[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Notices]
[Pages 44064-44065]
[FR Doc No: 2011-18497]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64901; File No. SR-BYX-2011-015]

Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Make
Certain Changes Consistent With the Upcoming Implementation of the
Market Access Rule

 July 18, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 12, 2011, BATS Y-Exchange, Inc. (``BYX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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 BYX Rule 11.13 to make certain
changes consistent with the upcoming implementation of the adoption of
Rule 15c3-5 under the Act (the ``Market Access Rule'').\5\
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    \5\ 17 CFR 240.15c3-5.
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    The text of the proposed rule change is available at the Exchange's
Web site at http://www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    On November 3, 2010, the Commission adopted the Market Access
Rule,\6\ pursuant to which, among other things, broker-dealers
providing market access are required to implement certain pre-order
entry checks in order to manage the financial, regulatory, and other
risks associated with providing its customers with market access. In
anticipation of the upcoming July 14, 2011 compliance date for the
Market Access Rule, the Exchange is proposing to amend BYX Rule 11.13
to describe the manner in which the Exchange's affiliated routing
broker-dealer, BATS Trading, Inc. (``BATS Trading'') will handle
routable orders consistent with the Market Access Rule.
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    \6\ See Securities Exchange Act Release No. 63241 (November 3,
2010), 75 FR 69792 (November 15, 2010).
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    In order to comply with the Market Access Rule, BATS Trading
proposes to implement, certain tests, on both an order-by-order basis
and over a short period of time, that are designed to limit the
financial exposure that could arise as a result of market access and to
ensure compliance with all regulatory requirements that are applicable
in connection with market access. Consistent with the requirements of
the Market Access Rule, these tests are designed to reject orders that
BATS Trading deems to be erroneous or duplicative, would cause the
entering Member's credit exposure to exceed a preset credit threshold,
or are non-compliant with applicable pre-trade regulatory requirements
(as defined in the Market Access Rule). To the extent BATS Trading
determines, based on its procedures, that an order should be rejected,
BATS Trading may also seek to cancel orders that have already been
routed away.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\7\ In particular, the
proposed change is consistent with Section 6(b)(5) of the Act,\8\
because it would promote just and equitable principles of trade, and,
in general, protect investors and the public interest. The proposed
rule is consistent with the requirements of the Act because the change
is necessary for the Exchange's affiliated broker-dealer, BATS Trading,
to comply with the Market Access Rule. The Exchange also believes that
the proposed changes will benefit Members of the Exchange because it
provides clarity on the procedures employed by BATS Trading consistent
with the Market Access Rule.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes
any burden on competition.

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

    No written comments were solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date

of filing.\11\ However, Rule 19b-4(f)(6)(iii) \12\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
notes that waiving the 30-day operative delay will allow BATS Trading
to comply with Rule 15c3-5 under the Act by July 14, 2011; \13\ the
compliance date for Rule 15c3-5. For this reason, the Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest, and designates the
proposed rule change to be operative upon filing with the
Commission.\14\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of filing
of the proposed rule change, or such shorter time as designated by
the Commission. The Exchange has satisfied this requirement.
    \12\ Id.
    \13\ 17 CFR 240.15c3-5.
    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 e-mail to<EMAIL_ADDRESS>Please include
File No. SR-BYX-2011-015 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-BYX-2011-015. This file
number should be included on the subject line if e-mail 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 changes 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
am and 3 pm. Copies of such filing will also be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-BYX-2011-015 and should be
submitted on or before August 12, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18497 Filed 7-21-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 20 (Wednesday, January 30, 2013)]
[Notices]
[Pages 6379-6382]
[FR Doc No: 2013-01932]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68721; File No. SR-NASDAQ-2013-008]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 5710

January 24, 2013.
    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 January 10, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II, below, which Items have been prepared by the Exchange. 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 the
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 5710 so that the Exchange may
list Linked Securities \3\ that provide for three times accelerated
payment at maturity. The Exchange requests that the Commission waive
the 30-day operative delay period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\4\ The text of the proposed rule change is available at
http://nasdaq.cchwallstreet.com/, at the Exchange's principal office,
and at the Commission's Public Reference Room.
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    \3\ For a discussion of Linked Securities, see Rule 5710.
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant 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 purpose of this proposed rule change is to amend Rule 5710(d)
so that the Exchange may list Linked Securities that provide for three
times accelerated payment at maturity.\5\ In changing one word in Rule
5710, the Exchange is conforming its rule to the established listing
rules of other exchanges.
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    \5\ The proposal is applicable only to non-option products.
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    This proposed amendment to Rule 5710(d) is based, word-for-word, on
NYSE Arca (``Arca'') Equities Rule 5.2(j)(6)(A)(d) and NYSE Section
703.22(B)(6) of the Listed Company Manual. NASDAQ, Arca, and NYSE all
have rule provisions stating that pursuant to Rule 19b-4(e) under the
Act \6\ a loss or negative payment at maturity of a Linked Security \7\
may be accelerated by a multiple of the performance of an underlying
asset (known as the ``acceleration provision''). However, in Rule 5710
NASDAQ sets the multiple for the acceleration provision at ``twice'';
\8\ whereas Arca and NYSE both set the acceleration

