[Federal Register Volume 78, Number 242 (Tuesday, December 17, 2013)]
[Notices]
[Pages 76341-76344]
[FR Doc No: 2013-29897]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71042; File No. SR-FINRA-2013-052]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating to
Alternative Display Facility New Entrant

December 11, 2013.
    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 2, 2013, 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, II, and III below, which Items have been 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 add a new entrant to the Alternative Display
Facility (``ADF'').
    The new ADF entrant, LavaFlow (``FLOW'') has prepared a summary of
its policies and procedures regarding access to its quotations in an
NMS stock displayed on the ADF, and a summary of its proposed fees for
such access, which was filed as Exhibit 3.
    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 A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    The ADF is a quotation collection and trade reporting facility that
provides ADF Market Participants (i.e., ADF-registered market makers or
electronic communications networks (``ECNs'')) \3\ the ability to post
quotations, display orders and report transactions in NMS stocks \4\
for submission to the Securities Information Processors for
consolidation and dissemination to vendors and other market
participants. In addition, the ADF delivers real-time data to FINRA for
regulatory purposes, including enforcement of requirements imposed by
SEC Regulation NMS.\5\
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    \3\ See FINRA Rule 6220(a)(3).
    \4\ See 17 CFR 242.600.
    \5\ See 17 CFR 242.600.
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    The ADF was initially approved by the Commission on July 24, 2002,
in connection with the SEC's approval of SuperMontage and Nasdaq's
registration as a national securities exchange.\6\ At that time, the
ADF was approved for Nasdaq-listed securities for a nine-month pilot
period to provide FINRA members with an alternative to the Nasdaq
systems for reporting quotations and transactions in Nasdaq UTP Plan
securities.
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    \6\ See Securities Exchange Act Release No. 46249 (July 24,
2002), 67 FR 49822 (July 31, 2002) (Order Approving File No. SR-
NASD-2002-97); see also Notice to Members 02-45 (August 2002).
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    In 2005, the Commission adopted Regulation NMS, which included the
Order Protection Rule.\7\ With the adoption of the Order Protection
Rule, Regulation NMS established trade-through protection for all NMS
stocks.\8\ Since the ADF is a display-only facility, a market
participant would have to access the actual ADF participant that posted
the protected quotation on the ADF in order to comply with the Order
Protection Rule.\9\ In the NMS Adopting Release, the Commission noted
that market participants could potentially access an ADF participant
either through direct access or through a private network.\10\
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    \7\ The Order Protection Rule provides that a trading center
``shall establish, maintain, and enforce written policies and
procedures that are reasonably designed to prevent trade-throughs on
that trading center of protected quotations in NMS stocks'' that do
not fall within one of the exceptions set forth in the rule. See 17
CFR 242.611.
    \8\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37501 (June 29, 2005) (``NMS Adopting
Release'').
    \9\ NMS Adopting Release, 70 FR at 37541.
    \10\ NMS Adopting Release, 70 FR at 37543.
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    Given that market participants could be required to access multiple
ADF participants to comply with the Order Protection Rule, the
Commission formulated Rule 610 under SEC Regulation NMS to ensure that
market participants would be afforded ``fair and efficient access'' to
such trading centers.\11\ Accordingly, Rule 610 requires that a trading
center displaying quotations in an NMS stock through an SRO display-
only facility (such as the ADF) ``provide a level and cost of access to
such quotations that is substantially equivalent to the level and cost
of access to quotations displayed by SRO trading facilities in that
stock.'' \12\ Rule 610 also requires that a trading center displaying
quotations in an NMS stock through an SRO display-only facility not
impose unfairly discriminatory terms that prevent or inhibit any person
from obtaining efficient access to such quotations through a member,
subscriber, or customer of the trading center.\13\
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    \11\ NMS Adopting Release, 70 FR at 37549.
    \12\ 17 CFR 242.610(b)(1).
    \13\ 17 CFR 242.610(b)(2).
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    In articulating this standard, the Commission noted that the level
and cost of access would ``encompass both

