[Federal Register: March 4, 2009 (Volume 74, Number 41)]
[Notices]
[Page 9449-9450]
[DOCID:fr04mr09-94]

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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a Closed Meeting on Thursday, March
5, 2009 at 2 p.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the Closed Meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or his designee, has
certified that, in his opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(5), (7), 9(B) and (10) and 17 CFR 200.402(a)(5),
(7), 9(ii) and (10), permit consideration of the scheduled matters at
the Closed Meeting.
    Commissioner Casey, as duty officer, voted to consider the items
listed for the Closed Meeting in closed session and determined that no
earlier notice thereof was possible.
    The subject matter of the Closed Meeting scheduled for Thursday,
March 5, 2009 will be:

Institution and settlement of injunctive actions;
Institution and settlement of administrative proceedings of an
enforcement nature;
Other matters relating to enforcement proceedings.

    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed, please contact:
    The Office of the Secretary at<PHONE_NUMBER>.

    Dated: February 26, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-4564 Filed 3-3-09; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 46 (Thursday, March 8, 2012)]
[Rules and Regulations]
[Pages 13974-13977]
[FR Doc No: 2012-5646]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R02-OAR-2011-0796, FRL-9645-4]

Approval and Promulgation of Implementation Plans; New York State
Ozone Implementation Plan Revision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is approving a
proposed revision to the New York State Implementation Plan (SIP) for
ozone concerning the control of volatile organic compounds. The
proposed SIP revision consists of amendments to Title 6 of the New York
Codes, Rules and Regulations Part 228, ``Surface Coating Processes,
Commercial and Industrial Adhesives, Sealants and Primers,'' Part 234,
``Graphic Arts,'' and Part 241, ``Asphalt Pavement and Asphalt Based
Surface Coating.'' The intended effect of this action is to approve
control strategies, required by the Clean Air Act, which will result in
emission reductions that will help attain and maintain the national
ambient air quality standards for ozone.

DATES: Effective Date: This rule will be effective April 9, 2012.

ADDRESSES: EPA has established a docket for this action under the
Federal Docket Management System (FDMS) which replaces the Regional
Materials in EDOCKET (RME) docket system. The new FDMS is located at
www.regulations.gov and the docket ID for this action is EPA-R02-OAR-
2011-0796. All documents in the docket are listed in the FDMS index.
Publicly available docket materials are available either electronically
in FDMS or in hard copy at the Environmental Protection Agency, Region
2 Office, Air Programs Branch, 290 Broadway, 25th Floor, New York, New
York 10007-1866. Copies of the documents relevant to this action are
also available for public inspection during normal business hours, by
appointment at the Air and Radiation Docket and Information Center,
Environmental Protection Agency, Room 3334, 1301 Constitution Avenue
NW., Washington, DC; and the New York State Department of Environmental
Conservation, Division of Air Resources, 625 Broadway, Albany, New York
12233.

FOR FURTHER INFORMATION CONTACT: Kirk J. Wieber, Air Programs Branch,
Environmental Protection Agency, 290 Broadway, 25th Floor, New York,
New York 10007-1866,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What was included in New York's submittals?
II. What is EPA's evaluation of part 228, ``Surface Coating
Processes, Commercial and Industrial Adhesives, Sealants and
Primers?''
III. What is EPA's evaluation of part 234, ``Graphic Arts?''
IV. What is EPA's evaluation of part 241, ``Asphalt Pavement and
Asphalt Based Surface Coating?''
V. What comments did EPA receive in response to its proposal?
VI. What is EPA's conclusion?
VII. Statutory and Executive Order Reviews