provision multiple at ``three times''.\9\ Other than changing one
word--from ``twice'' to ``three times''--in the Exchange's acceleration
provision in Rule 5710(d), no other change is proposed or made by this
filing.\10\
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    \6\ 17 CFR 240.19b-4(e).
    \7\ Where NASDAQ refers to ``Linked Securities'' in its Rule
5710, NYSE and Arca refer to these products as ``Index-Linked
Securities.'' On all exchanges, Linked Securities are based on the
performance of various Reference Assets. For a more detailed
discussion of Reference Assets, see Rule 5710.
    \8\ See Rule 5710(d). See also Securities Exchange Act Release
Nos. 59663 (March 31, 2009), 74 FR 15552 (April 6, 2009) (SR-NASDAQ-
2009-018) (notice of filing and immediate effectiveness relating to
revisions and restructuring of the NASDAQ listing rules, and
transference of Rule 5710(d) from Rule 4420(m)); and 57269 (February
5, 2008), 73 FR 8092 (February 12, 2008) (SR-NASDAQ-2008-08) (order
approving listing standards in Rule 4420(m) to allow twice (2x) the
performance of the underlying index, indexes, or Reference Asset).
    \9\ See Arca Equities Rule 5.2(j)(6) and NYSE Section
703.22(B)(6) of the Listed Company Manual. See also Securities
Exchange Act Release Nos. 59332 (January 30, 2009), 74 FR 6338
(February 6, 2009) (SR-NYSEArca-2008-136) (order approving listing
standards in NYSE Arca Equities Rule 5.2(j)(6) to allow three times
(3x) the performance of the underlying Reference Asset); and 61230
(December 23, 2009), 74 FR 69163 (December 30, 2009) (SR-NYSE-2009-
124) (order approving three times (3x) the performance in NYSE
Section 703.22 of the Listed Company Manual, similarly to Arca
Equities Rule 5.2(j)(6)).
    \10\ In recently approving rule changes to allow listings on
NASDAQ that are allowed on Arca by rule, the Commission noted that
it ``has previously approved substantively identical listing
standards for the listing and trading of the Subject Securities on
NYSE Arca.'' See Securities Exchange Act Release No. 66648 (March
23, 2012), 77 FR 19428 (March 30, 2012) (SR-NASDAQ-2012-013).
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    The current requirements for listing Linked Securities, which
include Multifactor Index-Linked Securities, Equity Index-Linked
Securities, Commodity-Linked Securities, Fixed Income Index-Linked
Securities and Futures-Linked Securities, are set forth in Rule 5710.
This rule states that NASDAQ will consider Linked Securities for
listing and trading pursuant to Rule 19b-4(e) under the Act, provided
the following requirements are met: \11\
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    \11\ However, Rule 5710 provides that if Linked Securities do
not otherwise meet the Rule 19b-4(e) standards set forth in the
rule, NASDAQ may submit a rule filing pursuant to Section 19 of the
Act to permit the listing and trading of Linked Securities.
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    (a) Both the issue and the issuer of such security meet the
criteria for other securities set forth in Rule 5730(a), except that if
the security is traded in $1,000 denominations or is redeemable at the
option of holders thereof on at least a weekly basis, then no minimum
number of holders and no minimum public distribution of trading units
shall be required;
    (b) The issue has a term of not less than one (1) year and not
greater than thirty (30) years;
    (c) The issue must be the non-convertible debt of the Company;
    (d) The payment at maturity may or may not provide for a multiple
of the direct or inverse performance of an underlying index, indexes or
Reference Asset; however, in no event will a loss (negative payment) at
maturity be accelerated by a multiple that exceeds twice the
performance of an underlying index, indexes or Reference Asset;
    (e) The Company will be expected to have a minimum tangible net
worth in excess of $250,000,000 and to exceed by at least 20% the
earnings requirements set forth in Rule 5405(b)(1)(A); \12\
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    \12\ Subsection (e) states also, in relevant part, regarding
minimum tangible net worth: ``In the alternative, the Company will
be expected: (i) To have a minimum tangible net worth of
$150,000,000 and to exceed by at least 20% the earnings requirement
set forth in Rule 5405(b)(1)(A), and (ii) not to have issued
securities where the original issue price of all the Company's other
index-linked note offerings (combined with index-linked note
offerings of the Company's affiliates) listed on a national
securities exchange exceeds 25% of the Company's net worth. Rule
5710(e).'' [sic]
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    (f) The Company is in compliance with Rule 10A-3 under the Act;
    (g) Certain Maintenance and Dissemination standards must be
satisfied.\13\
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    \13\ Subsection (g) states, regarding Maintenance and
Dissemination: ``(i) If the index is maintained by a broker-dealer,
the broker-dealer shall erect a ``firewall'' around the personnel
who have access to information concerning changes and adjustments to
the index and the index shall be calculated by a third party who is
not a broker-dealer. (ii) Unless the Commission order applicable
under paragraph (k) hereof provides otherwise, the current value of
the index or the Reference Asset (as applicable) will be widely
disseminated at least every 15 seconds during Nasdaq's regular
market session, except as provided in the next clause (iii). (iii)
The values of the following indexes need not be calculated and
widely disseminated at least every 15 seconds if, after the close of
trading, the indicative value of the Equity Index-Linked Security
based on one or more of such indexes is calculated and disseminated
to provide an updated value: CBOE S&P 500 BuyWrite Index(sm), CBOE
DJIA Buy Write Index(sm), CBOE Nasdaq-100 BuyWrite Index(sm). (iv)
If the value of a Linked Security is based on more than one index,
then the dissemination requirement of this paragraph (g) applies to
the composite value of such indexes. (v) In the case of a Commodity-
Linked Security that is periodically redeemable, the indicative
value of the subject Commodity-Linked Security must be calculated
and widely disseminated by one or more major market data vendors on
at least a 15-second basis during Nasdaq's regular market session.''
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    Of the seven specific and extensive requirements in Rule 5710 for
listing Linked Securities pursuant to Rule 19b-4(e), the Exchange
proposes to change only the multiple by which a Linked Security payment
can be accelerated from twice to three times. Each of the other listing
requirements remains unchanged.
    The principal reason for the proposed amendment is demand for
accelerated Linked Securities. There is continuing customer demand for
having the ability to list and trade these Linked Securities products
on the Exchange, particularly as the strategies and components of these
products continue to evolve and offer access to a broader range of
asset classes.
    Prior to the commencement of trading of three times accelerated
Linked Securities, NASDAQ will inform its members in an Information
Circular of the special characteristics and risks associated with
trading such leveraged securities. In particular, the Information
Circular will discuss that leveraged Linked Securities seek returns on
a periodic basis (e.g. daily or monthly), and do not seek to achieve
their stated investment objective over a period of time greater than
one period because compounding prevents these securities from perfectly
achieving such results. Accordingly, results for leveraged Linked
Securities over periods of time greater than one period (e.g. daily or
monthly) typically will not reflect exactly the leveraged multiple of
the period return of the applicable Reference Asset benchmark, and may
differ from the multiple.\14\ NASDAQ will also inform its members of
NASDAQ Rule 2310, Recommendations to Customers (Suitability), and the
requirement that, if members recommend transactions in these leveraged
securities, they must have a reasonable basis to believe that (1) the
recommendation is suitable for a customer given reasonable inquiry
concerning the customer's investment objectives, financial situation,
needs, and any other information known by such Member, and (2) the
customer can evaluate the special characteristics, and is able to bear
the financial risks, of an investment in the securities. In addition,
FINRA has implemented increased sales practice and customer margin
requirements for FINRA members applicable to inverse, leveraged, and
inverse leveraged securities and options on such securities, as
described in FINRA Regulatory Notices 09-31 (June 2009), 09-53 (August
2009) and 09-65 (November 2009) (``FINRA Regulatory Notices''). Members
that carry customer accounts will be required to follow the FINRA
guidance set forth in the FINRA Regulatory Notices. The Information
Circular will reference the FINRA Regulatory Notices.
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    \14\ The Exchange notes that leveraged exchange trade products
are not new to the market; these products trade on NASDAQ, NASDAQ
Options Market, and various other equity, options, and futures
exchanges. Moreover, as noted 3x leveraged exchange products have
been trading on Arca for years. As such, while the concept of
leverage is not novel to the markets, the Information Circular will
be distributed to provide additional information to market
participants.
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    The Exchange believes that its surveillance procedures are adequate
to address any concerns about the trading of the securities on NASDAQ.
Trading of the securities on NASDAQ will be subject to FINRA's
surveillance procedures for derivative products.\15\ NASDAQ may obtain
information via the Intermarket Surveillance Group