(1) the policies, procedures, and standards that govern access to
quotations of the trading center, and (2) the connectivity through
which market participants can obtain access and the cost of such
connectivity.'' \14\ The nature and cost of connections for market
participants seeking to access the ADF participant's quotations would
need to be substantially equivalent to the nature and cost of
connections to SRO trading facilities.\15\
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    \14\ NMS Adopting Release, 70 FR at 37549.
    \15\ NMS Adopting Release, 70 FR at 37549.
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    In evaluating whether ADF participants are meeting the access
standards under Rule 610, i.e., that the cost of accessing an ADF
participant is substantially equivalent to the cost of accessing an SRO
trading facility, the Commission stated that the NASD (now FINRA) would
act as a gatekeeper in this process. As such, FINRA would be required
to submit a proposed rule change pursuant to Section 19(b) of the Act
in order to add a new ADF participant.\16\ Since the second quarter of
2010, there have been no ADF Market Participants.
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    \16\ NMS Adopting Release, 70 FR at 37549.
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    Consistent with the requirements of Rule 610 and the NMS Adopting
Release, FINRA is submitting this proposed rule change so that FLOW may
become an ADF Market Participant. As set forth in its summary, FLOW has
proposed policies and procedures that are designed to ensure that the
level of access to its quotations is substantially equivalent to the
level of access to quotations displayed by SRO trading facilities in
that stock, and to ensure that FLOW does not impose unfairly
discriminatory terms that prevent or inhibit any person from obtaining
efficient access to such quotations.
    Specifically, firms wishing to access FLOW liquidity may connect in
a variety of ways. Firms that are FLOW subscribers may connect to FLOW
via the FLOW Smart Order Router, or through the FLOW Gateway. Non-FLOW
subscribers may connect via a third party vendor or connectivity
provider, or alternatively through an exchange or a third-party broker-
dealer subscriber. FLOW allows a subscriber to determine its level of
connectivity, and FLOW does not have any tiers or rules regarding
execution of orders based upon Market Participant Identification. No
participant is given any priority in the FLOW matching engine. One
feature of FLOW is customer anonymity from matching orders through
clearing executions, and the FLOW matching engine is blind to the
identity of the participant, with the exception of orders using the
anti-internalization feature. FLOW also has policies and procedures
that require FLOW to respond to orders by non-subscribers as promptly
as it responds to orders by subscribers, and have non-subscribers be
able to automatically execute against quotations displayed by the
system.
    As set forth in its summary, FLOW has also established, and
regularly maintains, policies and procedures designed to maintain a
linkage with at least one SRO trading facility, or SRO display-only
facility. It also has policies and procedures to transmit to such SRO
trading facility or SRO display-only facility for display either the
best priced order of those orders entered by OTC market makers and
exchange market makers for those securities in which they make markets
(or act as specialists) or the best priced orders entered by all ECN
subscribers. FLOW has policies and procedures to provide, to any broker
or dealer, access to such orders that is functionally equivalent to the
access that is generally available for quotes displayed by a SRO
trading facility or, for orders displayed in an SRO display-only
facility, a level and cost of access that is substantially similar to
the level and cost of access to quotations displayed by SRO trading
facilities in that stock. FLOW also has established and maintains
policies and procedures to conduct regular periodic system capacity
reviews and tests to ensure future capacity, and to identify potential
weaknesses and reduce the risks of system failures and threats to
system integrity. FLOW's policies and procedures also require
continuous monitoring of its connections with SRO trading facilities or
SRO display-only facilities and in the event that FLOW loses connection
with any SRO trading facility or SRO display-only facility FLOW will
cancel all quotes previously published by the system to that facility
and notify its subscribers of such interruption.
    FLOW also has policies and procedures, also set forth in its
summary, that are designed to ensure that the cost of access to its
quotations is substantially equivalent to the cost of access to
quotations displayed by SRO trading facilities in that stock, and that
FLOW will not charge a fee for accessing its quotations that exceeds
the maximum fee permitted by Rule 610 of Regulation NMS.\17\ The cost
of accessing the quotation of a trading center may consist of several
distinct costs, such as port fees, market data fees, general
connectivity fees, and transaction fees, and FLOW proposes to assess
costs in these respects that are substantially equivalent to the costs
assessed by SRO trading facilities.
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    \17\ With respect to the requirement that the nature and cost
for market participants seeking to access an ADF Trading Center need
to be substantially equivalent to the nature and cost of connection
to SRO trading facilities, FINRA notes that the Commission stated in
the NMS Adopting Release that this requirement does not apply on an
absolute basis, but rather applies on a per-transaction basis to
reflect the costs relative to the ADF participant's trading volume.
See NMS Adopting Release, 70 FR at 37549 n.449. Based on FLOW's
representations, FINRA believes that FLOW's proposed level and cost
of access to its quotations is substantially equivalent to the level
and cost of access to quotations displayed by an SRO trading
facility, both in absolute and relative terms.
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    With respect to port fees, FLOW charges port fees to subscribers
based upon the number of ports requested. FLOW provides one port per
subscriber in each of its data centers (primary and secondary) for
free, and reserves the right to charge a port fee for all subsequent
connections. Fee-eligible port connections may be charged $400 per
connection, per month. In comparison, exchange port fees on average
range from $100 to $1,000 per port, per month.\18\
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    \18\ For example, The Chicago Board Options Exchange,
Incorporated Stock Exchange (``CBSX'') assesses a fee of $100 per
month per FIX port. See http://www.cboe.com/publish/cbsxfeeschedule/cbsxfeeschedule.pdf. BATS Exchange, Inc. (``BATS'') assesses a
monthly port fee of $400 for certain ports. See http://cdn.batstrading.com/resources/regulation/rule_book/BZX_Fee_Schedule.pdf. EDGA Exchange, Inc. assesses a monthly port fee of
$500. See https://www.directedge.com/Portals/0/01Trading/EDGA%20Fee%20Schedule/2013/EDGA.11.2013.pdf. CBSX assess a fee of
$1,000 per month for a 10-gigabit network access port. Id.
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    With respect to other connectivity fees, FLOW is already connected
in its production environment to most outbound routers via intranets,
cross connects and other direct connections. FLOW has represented that
the cost to establish connections to FLOW for users of these services
and for individual firms not using these services should be
substantially the same as the costs to connect to an exchange. Both
FLOW subscribers and non-subscribers are responsible for paying for
their own external telecommunications costs to connect to FLOW, and
FLOW has represented that such fees would be equivalent to the costs to
connect to any other trading center, such as an exchange.
    With respect to market data fees, FLOW has represented that it does
not have any plans to charge its subscribers or non-subscribers for
access to FLOW's market data in either of its two forms of distribution
(TCP or multicast). In comparison, market data fees vary by exchange,
with some exchanges charging fees that range from under