I. What was included in New York's submittals?

    On August 19, 2010 and December 15, 2010, the New York State
Department of Environmental Conservation (NYSDEC),

submitted to EPA proposed revisions to the SIP, which included state
adopted revisions to three regulations contained in Title 6 of the New
York Code of Rules and Regulations (6 NYCRR) Part 228, ``Surface
Coating Processes, Commercial and Industrial Adhesives, Sealants and
Primers,'' Part 234, ``Graphic Arts,'' and Part 241, ``Asphalt Pavement
and Asphalt Based Surface Coating'' with effective dates of September
30, 2010, July 8, 2010 and January 1, 2011, respectively. These
revisions are applicable statewide and will therefore provide volatile
organic compound (VOC) emission reductions statewide and will address,
in part, attainment of the 1997 8-hour ozone national ambient air
quality standards (NAAQS or standard) in the Poughkeepsie, Jefferson
County and the New York portion of the New York-Northern New Jersey-
Long Island, NY-NJ-CT (NYMA) moderate nonattainment areas.

II. What is EPA's evaluation of part 228, ``Surface Coating Processes,
Commercial and Industrial Adhesives, Sealants and Primers?''

    Part 228 contains the required elements for a federally enforceable
rule: emission limitations, compliance procedures and test methods,
compliance dates and record keeping provisions. In contrast to the
Control Techniques Guideline (CTG) document for Miscellaneous
Industrial Adhesives dated September 2008, Part 228 is applicable to
all stationary sources including those applications that occur outside
of the factory setting, such as applied in the field. In addition, it
includes provisions that apply to the selling, supplying, offering for
sale or manufacture for sale in New York of adhesives, sealants,
adhesive primers and sealant primers, along with container labeling
requirements and product registrations. The VOC content restrictions
for these products apply to both their manufacture and application.
Stationary sources also have the option of using add-on control
equipment provided it achieves 85 percent control. Part 228 also
regulates the VOC content/vapor pressure of surface-preparation and
clean-up solvents for which the CTG did not make recommendations other
than including work practices.
    EPA recommends that when states evaluate reasonably available
control technology (RACT), as required by section 182(b), when
implementing a revised 8-hour ozone standard, that they review the VOC
content limits for wood adhesives. This category of adhesives is
included in the CTG recommended VOC emission limits. Overall, Part 228:
(1) Regulates the same adhesives and adhesive primers as the CTG with
the addition of regulating sealants and sealant primers, (2) applies to
additional stationary sources, and (3) provides for similar exemptions
as the CTG recommends.
    EPA has evaluated New York's submittal for consistency with the
Clean Air Act, EPA regulations, and EPA policy. EPA has determined that
Part 228 is as effective in regulating this source category as the CTG
and is approving it as part of the SIP and as meeting the requirement
to adopt a RACT rule for the Miscellaneous Industrial Adhesives CTG
category.

III. What is EPA's evaluation of part 234, ``Graphic Arts?''

    Part 234 contains the required elements for a federally enforceable
rule: Emission limitations, compliance procedures and test methods,
compliance dates and record keeping provisions.
    In contrast to the two CTG documents, one for Offset Lithographic
Printing and Letterpress Printing and a second for Flexible Package
Printing, issued by EPA in September 2006, Part 234 is generally
applicable to all graphic arts facilities located in a severe ozone
nonattainment area, which includes the NYMA, or to facilities that emit
total actual annual VOC graphic arts emissions of three tons or more on
a 12-month rolling basis, which is consistent with or more stringent
than the CTG's.

Offset Lithographic Printing and Letterpress Printing

    In addition to the general revisions to Part 234, the revised
section 234.3 addresses the CTG for Offset Lithographic Printing and
Letterpress Printing. Subsections (b), (c) and (d) were added and
require more stringent emission controls. Subsection 234.3(b) requires
control equipment achieve overall removal efficiencies, i.e., 90
percent if installed prior to July 8, 2010 and 95 percent if installed
on or after July 8, 2010. Subsection 234.3(d) includes the VOC limits
for heatset web, sheet-fed and cold-set offset lithographic printing
processes. Subsection 234.3(c) limits provisions for cleaning materials
to a composite vapor pressure less than 10 mm Hg (millimeters mercury)
or VOC content of less than 70 percent by weight, with some exceptions.
In addition, section 234.6 requires best management practices for
handling, storage and disposal of VOCs, such as keeping VOC and VOC
containing materials in closed containers, keeping VOC containing shop
towels in closed containers, and recordkeeping requirements. These
revisions are consistent with the CTG recommendations issued on October
5, 2006.
    EPA evaluated these provisions for consistency with the Clean Air
Act, EPA regulations, and EPA policy and is approving them.