(``ISG'') from other exchanges who are members or affiliates of the
ISG.\16\
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    \15\ FINRA surveils trading on NASDAQ pursuant to a regulatory
services agreement. NASDAQ is responsible for FINRA's performance
under this regulatory services agreement.
    \16\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
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    The Exchange believes that by conforming Rule 5710 to the rules of
other exchanges (e.g. Arca and NYSE) and allowing listing opportunities
on the Exchange that are already allowed by rule on other exchanges,
the proposal would offer another venue for listing and trading the
Linked Securities products and thereby promote competition. For the
noted reasons, the Exchange proposes to change the acceleration
provision in its Rule 5710 to exactly match, as described above, what
is available on other exchanges.\17\
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    \17\ No other changes are made or intended by this filing and
existing listing and trading rules continue to be applicable to
leveraged Linked Securities.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \18\ in general, and furthers the objectives of Section
6(b)(5) of the Act \19\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest. For the reasons noted in the filing, the Exchange proposes to
change the acceleration provision in its Rule 5710 from a two times to
a three times multiple of the performance of the underlying asset. This
exactly matches what is available on other exchanges. The Exchange
believes that by conforming Rule 5710 to the rules of other exchanges
(e.g. Arca and NYSE) and allowing listing opportunities on the Exchange
that are already allowed by rule on other exchanges, the proposal would
offer another venue for listing and trading the Linked Securities
products and thereby promote broader competition among exchanges.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
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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. To the contrary, where the
current variance in the rules of the exchanges limits competition, the
proposal will allow listing additional Linked Securities on the
Exchange, thereby promoting increased competition across markets and
liquidity on the Exchange.

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

    The foregoing proposed rule change may take effect upon filing with
the Commission pursuant to Section 19(b)(3)(A) \20\ of the Act and Rule
19b-4(f)(6)(iii) thereunder \21\ because the foregoing proposed rule
change does not: (i) Significantly affect the protection of investors
or the public interest; (ii) impose any significant burden on
competition; and (iii) become operative for 30 days from the date on
which it was filed, or such shorter time as the Commission may
designate.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has requested the Commission to waive the 30-day
operative delay period to allow the proposed rule change to become
operative upon filing.\22\ The Commission believes it is consistent
with the public interest to waive the 30-day operative delay. The
proposed rule change is substantially similar in all material respects
to Section 703.22(B)(6) of the NYSE Listed Company Manual and Arca
Equities Rule 5.2(j)(6)(A)(d), and each policy issue raised by the
proposed rule change (i) has been considered by the Commission in
approving the other exchanges' rules and (ii) is resolved in a manner
generally consistent with the approved rules. As such, the Commission
believes that the proposal presents no novel regulatory issues. Waiver
of the operative delay will allow the Exchange to list certain
securities that can already be listed and traded on other exchanges
without undue delay. Therefore, the Commission grants such waiver and
designates the proposal operative upon filing.\23\
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    \22\ As required under Rule 19b-4(f)(6)(iii), the Exchange
provided the Commission with written notice of its intent to file
the proposed rule change along with a brief description and the text
of the proposed rule change, at least five business days prior to
the date of filing of the proposed rule change, or such shorter time
as designated by the Commission.
    \23\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

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-NASDAQ-2013-008 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-NASDAQ-2013-008. 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 Web site (http://www.sec.gov/rules/sro.shtml ). Copies
of the submission, all subsequent amendments, all written statements
with respect to the proposed rule change that are filed with the
Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of NASDAQ. 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-NASDAQ-2013-008 and should be submitted on
or before February 20, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01932 Filed 1-29-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 225 (Thursday, November 21, 2013)]
[Notices]
[Pages 69918-69921]
[FR Doc No: 2013-27904]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70889; File No. SR-CBOE-2013-108]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating To Amend Rule 53.23 Related to CBSX RMM
Quoting Obligations

November 15, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 8, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. 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

    The ``Exchange'' or ``CBOE'' proposes to amend Rule 53.23 related
to CBOE Stock Exchange, LLC (``CBSX'') Remote Market-Maker (``RMM'')
quoting obligations. The text of the proposed rule change is provided
below.