$100 per month to $750 to $2,500, and some exchanges charging $5,000
for external distribution.\19\
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    \19\ For example, The NASDAQ Stock Market LLC (``Nasdaq'')
assesses a user fee of $70 per month for professional and corporate
subscribers and $14 for non-professional subscribers to its
TotalView and OpenView products for Nasdaq issues. See http://www.nasdaqtrader.com/Trader.aspx?id=DPUSdata. NYSE Arca, Inc.
charges a monthly access fee of $750 for its ArcaBook data feed. See
http://www.nyxdata.com/arcabook. BATS assesses a fee of $5,000 per
month for external distribution of its PITCH feed. See http://cdn.batstrading.com/resources/regulation/rule_book/BZX_Fee_Schedule.pdf.
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    Finally, exchanges currently charge a range of other fees,
including but not limited to membership fees, trading rights fees, risk
gateway fees and other miscellaneous fees. FLOW has represented that it
does not assess similar charges.
    With respect to the specific fees for accessing protected
quotations that it has displayed on the ADF, the FLOW fee structure is
currently a maker-taker model where FLOW pays a rebate for added
executed liquidity and charges a fee for removed liquidity. FLOW
charges a standard rate of $0.0030 to remove liquidity.\20\ Pricing is
subject to change with advance notice provided to subscribers. For non-
subscribers, notice of a price change is published to the FLOW Web site
in advance of such price change. FLOW charges subscribers and non-
subscribers the same fees for utilizing its system, and monitors the
average fee charged to non-subscribers and compares it to the average
fee paid by subscribers in order to ensure the prices are the same.\21\
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    \20\ FLOW also pays a current base rebate is $0.0024 per share
for added executed visible liquidity and $0.0010 per share of added
executed non-visible liquidity. There are increased rebate
incentives for FLOW subscribers that maintain higher volumes on a
daily basis.
    \21\ FINRA notes that these are the current fees assessed, and
rebates paid, by FLOW, and that FLOW's fees may be subject to
change. In that event that FLOW makes a material change to the
policies and procedures governing access to FLOW, including a change
to its fees, it will submit to FINRA, and FINRA will post on its Web
site, an amended description of its policies, procedures and fees
governing access.
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    All members in good standing of a self-regulatory organization
(``SRO'') are eligible to become FLOW subscribers, and will be subject
to credit limits set by FLOW. In setting a subscriber's credit limits,
FLOW considers the subscriber's financial condition and its regulatory
history.
    FINRA believes that the policies, procedures and standards
governing access to protected quotations displayed on the ADF by FLOW
are reasonably designed to provide market participants with fair and
efficient access, and are not unfairly discriminatory such that they
would prevent a market participant from obtaining efficient access to
such quotations. For example, all members in good standing of an SRO
are eligible to become FLOW subscribers, and both subscribers and non-
subscribers may access FLOW liquidity. Additionally, both subscribers
and non-subscribers have multiple options when accessing FLOW
liquidity: subscribers may use either the FLOW Smart Order Router or
the FLOW Gateway, and non-subscribers may connect to FLOW through a
third-party vendor, an exchange, or through a third-party broker-dealer
that is a subscriber. FLOW allows a subscriber to determine its level
of connectivity, and FLOW does not have any tiers or rules regarding
execution of orders based upon Market Participant Identification. No
participant is given any priority in the FLOW matching engine, and the
FLOW matching engine is blind to the identity of the participant, with
the exception of orders using the anti-internalization feature. FLOW
also has policies and procedures that require FLOW to respond to orders
by non-subscribers as promptly as it responds to orders by subscribers,
and allow for non-subscribers to be able to automatically execute
