OPP– 2002– 0069; FRL– 7197– 4]

Methodology for Lower Toxicity Pesticide Chemicals; Extension of Comment Period AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Availability; Extension of Comment Period.

SUMMARY: On June 13, 2002, EPA published a notice of availability soliciting comments on a document `` methodlogy for determining the data needed and the types of assessments necessary to make FFDCA section 408 safety determinations for lower toxicity pesticide chemicals. '' EPA is extending the comment period for 30 days, from September 11, 2002, to October 11, 2002.

DATES: Comments, identified by the docket ID number OPP– 2002– 0069, must be received on or before October 11, 2002.

ADDRESSES: Comments may be submitted by mail, electronically, or in person. Please follow the detailed instructions for each method as provided in Unit I. of the SUPPLEMENTARY INFORMATION. To ensure proper receipt by EPA, it is imperative that you identify docket ID number OPP– 2002– 0069 in the subject line on the first page of your response.

FOR FURTHER INFORMATION CONTACT: Kathryn Boyle, Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (703) 305– 6304; fax number: (703) 305– 0599; e mail address: boyle. kathryn@ epa. gov.

SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me?

This action is directed to the public in general. This action may, however, be of interest to those persons who are or may be required to conduct testing of chemical substances under the Federal Food, Drug, and Cosmetic Act (FFDCA), or the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)]. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT. B. How Can I Get Additional Information, Including Copies of this Document and Other Related Documents?

1. Electronically. You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http:// www. epa. gov/. On the Home Page select `` Laws and Regulations, '' `` Regulations and Proposed Rules, '' and then look up the entry for this document under the `` Federal Register— Environmental Documents. '' You can also go directly to the Federal Register listings at http:// www. epa. gov/ fedrgstr/. To obtain an electronic copy of the methodology, go to www. epa. gov/ oppfead1/ cb/ csb page/ updates/ lowertox. pdf . 2. In person. The Agency has established an official record for this action under docket ID number OPP– 2002– 0069. The official record consists of the documents specifically referenced in this action, any public comments received during an applicable comment period, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period, is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305– 5805.

C. How and to Whom Do I Submit Comments?

You may submit comments through the mail, in person, or electronically. To ensure proper receipt by EPA, it is imperative that you identify docket ID number OPP– 2002– 0069 in the subject line on the first page of your response. 1. By mail. Submit your comments to: Public Information and Records Integrity Branch (PIRIB), Information Resources and Services Division (7502C), Office of Pesticide Programs (OPP), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460. 2. In person or by courier. Deliver your comments to: Public Information and Records Integrity Branch (PIRIB), Information Resources and Services Division (7502C), Office of Pesticide Programs (OPP), Environmental Protection Agency, Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The PIRIB is open from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305– 5805. 3. Electronically. You may submit your comments electronically by e mail to: opp docket@ epa. gov, or you can submit a computer disk as described in this unit. Do not submit any information electronically that you consider to be CBI. Avoid the use of special characters and any form of encryption. Electronic submissions will be accepted in WordPerfect 6.1/ 8.0/ 9.0 or ASCII file format. All comments in electronic form must be identified by docket ID number OPP– 2002– 0069. Electronic comments may also be filed online at many Federal Depository Libraries.

D. How Should I Handle CBI that I Want to Submit to the Agency?

Do not submit any information electronically that you consider to be CBI. You may claim information that you submit to EPA in response to this document as CBI by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public version of the official record. Information not marked confidential will be included in the public version of the official record without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under FOR FURTHER INFORMATION CONTACT.

E. What Should I Consider as I Prepare My Comments for EPA?

You may find the following suggestions helpful for preparing your comments: 1. Explain your views as clearly as possible. 2. Describe any assumptions that you used. 3. Provide copies of any technical information and/ or data you used that support your views. 4. If you estimate potential burden or costs, explain how you arrived at the estimate that you provide.

VerDate Aug< 23> 2002 14: 18 Aug 27, 2002 Jkt 197001 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 E:\ FR\ FM\ 28AUN1. SGM 28AUN1 55253 Federal Register / Vol. 67, No. 167 / Wednesday, August 28, 2002 / Notices 5. Provide specific examples to illustrate your concerns. 6. Offer alternative ways to improve the notice or collection activity. 7. Make sure to submit your comments by the deadline in this notice. 8. To ensure proper receipt by EPA, be sure to identify the docket control number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and Federal Register citation.

II. What Action is EPA Taking? In the Federal Register of June 13, 2002 (67 FR 40732) (FRL– 7177– 9), EPA published a notice of availability soliciting comments on a document `` methodology for determing the data needed and the types of assessments necessary to make FFDCA section 408 safety determinations for lower toxicity pesticide chemicals. '' In response to a request for an extension, EPA is extending the comment period for 30 days, from September 11, 2002 to October 11, 2002. The methodology is available on the Agency's Web site at www. epa. gov/ oppfead1/ cb/ csb page/ updates/ lowertox. pdf.

List of Subjects Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests.

Dated: August 22, 2002. Deborah Edwards, Acting Director, Registration Division, Office of Pesticide Programs. [FR Doc. 02– 21937 Filed 8– 27– 02; 8: 45 am]

BILLING CODE 6560– 50– S ENVIRONMENTAL PROTECTION AGENCY [OPP– 2002– 0165; FRL– 7190– 5]

Pesticides; Guidance for Pesticide Registrants on Submitting Requests for Threshold of Regulation (TOR) Decisions and Standard Operating Procedures (SOP) for Making TOR Decisions AGENCY: Environmental Protection Agency (EPA). ACTION: Notice.