(additions are italicized; deletions are [bracketed])
* * * * *

Chicago Board Options Exchange, Incorporated Rules

* * * * *

Rule 53.23 Obligations of CBSX Remote Market-Makers

    (a) No changes.
    (b) Securities Other than those to which Appointed. With respect
to securities in which it does not hold an Appointment, a CBSX
Remote Market-Maker should not engage in transactions for an account
in which it has an interest which are disproportionate in relation
to, or in derogation of, the performance of its obligations as
specified in this Rule with respect to those securities to which it
does hold an Appointment. [Whenever a CBSX Remote Market-Maker
submits a two-sided quote in a security to which it is not
appointed, it must fulfill the obligations established by this Rule
for the rest of that trading session.]
    . . . Interpretations and Policies:

    .01 No changes.
* * * * *
    The text of the proposed rule change is also available on the
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant 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 Exchange proposes to amend Rule 53.23 related to CBSX RMM
quoting obligations. A ``CBSX Remote Market-Maker'' or ``RMM'' is a
CBSX Trading Permit Holder that has agreed to fulfill certain market-
making obligations thus qualifying for defined benefits as set forth in
the CBOE Rules.\3\ An RMM is an individual (either a Trading Permit
Holder or nominee of a Trading Permit Holder organization) who is
registered with CBSX for the purpose of making transactions as a
dealer-specialist in the CBSX electronic trading system in accordance
with the CBOE Rules. Registered RMMs are designated as specialists on
CBSX for all purposes under the Act and the rules and regulations
thereunder. RMMs may only operate in a remote capacity.\4\
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    \3\ See Rule 50.3(2). The rules in Chapters 50 through 54 of the
CBOE Rules are applicable only to the trading of non-option
securities on CBSX. Trading of non-option securities on CBSX is also
subject to the rules in Chapters 1 through 29 of the CBOE Rules to
the same extent those rules apply to the trading of the products to
which those rules apply, in some cases supplemented by the rules in
Chapters 50 through 54, except for rules that have been replaced by
rules in Chapters 50 through 54 and except where the context
otherwise requires. Appendix A to Chapters 50 through 54 lists the
rules in Chapters 1 through 29 of the CBOE rules that are applicable
to the trading of equity securities on CBSX. Where appropriate,
Appendix A also indicates that a rule in Chapters 1 through 29 has
been supplemented by a rule in Chapters 50 through 54.
    \4\ See Rule 53.20.
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    In a manner prescribed by CBSX, an RMM may select an appointment
(having the obligations of Rule 53.23) in one or more non-option
securities traded on CBSX.\5\ Under Rule 53.23, RMMs must, among other
things:
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    \5\ See Rule 53.22. CBSX may also appoint a RMM in one or more
non-option securities trading on CBSX, giving attention to (1) the
preference of registrants; (2) the maintenance and enhancement of
competition among RMMs in each security; and (3) whether the
financial resources available to an RMM enable it to satisfy the
obligations set forth in Rule 53.23 with respect to each security in
which it holds an appointment.
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     Enter into transactions that constitute a course of
dealings reasonably calculated to contribute to the maintenance of a
fair and orderly market;
     not enter into transactions or make bids or offers that
are inconsistent with such a course of dealings;
     with respect to each security for which it holds an
appointment, continuously engage in, to a reasonable degree under the
existing circumstances, dealings for its own account when there exists,
or it is reasonably anticipated that there will exist, a lack of price
continuity, or a temporary disparity between the supply of and demand
for a particular security;
     compete with other CBSX Market-Makers to improve markets;
     make markets which, absent changed market conditions, will
be honored for the number of shares entered into the CBSX electronic
trading system;
     engage in trading activity of which at least 75% of its
total dollar amount traded on CBSX is in securities to which it has an
appointment;
     with respect to securities in which an RMM does not hold
an appointment, not engage in transactions for an account in which it
has an interest that are disproportionate in relation to, or in
derogation of, the performance of its obligations with respect to those
securities in which it does hold an appointment;
     satisfy RMM obligations in a security in which it does not
hold an appointment whenever an RMM submits a two-sided quote in that
security for the rest of the trading session; and
     comply with two-sided and minimum size obligations and
pricing obligations for bids and offers.
    The proposed rule change amends Rule 53.23 to eliminate the
requirement that a RMM fulfill the obligations established by Rule
53.23 when it submits a two-sided quote in a security to which it is
not appointed for the rest of the trading session. The Exchange
believes it is an unnecessary burden to impose these obligations on
RMMs with respect to securities in which they do not hold appointments
because they do not receive any corresponding benefits. RMMs only
qualify for defined benefits in exchange for fulfillment of market-
making obligations in their appointments. The Exchange believes the
elimination of an obligation with no benefit that accompanies quoting
in non-appointments will incentivize RMMs to submit quotes in non-
appointments, which will provide additional liquidity and enhance
competition in those non-appointments. CBSX will retain the ability to
appoint RMMs in order to maintain a fair and orderly market.\6\ RMMs
will continue to be subject to the same obligations set forth in Rule
53.23, and receive the same defined benefits, with respect to their
appointments, including the obligation to maintain continuous two-sided
quotes in their appointments and contribute to the maintenance of a
fair and orderly market.
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    \6\ CBSX also retains the authority under Rule 53.22(a) to
suspend or terminate any RMM appointment if it is in the interest of
a fair and orderly market.
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    The Exchange notes that other self-regulatory organizations with
substantially similar market-maker quoting obligations do not require
market-makers to fulfill those quoting obligations in securities in
which they submit quotes but do not hold appointments.\7\
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    \7\ See, e.g., BATS Exchange, Inc. Rule 11.8; Chicago Stock
Exchange, Inc. Article 16, Rule 8; and National Stock Exchange, Inc.
Rule 11.8.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\8\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \9\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the