against quotations displayed by the system.
    FINRA also believes that the proposed level and cost of access is,
in relative terms, substantially equivalent to the level and cost of
access provided by SRO trading facilities. FLOW charges a standard rate
of $0.0030 to remove liquidity; in comparison, BATS assesses a $0.0030
charge per share for orders in securities priced $1 or above that
remove liquidity.\22\ Also by way of comparison, Nasdaq assesses a fee
for removing liquidity for orders in securities that are priced at or
above $1 that ranges from $0.0029 to $0.0030.\23\ FLOW provides one
port per subscriber in each of its data centers (primary and secondary)
for free, and reserves the right to charge a port fee for all
subsequent connections, which would be assessed $400 per connection,
per month. This is comparable to port fees assessed by certain
exchanges. Both FLOW subscribers and non-subscribers are responsible
for paying for their own external telecommunications costs to connect
to FLOW, and FLOW believes that these fees are equivalent to the costs
to connect to any other trading center, such as an exchange.
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    \22\ See BATS BZX Exchange Fee Schedule, available at http://cdn.batstrading.com/resources/regulation/rule_book/BZX_Fee_Schedule.pdf.
    \23\ See Nasdaq fee schedule, available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
    FINRA also notes that FLOW offers rebates that are substantially
comparable to rebates offered by SRO trading facilities. FLOW's
current base rebate is $0.0024 per share for added executed
displayed liquidity and $0.0010 per share of added executed non-
displayed liquidity. By way of comparison, BATS Exchange, Inc. pays
a standard rebate of $0.0020 rebate per share for orders in
securities priced $1 or above that add displayed liquidity, and a
rebate of $0.0017 for orders in securities priced $1 or above that,
with certain exceptions, add non-displayed liquidity. See BATS BZX
Exchange Fee Schedule, available at http://cdn.batstrading.com/resources/regulation/rule_book/BZX_Fee_Schedule.pdf. FLOW offers
increased rebate incentives for subscribers that maintain higher
volumes on a daily basis. Similarly, BATS offers a tiered rebate
structure for displayed liquidity for orders in securities priced $1
or above for members that meet certain volume thresholds.
    FINRA also notes that Nasdaq offers rebates to firms that add
displayed liquidity for orders in securities priced at or above $1
that range, with certain exceptions, from $0.0015 to $0.00305,
depending in part on whether the firm meets certain volume
thresholds. Nasdaq offers rebates to firms that add non-displayed
liquidity for orders in securities priced at or above $1 that range,
with certain exceptions, from $0.0005 to $0.0017. See Nasdaq fee
schedule, available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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    FLOW also believes that the cost to establish connections to FLOW
for users of most outbound routers via intranets, cross connects and
other direct connections, and for individual firms not using these
services, should be substantially the same as the costs to connect to
an exchange. FLOW does not charge its subscribers or non-subscribers
for access to FLOW's market data, in comparison to market data fees
assessed by exchanges, which range from under $100 per month to costs
for external distribution, for which some exchanges assess $5,000. FLOW
does not assess other charges that may be assessed by exchanges,
including membership fees, trading rights fees, risk gateway fees and
other miscellaneous fees.
    The proposal shall be effective upon Commission approval.
 2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\24\ 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, and Section 15A(b)(9) of the Act,\25\ which requires
that FINRA rules not impose any burden on competition that is not
necessary or appropriate.
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    \24\ 15 U.S.C. 78o-3(b)(6).
    \25\ 15 U.S.C. 78o-3(b)(9).
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    FINRA believes this proposal is consistent with the Act because it
is being submitted pursuant to Rule 610