SUMMARY: The Agency is announcing the availability of Pesticide Registration Notice 2002– 2 (PR Notice) Entitled `` Guidance for Submitting Requests for Threshold of Regulation (TOR) Decisions. '' The Office of Pesticide Programs (OPP) issues PR Notices to inform pesticide registrants and other interested persons about important policies, procedures and registrationrelated decisions and to provide guidance to pesticide registrants and OPP personnel. PR Notice 2002– 2 provides guidance concerning procedures to use when a registrant or other person wants the Agency to determine whether a use of a pesticide in a manner that has the possibility of resulting in residues in food qualifies under the Agency's October 27, 1999 `` Threshold of Regulation'' policy. If EPA concludes a use is below the threshold of regulation, no tolerance or tolerance exemption would be required. The accompanying SOP explains how the Agency will process TOR requests. FOR FURTHER INFORMATION CONTACT: Vivian Prunier, Field and External Affairs Division (7506C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (703) 308– 9341; fax number: (703) 305– 5884; e mail address: Prunier. Vivian@ epa. gov. SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me? This action is directed to the public in general. This action may, however, be of interest to those persons who are required to register pesticides under the Federal Fungicide, Insecticide and Rodenticide Act (FIFRA) or to persons who may be interested in ascertaining whether a tolerance or tolerance exemption is required under the Federal Food, Drug and Cosmetic Act (FFDCA) as a condition of FIFRA registration of a pesticide. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

B. How Can I Get Additional Information, Including Copies of this Document and Other Related Documents? 1. Electronically. You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http:// www. epa. gov/. To access this document, on the Home Page select `` Laws and Regulations, '' `` Regulations and Proposed Rules, '' and then look up the entry for this document under the `` Federal Register— Environmental Documents. '' You can also go directly to the Federal Register listings at http:// www. epa. gov/ fedrgstr/. You may view the PR Notice and the SOP described in this notice on the Office of Pesticide Programs Internet Home Page at http:// www. epa. gov/ opppmsd1/ PR Notices/. 2. In person. The Agency has established an official record for this action under docket ID number OPP– 2002– 0165. The official record consists of the documents specifically referenced in this action, any public comments received during an applicable comment period, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period, is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305– 5805.

II. Background In the Federal Register of October 27, 1999 (64 FR 57881), the Environmental Protection Agency (EPA) announced the availability of a document entitled `` Threshold of Regulation Policy — Deciding Whether a Pesticide with a Food Use Pattern Needs a Tolerance. '' The Threshold of Regulation (TOR) policy listed criteria and procedures for considering whether a tolerance is required for the use of a pesticide. A use may qualify as a TOR use if: (a) Using a reliable and appropriately sensitive analytical method to measure residues in the commodity, no residues are detected in the commodity under the expected conditions of use; and (b) using reasonably protective criteria, the estimated potential risk of any theoretically possible residues in food is not of concern. In the Federal Register of October 5, 2001 (55 FR 51040), the Agency announced the availability of, and asked for comments on, a draft PR Notice entitled `` Guidance for Submitting Requests for Threshold of Regulation (TOR) Decisions. '' The draft PR Notice would provide guidance on how to submit a request for a TOR decision and would explain how EPA will make TOR decisions in the course of pesticide VerDate Aug< 23> 2002 14: 18 Aug 27, 2002 Jkt 197001 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 E:\ FR\ FM\ 28AUN1. SGM 28AUN1


[Federal Register Volume 76, Number 165 (Thursday, August 25, 2011)]
[Notices]
[Page 53142]
[FR Doc No: 2011-21750]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4008-DR; Docket ID FEMA-2011-0001]

Kentucky; Major Disaster and Related Determinations

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This is a notice of the Presidential declaration of a major
disaster for the Commonwealth of Kentucky (FEMA-4008-DR), dated July
25, 2011, and related determinations.

DATES: Effective Date: July 25, 2011.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that, in a letter
dated July 25, 2011, the President issued a major disaster declaration
under the authority of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. 5121 et seq. (the ``Stafford
Act''), as follows:

    I have determined that the damage in certain areas of the
Commonwealth of Kentucky resulting from severe storms, tornadoes,
and flooding during the period of June 19-23, 2011, is of sufficient
severity and magnitude to warrant a major disaster declaration under
the Robert T. Stafford Disaster Relief and Emergency Assistance Act,
42 U.S.C. 5121 et seq. (the ``Stafford Act''). Therefore, I declare
that such a major disaster exists in the Commonwealth of Kentucky.
    In order to provide Federal assistance, you are hereby
authorized to allocate from funds available for these purposes such
amounts as you find necessary for Federal disaster assistance and
administrative expenses.
    You are authorized to provide Public Assistance in the
designated areas and Hazard Mitigation throughout the Commonwealth.
Consistent with the requirement that Federal assistance is
supplemental, any Federal funds provided under the Stafford Act for
Public Assistance and Hazard Mitigation will be limited to 75
percent of the total eligible costs.
    Further, you are authorized to make changes to this declaration
for the approved assistance to the extent allowable under the
Stafford Act.

    The Federal Emergency Management Agency (FEMA) hereby gives notice
that pursuant to the authority vested in the Administrator, under
Executive Order 12148, as amended, Steven S. Ward, of FEMA is appointed
to act as the Federal Coordinating Officer for this major disaster.
    The following areas of the Commonwealth of Kentucky have been
designated as adversely affected by this major disaster:

    Bell, Breathitt, Knott, Knox, Lee, Magoffin, and Perry Counties
for Public Assistance.
    All counties within the Commonwealth of Kentucky are eligible to
apply for assistance under the Hazard Mitigation Grant 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.

W. Craig Fugate,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2011-21750 Filed 8-24-11; 8:45 am]
BILLING CODE 9111-23-P