proposed rule change is consistent with the Section 6(b)(5) \10\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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    In particular, the proposed rule change removes impediments to a
free and open market, because it will incentivize RMMs to submit quotes
in non-appointments by eliminating an obligation that accompanies that
quoting, which will provide additional liquidity and enhance
competition in those securities. CBSX will still have authority to
suspend or terminate RMM appointments in the interest of a fair and
orderly market, including if necessary to prevent fraudulent and
manipulative acts and practices and protect investors or if an RMM does
not satisfy its obligations with respect to its appointments.
Additionally, the Exchange notes that other self-regulatory
organizations with substantially similar market-maker quoting
obligations do not impose a quoting obligation on market-makers in
securities in which they submit quotes but do not hold
appointments.\11\ The Exchange also notes that the proposed rule change
does not result in unfair discrimination, as it applies to all RMMs.
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    \11\ See supra note 7.
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    The Exchange believes that the rules applicable to CBSX RMMs will
continue to provide an appropriate balance between obligations and
benefits of RMMs. The proposed rule change eliminates an obligation of
RMMs that has no accompanying benefit in non-appointments. RMMs only
qualify for defined benefits in exchange for fulfillment of market-
making obligations in their appointments. The proposed rule change has
no impact on these obligations and corresponding benefits within RMM
appointments, which remain in the same balance. RMMs must still comply
with the same obligations set forth in Rule 53.23 and will receive the
same benefits for fulfillment of those obligations with respect to
their appointments, which the Exchange believes will continue to ensure
continuous, two-sided quotations in their appointments. CBSX will
retain the authority to make RMM appointments in securities in the
interest of a fair and orderly market. The proposed rule change only
eliminates an obligation with respect to RMM non-appointments, which
obligation has no corresponding benefit. The Exchange believes it is
unduly burdensome to continue to impose this obligation on RMMs if they
receive nothing in return for fulfillment of the obligation and further
believes this obligation reduces the incentive of RMMs to quote in non-
appointments. Thus, the proposed rule change maintains the current
balance between obligations and benefits of RMMs within their
appointments and eliminates the imbalance between obligations and
benefits of RMMs within their non-appointments.

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

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act because it provides the same
relief to a group of similarly situated market participants--RMMs. The
proposed rule change eliminates an obligation of RMMs that has no
corresponding benefit within their non-appointments. All RMMs will be
relieved of this unduly burdensome obligation but must still comply
with the remaining obligations set forth in Rule 53.23 to receive the
corresponding defined benefits within their appointments, which the
Exchange believes will continue to ensure continuous, two-sided
quotations in their appointments.
    The Exchange notes that other self-regulatory organizations with
substantially similar market-maker quoting obligations do not require
market-makers to fulfill those quoting obligations in securities in
which they submit quotes but do not hold appointments.\12\ The Exchange
does not believe the proposed rule change will help RMMs to the
detriment of market participants on other exchanges. Rather, the
Exchange believes that continuing to impose the quoting obligation that
the Exchange proposes to eliminate will be detrimental to RMMs. It is
unduly burdensome to require RMMs to satisfy an obligation for which
they receive no benefits and to which market-makers at other exchanges
with otherwise similar quoting obligations are not subject. RMMs will
continue to be subject to the same obligations with respect to their
appointments, which are similar to the market-making obligations within
appointments imposed by other exchanges. The proposed rule change is
merely eliminating an obligation with respect to RMMs non-appointments
to which market-makers at other exchanges are not subject. Market
participants on other exchanges are welcome to become CBSX Trading
Permit Holders and trade as RMMs on CBSX if they determine that this
proposed rule change has made CBSX more attractive or favorable.
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    \12\ See supra note 7.
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    CBOE believes that the proposed rule change will relieve any burden
on, or otherwise promote, competition, as it will relieve RMMs of a
quoting obligation that has no corresponding benefits within their non-
appointments. The Exchange believes this will incentivize RMMs to
submit quotes in non-appointments, which will provide additional
liquidity and enhance competition in those securities.

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

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

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) \14\ thereunder. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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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-CBOE-2013-108 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-CBOE-2013-108. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal offices of the Exchange.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-CBOE-2013-108,
and should be submitted on or before December 12, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27904 Filed 11-20-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: November 17, 2008 (Volume 73, Number 222)]
[Notices]
[Page 67866]
[DOCID:fr17no08-61]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER09-172-000]

Canandaigua Power Partners, LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

November 10, 2008.
    This is a supplemental notice in the above-referenced proceeding of
Canandaigua Power Partners, LLC's application for market-based rate
authority, with an accompanying rate tariff, noting that such
application includes a request for blanket authorization, under 18 CFR
part 34, of future issuances of securities and assumptions of
liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure (18 CFR 385.211 and
385.214). Anyone filing a motion to intervene or protest must serve a
copy of that document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is December 1, 2008.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://
www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First St., NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list.
    They are also available for review in the Commission's Public
Reference Room in Washington, DC. There is an eSubscription link on the
Web site that enables subscribers to receive e-mail notification when a
document is added to a subscribed docket(s). For assistance with any
FERC Online service, please e-mail<EMAIL_ADDRESS>or call
(866) 208-3676 (toll free). For TTY, call<PHONE_NUMBER>.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
 [FR Doc. E8-27194 Filed 11-14-08; 8:45 am]