and the requirements set forth in the NMS Adopting Release, which
require FINRA to submit a proposed rule change upon the addition of a
new ADF participant. This rule change is also consistent with the Act
in that it sets forth the fees, policies and procedures governing
access to protected quotations FLOW may display on the ADF, which were
identified by the Commission as central concerns surrounding the
adoption of Rule 610.
    As set forth above, FINRA believes that the policies, procedures
and standards governing access to protected quotations displayed on the
ADF by FLOW are reasonably designed to provide market participants with
fair and efficient access, and are not unfairly discriminatory such
that they would prevent a market participant from obtaining efficient
access to such quotations. FINRA also believes, as set forth above,
that the proposed level and cost of access is, in relative terms,
substantially equivalent to the level and cost of access provided by
SRO trading facilities.

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 notes that the purpose of
this filing is to provide for the opportunity for public notice and
comment on the addition of a new ADF entrant as required by SEC Rule
610 and the NMS Adopting Release, along with that new entrant's
proposed fees and policies and procedures for accessing protected
quotations that it may display on the ADF. As such, FINRA believes that
this filing may in fact promote competition by providing information
about the level of access provided, and fees assessed, by a new ADF
entrant.

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-2013-052 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 Number SR-FINRA-2013-052. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the 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-2013-052 and should be
submitted on or before January 7, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29897 Filed 12-16-13; 8:45 am]
BILLING CODE 8011-01-P