BILLING CODE 6717-01-P


analysis only when small entities will be subject to the requirements of
the rule.  See, Michigan v. EPA, 213 F.3d 663, 668-69 (D.C. Cir., 2000),
cert. den., 532 U.S. 903 (2001).  This rule would not establish
requirements applicable to small entities. Instead, this rule provides
the criteria necessary for State, local, or Tribal air quality agencies
to meet in order to properly flag data as being influenced by an
exceptional or natural event.  The rule also provides information
concerning what action should be taken by a State, local, or Tribal air
quality agency to protect public health during and following an
exceptional or natural event.  Because affected States would have
discretion to implement controls on sources that may need to be
regulated due to anthropogenic contribution in the area determined to be
influenced by an exceptional or natural event, EPA could not predict the
effect of the rule on small entities.

	After considering the economic impacts of this final rule on small
entities, I certify that this rule will not have a significant economic
impact on a substantial number of small entities.

	Unfunded Mandates Reform Act

	Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law
104-4, establishes requirements for Federal Agencies to assess the
effects of their regulatory actions on State, local and Tribal
governments and the private sector.  Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with “Federal mandates” that
may result in expenditures to State governments, in the aggregate, or to
the private sector, of $100 million or more in any 1 year.  Before
promulgating an EPA rule for which a written statement is needed,
section 205 of the UMRA generally requires EPA to identify and consider
a reasonable number of regulatory alternatives and adopt the least
costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule.  The provisions of section 205 do
not apply when they are inconsistent with applicable law.  Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation of why that
alternative was not adopted.  Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including Tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan.  The plan must
provide for notifying potentially affected small governments to have
meaningful and timely input in the development of EPA regulatory
proposals with significant Federal intergovernmental mandates, and
informing, educating, and advising small government on compliance with
regulatory requirements.

	We have determined that this rule does not contain a Federal mandate
that may result in expenditures of $100 million or more for State,
local, and Tribal governments, in the aggregate, or the private sector
in any 1 year.  This action simply provides the criteria for State,
local, or Tribal air quality agencies to flag data to be discounted for
regulatory purposes that is being influenced by exceptional or natural
events.  Thus, this rule is not subject to the requirements of sections
202, 203, and 205 of the UMRA.

	Executive Order 13132: Federalism

	Executive Order 13132, entitled “Federalism” (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
“meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.”
“Policies that have federalism implications” is defined in the
Executive Order to include regulations that have “substantial direct
effects on the States, or the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.”

	This final rule does not have federalism implications.  It will not
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government, as
specified in Executive Order 13132.  The CAA establishes the scheme
whereby States take the lead in developing plans to meet the NAAQS.
Thus, Executive Order 13132 does not apply to this rule.

	Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments

	Executive Order 13175, entitled “Consultation and Coordination with
Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires
EPA to develop an accountable process to ensure “meaningful and timely
input by Tribal officials in the development of regulatory policies that
have Tribal implications.”  This final rule does not have “Tribal
implications” as specified in Executive Order 13175.  The rule
provides information concerning what action should be taken by a State,
local, or Tribal air quality agency implementing relevant air quality
programs to protect public health once EPA has provided a concurrence on
data that has been flagged as being influenced by an exceptional or
natural event.  The CAA and the Tribal Authority Rule (TAR) give Tribes
the opportunity to develop and implement CAA programs, but it leaves to
the

discretion of the Tribe whether to develop these programs and which
programs, or appropriate elements of a program, the Tribe will adopt.

	This rule does not have Tribal implications as defined by Executive
Order 13175.  It does not have a substantial direct effect on one or
more Indian Tribes, because no Tribe has implemented an air quality
management program related to the PM or the 8-hour ozone NAAQS at this
time.  Furthermore, this rule does not affect the relationship or
distribution of power and responsibilities between the Federal
government and Indian Tribes.  The CAA and the TAR establish the
relationship of the Federal government and Tribes in developing plans to
attain the NAAQS, and this rule does nothing to modify that
relationship.  Because this rule does not have Tribal implications,
Executive Order 13175 does not apply.

	Executive Order 13045: Protection of Children from Environmental Health
and Safety Risks

	Executive Order 13045: “Protection of Children From Environmental
Health and Safety Risks” (62 FR 19885, April 23, 1997) applies to any
rule that (1) is determined to be “economically significant” as
defined under Executive Order 12866, and (2) concerns an environmental
health and safety risk that EPA has reason to believe may have a
disproportionate effect on children.  If the regulatory action meets
both criteria, EPA must evaluate the environmental health or safety
effects of the planned rule on children, and explain why the planned
regulation is preferable to other potentially effective and reasonably
feasible alternatives considered by EPA.

	This action is not subject to Executive Order 13045 because it is not
economically significant as defined in Executive Order 12866, and
because EPA does not have reason to believe that the environmental
health risks or safety risks addressed by this rule present a
disproportionate risk or safety risk to children.  The rule provides
information concerning what action should be taken by a State, local, or
Tribal air quality agency to protect public health once EPA has provided
a concurrence on data that has been flagged as being influenced by an
exceptional or natural event.

H. 	Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

	This rule is not a “significant energy action” as defined in
Executive Order 13211, “Actions that Significantly Affect Energy
Supply, Distribution, or Use,” (66 FR 28355, May 22, 2001) because it
is not likely to have a significant adverse effect on the supply,
distribution, or use of energy.  Further, we have concluded that this
rule is not likely to have any adverse energy effects.