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    \133\ This view is also analogous to the SEC's view for
preparation of the compliance report discussed in the SEC Release.
In the SEC Release, the SEC observed that the controls necessary for
a carrying broker or dealer that engages in limited custodial
activities generally should be less complex than the controls
necessary for a carrying broker or dealer that engages in more
extensive custodial activities, so a carrying broker or dealer with
limited custodial activities should have to expend less effort to
make the statements in the compliance report regarding Internal
Control Over Compliance. See the SEC Release at 229. Similarly, the
necessary audit effort related to test controls should be less for
brokers and dealers with limited custodial activities.
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    The Board also considered commenters' views. Commenters on the
Board's proposed attestation standards generally agreed that the
proposed standards were appropriately tailored for the SEC's proposed
amendments to Rule 17a-5. Notably, when the attestation standards were
proposed, the PCAOB requested comment on whether the standards were
appropriately scalable based on the size and complexity of the broker
or dealer. Some commenters specifically agreed that the standards are
scalable, and no commenters asserted that the standards are not
scalable. Additionally, several comments on the proposed standards were
no longer relevant because of changes the SEC made when it adopted the
amendments.
    Some commenters on the proposed standards expressed concerns about
costs associated with extending the requirements for engagement quality
reviews to encompass the attestation engagements covered by these
standards. In light of the importance of the attestation engagements to
investor protection and the high level of deficiencies observed by
PCAOB inspection staff in areas that would be covered by the
attestation engagements, the Board believes that engagement quality
reviews can enhance the consistency of compliance with the SEC's rule.
An effective engagement quality review can increase the likelihood of
identifying significant engagement deficiencies before the examination
report or review report is issued. Additionally, the Board took note of
the fact that, in a February 2011 AICPA Peer Review Alert, the AICPA
designated audits of carrying brokers or dealers as a ``must select''
for peer review, recognizing the significant public interest in audits
of such firms.\134\
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    \134\ See AICPA Peer Review Alert 11-01 (February 2011).
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    Regarding the incremental costs of engagement quality reviews,
because engagement quality reviews are required for audits of financial
statements under PCAOB standards, the requirements for auditors to
coordinate their audits of the financial statements and attestation
engagements should facilitate the engagement quality review of the
attestation engagement and help mitigate incremental costs.
Furthermore, the Board anticipates that incremental costs for an
engagement quality review of an attest engagement will vary with the
nature of the attest engagement. For example, the required effort for
an engagement quality review of a review engagement generally would be
less than for an examination engagement, and the required effort for an
examination of a smaller, less complex broker or dealer generally would
be less than for a larger, more complex broker or dealer.
Applicability to Audits of Emerging Growth Companies
    The Board is adopting the attestation standards pursuant to its
authority under the Sarbanes-Oxley Act.\135\
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    \135\ Public Law 107-204, 116 Stat. 745 (2002). Under Section
101 of the Sarbanes-Oxley Act, the mission of the PCAOB is to
oversee the audit of companies that are subject to the securities
laws, and related matters, in order to protect the interests of
investors and further the public interest in the preparation of
informative, accurate, and independent audit reports. Section 103 of
the Sarbanes-Oxley Act authorizes the Board to adopt auditing
standards for use by registered public accounting firms in the
preparation and issuance of audit reports ``as required by [the] Act
or the rules of the Commission, or as may be necessary or
appropriate in the public interest or for the protection of
investors.''
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    Before rules adopted by the Board can take effect, they must be
approved by the SEC. Pursuant to Section 107(b)(3) of Sarbanes-Oxley
Act, the SEC shall approve a proposed rule if it finds that the rule is
``consistent with the requirements of [the] Act and the securities
laws, or is necessary or appropriate in the public interest or for the
protection of investors.''
    Additionally, Section 104 of the Jumpstart Our Business Startups
Act (``JOBS Act'') \136\ amended Sarbanes-Oxley Act to provide that any
additional rules adopted by the PCAOB after April 5, 2012 do not apply
to audits of emerging growth companies (``EGCs'') \137\ unless the SEC
``determines that the application of such additional requirements is
necessary or appropriate in the public interest, after considering the
protection of investors, and whether the action will promote
efficiency, competition, and capital formation''.\138\
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    \136\ Public Law 112-106, 126 Stat. 306 (2012).
    \137\ Section 3(a)(80) of the Exchange Act defines the term
``emerging growth company.''
    \138\ See Section 103(a)(3)(C) of the Sarbanes-Oxley Act (15
U.S.C. Sec.  7213(a)(3)), as amended by Section 104 of the JOBS Act,
Public Law 112-106 (2012).
---------------------------------------------------------------------------

    As previously discussed, the attestation standards will apply
solely in connection with audits of registered brokers and dealers
pursuant to SEC Rule 17a-5. PCAOB staff has discussed the applicability
of the JOBS Act to this rulemaking with the SEC staff. The PCAOB is not
aware of any EGCs that

are also registered brokers or dealers.\139\ Moreover, the reporting
regimes for registered brokers and dealers under SEC Rule 17a-5 are
separate and distinct from those for companies subject to reporting
requirements pursuant to Section 13 and 15 of the Exchange Act or for a
Securities Act registration statement. The Board defers to the SEC on
the applicability of the JOBS Act to this rulemaking and stands ready
to assist the SEC with any additional analysis that may become
necessary.
---------------------------------------------------------------------------

    \139\ PCAOB staff has reviewed the reported industry
classifications in the most recent filings of those companies and
read SEC filings of self-identified EGCs as necessary to ascertain
whether any EGCs were brokers or dealers. For those companies for
which audited financial statements were available and based on
information included in the most recent audited financial statements
filed as of May 15, 2013, PCAOB staff has observed that none of the
EGCs is a broker or dealer.
---------------------------------------------------------------------------

Effective Date
    The attestation standards will be effective, subject to approval by
the SEC, for examination engagements and review engagements for fiscal
years ending on or after June 1, 2014. This effective date coincides
with the effective date for the corresponding amendments to SEC Rule
17a-5.\140\
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    \140\ See the SEC Release at 2.
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III. Date of Effectiveness of the Proposed Rules and Timing for
Commission Action

    The proposed rules discussed in this release are related to the
proposed rules discussed in SEC Release No. 34-70843 (the ``proposed
rules relating to Auditing Standard No. 17''). Because the PCAOB has
requested that the Commission determine that the proposed rules
relating to Auditing Standard No. 17 apply to audits of emerging growth
companies, the Commission has determined to extend to February 13, 2014
the date by which the Commission should take action on those proposed
rules. Pursuant to Section 19(b)(2)(A)(ii) of the Exchange Act, and
based on its determination that an extension of the period set forth in
Section 19(b)(2)(A)(i) of the Exchange Act is appropriate, the
Commission has also determined to extend to February 13, 2014 the date
by which the Commission should take action on the proposed rules
discussed in this release.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed
rules are consistent with the requirements of Title I of the Sarbanes-
Oxley 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/pcaob.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number PCAOB-2013-01 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 Number PCAOB-2013-01. 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/pcaob.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rules that are filed
with the Commission, and all written communications relating to the
proposed rules 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, on official business days
between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing
will also be available for inspection and copying at the principal
office of the PCAOB. All comments received will be posted without
charge; we do 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. PCAOB-
2013-01 and should be submitted on or before December 6, 2013.

By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27344 Filed 11-14-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Notices]
[Pages 71715-71716]
[FR Doc No: 2016-25157]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-3140-024.
    Applicants: Inland Empire Energy Center, LLC.
    Description: Clarification to September 9, 2016 Supplement to June
28, 2016 Triennial Market Power Analysis of Inland Empire Energy
Center, LLC.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5345.
    Comments Due: 5 p.m. ET 11/1/16.

    Docket Numbers: ER16-2222-002.
    Applicants: Alcoa Power Generating Inc.
    Description: Tariff Amendment: Amendment to Initial Long Sault
Division Open Access Transmission Tariff to be effective 10/1/2016.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5273.
    Comments Due: 5 p.m. ET 10/24/16.

    Docket Numbers: ER16-2223-002.
    Applicants: Alcoa Power Generating Inc.
    Description: Tariff Amendment: Amendment to Initial Tapoco Division
Open Access Transmission Tariff to be effective 10/1/2016.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5277.
    Comments Due: 5 p.m. ET 10/24/16.

    Docket Numbers: ER16-2639-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Report Filing: Supplement to Filing in Docket No.
ER16-2639 to be effective N/A.
    Filed Date: 9/27/16.
    Accession Number: 20160927-5129.
    Comments Due: 5 p.m. ET 10/18/16.

    Docket Numbers: ER17-56-000.
    Applicants: Macquarie Energy LLC.
    Description: Sec.  205(d) Rate Filing: Revised MBR Tariff to be
effective 10/12/2016.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5253.
    Comments Due: 5 p.m. ET 11/1/16.