	National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer Advancement Act of
1995 (NTTAA), Public Law No. 104-113, section 12(d) (15  U.S.C. 272
note) directs EPA to use voluntary consensus standards (VCS) in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impracticable.  Voluntary consensus
standards are technical standards (e.g., materials specifications, test
methods, sampling procedures, and business practices) that are developed
or adopted by VCS bodies.  The NTTAA directs EPA to provide Congress,
through OMB, explanations when EPA decides not to use available and
applicable VCS.

	This action does not involve technical standards. Therefore, EPA did
not consider the use of any VCS.

J. 	Congressional Review Act

	The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating the
rule must submit a rule report, which includes a copy of the rule, to
each House of the Congress and to the Comptroller General of the United
States.  EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register.  A major rule cannot
take effect until 60 days after it is published in the Federal Register.
This action is not a “major rule” as defined by 5 U.S.C. 804(2).
This rule will be effective [INSERT DATE 60 DAYS AFTER PUBLICATION].

K. Petitions for Judicial Review

	Under section 307(b)(1) of the CAA, petitions for judicial review of
this action must be filed in the United States Court of Appeals for the
District of Columbia Circuit by [INSERT DATE 60 DAYS AFTER DATE OF
PUBLICATION IN THE FEDERAL REGISTER].  Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review must be
filed, and shall not postpone the effectiveness of such rule or action.
This

Page 113 of 119 - Final Rule on the Treatment of Data Influenced by
Exceptional Events

action may not be challenged later in proceedings to enforce its
requirements.  See CAA Section 307(b)(2).

List of Subjects

40 CFR Part 50

Environmental protection, Air pollution control, National parks,
Wilderness areas.

40 CFR Part 51

Environmental protection, Air pollution control, Administrative practice
and procedure, Reporting and recordkeeping requirements.

Date

Stephen L. Johnson,

Administrator.

	In consideration of the foregoing, the Environmental Protection Agency
amends 40 CFR parts 50 and 51 as follows:

PART 50 - NATIONAL PRIMARY AND SECONDARY AMBIENT AIR QUALITY STANDARDS

1. The authority citation for part 50 continues to read as

follows:

Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

2. Amend §50.1 to add paragraphs (j) and

(k) 	to read as follows:

§50.1 Definitions.

* * * * *

(j) 	Exceptional event means an event that affects air quality, is not
reasonably controllable or preventable, is a natural event or an event
caused by human activity that is unlikely to recur at a particular
location, and is determined by the Administrator in accordance with 40
CFR 50.14 to be an exceptional event. It does not include stagnation of
air masses or meteorological inversions, a meteorological event
involving high temperatures or lack of precipitation, or air pollution
relating to source noncompliance.

(k) 	Natural event means an event in which human activity plays little
or no direct causal role.

(l) 	Exceedance with respect to a national ambient air quality standard
means one occurrence of a measured or modeled concentration that exceeds
the specified concentration level of such standard for the averaging
period specified by the standard.

3. Add §50.14 to read as follows:

§50.14 Treatment of air quality monitoring data influenced by
exceptional events.

(a) 	Requirements.

(1) 	A State may request EPA to exclude data showing exceedances or
violations of the national ambient air quality standard that are
directly due to an exceptional event from use in determinations by
demonstrating to EPA’s satisfaction that such event caused a specific
air pollution concentration at a particular air quality monitoring
location.

(2) 	Demonstration to justify data exclusion may include any reliable
and accurate data, but must demonstrate a clear causal relationship
between the measured exceedance or violation of such standard and the
event in accordance with paragraph (c)(3)(iii) of this section.

(b)  Determinations by EPA.

(1) 	EPA shall exclude data due to such event from use in determinations
of exceedances and NAAQS violations where a State demonstrates to
EPA’s satisfaction that an exceptional event caused a specific air
pollution concentration in excess of one or more national ambient air
quality standards at a particular air quality monitoring location and
otherwise satisfies the requirements of this section.

	[Reserved]EPA shall exclude from use in determinations of exceedances
and NAAQS violations data that has been determined to be affected by
emissions from fireworks displays in the same manner as exceptional
events under this rule, where a State demonstrates that such use of
fireworks is significantly 	integral to traditional national, ethnic, or
other cultural events including, but not limited to, July Fourth
celebrations, Chinese New Year celebrations, and Diwali, and otherwise
satisfies the requirements of this section.

  [Reserved]

(c) 	Schedules and Procedures.

(1) 	Public notification.

	(i) 	All States and, where applicable, their political subdivisions
must notify the public promptly whenever an event occurs or is
reasonably anticipated to occur which may result in the exceedance of an
applicable air quality standard.

	(ii) Reserved.

(2) 	Flagging of data.

	(i) 	A State shall notify EPA of its intent to exclude one or more
measured exceedances of an applicable ambient air quality standard as
being due to an exceptional event by placing a flag in the appropriate
field for the data record of concern in accordance with the schedules
for submission of data to the AQS data basedatabase in 40 CFR 58.16.

	(ii) Flags placed on data in accordance with this section shall be
deemed informational only, and the data shall not be excluded from
determinations with respect to exceedances or violations of the national
ambient air quality standards unless and until, following the state’s
submittal of its demonstration pursuant to (c)(3)and EPA review, EPA
notifies the State of its concurrence by placing a concurrence flag in
the appropriate field for the data record in the AQS data basedatabase.

(3) 	Submission of demonstrations.

(i) A State shall that has flagged data as being due to an exceptional
event event and shall submit an initial description of the event to EPA
not later than July 1st of the calendar year following the year in which
the flagged measurement occurred.

(ii) A State that has flagged data as being due to an exceptional event
and is requesting exclusion of the affected measurement data shall,
after notice and opportunity for public comment, submit a demonstration
to justify data exclusion to EPA not later than the lesser of, 3 years
following the end of the calendar quarter in which the flagged
concentration was recorded or, 12 months prior to the date that a
regulatory decision must be made by EPA.