    Docket Numbers: ER17-57-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Errata to ER16-1737 to
Clarify Rev to Definitions Sections in OATT, OA and RAA to be effective
12/12/2016.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5254.
    Comments Due: 5 p.m. ET 11/1/16.

    Docket Numbers: ER17-58-000.
    Applicants: NorthWestern Corporation.
    Description: Compliance filing: Order Nos. 827 and 828 Combined
Compliance Filing (South Dakota OATT) to be effective 10/14/2016.
    Filed Date: 10/11/16.
    Accession Number: 20161011-5297.
    Comments Due: 5 p.m. ET 11/1/16.

    Docket Numbers: ER17-59-000.
    Applicants: Southern California Edison Company.
    Description: Sec.  205(d) Rate Filing: Updates to Service Agreement
Nos. 622 and 623 for the Portal Ridge Solar Project to be effective 10/
13/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5048.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-60-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Sec.  205(d) Rate Filing: SPP-MISO JOA Ministerial
Filing to Correct Attachment 1 Section 7 Appendix C to be effective 7/
25/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5054.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-61-000.
    Applicants: New York Independent System Operator, Inc.
    Description: Compliance filing: Compliance filing--Order Nos. 827
828--pro forma LGIA, SGIA to be effective 10/13/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5072.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-62-000.
    Applicants: Otter Tail Power Company.
    Description: Sec.  205(d) Rate Filing: Filing of Certificate of
Concurrence to be effective 1/1/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5073.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-63-000.
    Applicants: ORNI 47 LLC.
    Description: Sec.  205(d) Rate Filing: ORNI 47 Shared Facilities
Agreement to be effective 12/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5078.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-64-000.
    Applicants: ORNI 47 LLC.
    Description: Sec.  205(d) Rate Filing: ORNI 47 Co-Tenancy Agreement
to be effective 12/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5079.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-65-000.
    Applicants: ORNI 37 LLC.
    Description: Sec.  205(d) Rate Filing: ORNI 37 Shared Facilities
Agreement to be effective 12/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5080.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-66-000.
    Applicants: ORNI 37 LLC.
    Description: Sec.  205(d) Rate Filing: ORNI 37 Co-Tenancy Agreement
to be effective 12/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5083.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-67-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Sec.  205(d) Rate Filing: 2016-10-12_Reorganization of
Module C Section 40.3.3 to be effective 11/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5087.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-68-000.
    Applicants: ISO New England Inc., New England Power Pool
Participants Committee.
    Description: Sec.  205(d) Rate Filing: Market Rule 1 Revisions to
Increase Resource Dispatchability to be effective 12/12/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5088.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-68-001.
    Applicants: ISO New England Inc., New England Power Pool
Participants Committee.
    Description: Tariff Amendment: Market Rule 1 Revisions to Increase
Resource Dispatchability--Part 2 to be effective 6/1/2020.

    Filed Date: 10/12/16.
    Accession Number: 20161012-5141.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-69-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Original WMPA SA No. 4563,
Queue Position AA2-048 to be effective 9/22/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5089.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-70-000.
    Applicants: KCP&L Greater Missouri Operations Company.
    Description: Tariff Cancellation: cancellation filing to be
effective 10/13/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5090.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-72-000.
    Applicants: Kansas City Power & Light Company.
    Description: Tariff Cancellation: cancellation filing to be
effective 12/11/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5102.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-73-000.
    Applicants: Western Interconnect LLC.
    Description: Sec.  205(d) Rate Filing: Revision Filing to be
effective 12/1/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5113.
    Comments Due: 5 p.m. ET 11/2/16.

    Docket Numbers: ER17-74-000.
    Applicants: Western Interconnect LLC.
    Description: Initial rate filing: Initial OATT to be effective 12/
1/2016.
    Filed Date: 10/12/16.
    Accession Number: 20161012-5143.
    Comments Due: 5 p.m. ET 11/2/16.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: October 12, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-25157 Filed 10-17-16; 8:45 am]
 BILLING CODE 6717-01-P