	(iii) The demonstration to justify data exclusion shall provide
evidence that:

			(A) the event satisfies the criteria set forth in 40 CFR 50.1(j);

			(B) there is a clear causal relationship between the measurement
under consideration and the event that is claimed to have affected the
air quality in the area;

			(C) the event is associated with a measured concentration in excess
of normal historical fluctuations, including background; and

			(D) there would have been no exceedance or violation but for the
event.

	(iv) With the submission of the demonstration, the State must document
that the public comment process was followed and that the appropriate
mitigation occurred according to 40 CFR 51.920.

(v) Reserved.

		A.	[Reserved]

PART 51 NATIONAL PRIMARY AND SECONDARY NATIONAL AMBIENT AIR QUALITY
STANDARDS

1.  The authority citation for part 51 continues to read as

follows:

Authority: 42 U.S.C. 7401-7671.

2. 	Adding §51.920 to read as follows

§51.920

§51.920	Mitigation of Exceptional Events.

(a) 	A State requesting to exclude air quality data due to exceptional
events must take appropriate and reasonable actions to protect public
health from exceedances or violations of the national ambient air
quality standards and document such actions. At a minimum, the State
must:

	(1)	provide for prompt public notification whenever air quality
concentrations exceed or are expected to exceed an applicable ambient
air quality standard;

	(2)	provide for public education concerning actions that individuals
may take to reduce exposures to unhealthy levels of air quality during
and following an exceptional event; and

	(3) 	provide for the implementation of appropriate measures to protect
public health from exceedances or violations of ambient air quality
standards caused by exceptional events.

	[Reserved]

  The U.S. Environmental Protection Agency

      All subsequent references to section 319 of the CAA in this
proposal are to section 319 as amended by SAFE-TEA-LU unless otherwise
noted.

      While this document refers primarily to States as the entity
responsible for flagging data impacted by exceptional events, other
agencies, such as local or Tribal government agencies, may also have
standing to flag data as being affected by these types of events, and
the criteria and procedures that are discussed in this rulemaking also
apply to these entities.

      “Guideline for Interpretation of Air Quality Standards,” U.S.
Environmental Protection Agency, Office of Air Quality Planning and
Standards, Research Triangle Park, N.C. OAQPS No. 1.2-008 (Revised
February 1977). The guidance indicated the need for a data flagging
system which would require the submittal of detailed information
establishing that a violation was due to uncontrollable natural sources
and that the information could be used in decision-making related to the
feasibility of modifying

control strategies.

      Federal Register (52 FR 24667), July 1, 1987.

 Memorandum from Mary D. Nichols, Assistant Administrator for Air and
Radiation, to EPA Regional Offices entitled, “Areas Affected by PM10
Natural Events,” May 30, 1996.

      “Guideline on Data Handling Conventions for the PM NAAQS,”
United States Environmental Protection Agency, Office of Air Quality
Planning and Standards, Research Triangle Park, N.C. 27711,
EPA-454/R-98-017, December 1998.

 “Guideline on Data Handling Conventions for the 8-hour Ozone
NAAQS,” United States Environmental Protection Agency, Office of Air
Quality Planning and Standards, Research Triangle Park, N.C. 27711,
EPA-454/R-99-008,  April 1999.

  Following the promulgation of this rule, it is EPA’s intention to
begin the process to revise the “Interim Air Quality Policy on
Wildland and Prescribed Fires” in calendar year 2007 to update the
policy and to ensure that the policy is consistent with this final
rulemaking action.

 Section IV.G of the preamble to the Proposed Rule discussed special
considerations relevant to a new national ambient air quality standard
for PM10-2.5 proposed by EPA on December 20, 2005.  This proposed
standard would have drawn a distinction between coarse particles of
urban versus non-urban origin, which raised new issues about the
handling of exceedances of the coarse particle standard caused by
exceptional events.  However, in EPA’s final rule on the PM NAAQS,
issued September 21, 2006, EPA retained the existing 24-hour PM10
standard instead of promulgating the proposed PM10-2.5 standard.  Thus,
Section IV.G. of the preamble to the Proposed Rule is no longer relevant
and has been removed from this Preamble.

  EPA will be revising the list of events contained in the AQS database
following the promulgation of this rule to ensure that the list is
consistent with the requirements of this rule.

  In cases where a prescribed fire or a fire due to agricultural burning
activities meet the criteria of an exceptional event, as described in
this rulemaking, the data may also be excluded.

 Although a single qualifying exceptional event may affect air quality
for multiple days and at multiple monitors, the discussions below
consider an individual demonstration as justifying exclusion of a single
AQS data point.  EPA encourages state submittals to package
demonstrations about single exceptional events to expedite the review
process.

  It is EPA’s intention, for purposes of consistency with this rule,
to review the list of exceptional events that are currently in the AQS
database following the promulgation of the rule.

  Data influenced by exceptional or natural events will be addressed by
the exceptional events rule following the effective date of the
promulgation of this rule.  Per the requirements of section 319, the
current policies and guidance related to the handling of data influenced
by exceptional events or natural events will only be used to address
these issues until the effective date of the final rule.  In cases where
States have flagged data affected by an exceptional or natural event,
and EPA has taken action to approve or disapprove the flag, these
decisions will deemed as final.

  While EPA is requiring that States submit documentation related to the
mitigation efforts that it has taken to protect public health following
the occurrence of an event, this documentation will not be used as the
basis for EPA’s decision to approve or disapprove a State’s request
for the exclusion of data as an exceptional event.

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-States to submit documentation which shows that “severe drought”
conditions may have contributed to the occurrence of a high wind event.
The documentation must, however, be compelling enough to show that the
conditions present at the time of the event were more substantial than a
typical dry day(s) or dry season for the area in question, but were
related to severe drought conditions. EPA will review this information
and make decisions concerning the exclusion of the data related to the
event on a
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