Flexible Package Printing

    In addition to the general provisions of Part 234, the revised
subsection 234.3(a) addresses the CTG for Flexible Package Printing.
Subsection 234.3(a)(1)(ii) was added and requires more stringent
emission controls for publication rotogravure and other printing
processes. Subsection 234.3(a)(1)(i) contains new maximum allowable VOC
content limits for inks, coatings and adhesives (minus water). Section
234.6 requires best management practices (see above description). These
revisions are consistent with the CTG recommendations issued on October
5, 2006.
    EPA evaluated these provisions for consistency with the Clean Air
Act, EPA regulations, and EPA policy and is approving them.

IV. What is EPA's evaluation of part 241, ``Asphalt Pavement and
Asphalt Based Surface Coating?''

    Part 241 contains the regulatory provisions applicable to asphalt
pavements and asphalt based surface coatings. These provisions were
previously regulated under 6 NYCRR Part 205, ``Architectural and
Industrial Maintenance (AIM) Coatings'' and Part 211, ``General
Prohibitions.'' New York revised these two rules by removing the
asphalt provisions and moving them into new rule Part 241.
    New York removed the seasonal limit that allowed the use of cutback
asphalt from October 16th to May 1st. Part 241 only allows the use of
cutback asphalt in two circumstances: When the asphalt is used in the
production of long-life stockpile material for pavement patching and
repair and when the asphalt is used as a penetrating prime coat for the
purpose of preparing a surface to receive asphalt pavement.
    New York included a VOC content limit in Part 241 for asphalt
surface coatings. No asphalt based surface coating may be applied,
sold, offered for sale, or manufactured if it contains more than 100
grams of VOC per liter. This is consistent with the limit that was
previously included in Part 205.
    Part 241 also includes limits for emulsified asphalt. No emulsified
asphalt, as classified under ASTM International standard specifications
D 977 or D 2397 may be applied, sold, offered for sale, or manufactured
that

contains oil distillate, as determined by ASTM International standard
test method D 6997, in amounts that exceed the following limits
(milliliters of oil distillate per 200 gram sample):
    (a) Three milliliters for ASTM grades RS-1, SS-1, SS-1h, CRS-1,
CSS-1, and CSS-1h;
    (b) Five milliliters for ASTM grades RS-2, CRS-2, and HFRS-2;
    (c) Sixteen milliliters for ASTM grades MS-2, HFMS-2 and HFMS-2h;
and
    (d) Twenty milliliters for ASTM grades CMS-2 and CMS-2h.
    Similar limits were previously included in Part 211 but they were
expressed as VOC content limits in percent by weight. The revised
limits included in Part 241 are approximately 17-25 percent more
stringent than what was previously included in Part 211.
    EPA notes that while the revised limits in Part 241 are more
stringent than the previous limits included in Part 211, the States of
New Jersey, Delaware and Connecticut have adopted emission limits more
stringent than Part 241, specifically during the ozone season months.
EPA recommends that when New York evaluates RACT, as is required by
section 182(b) when implementing a revised 8-hour ozone standard, that
New York consider more stringent asphalt paving limits in line with
those adopted by the neighboring states.
    EPA evaluated the provisions of Part 241 for consistency with the
Clean Air Act, EPA regulations, and EPA policy and is approving them.

V. What comments did EPA receive in response to its proposal?

    On December 12, 2011 (76 FR 77178), EPA proposed to approve New
York's revised Parts 228, 234 and 241. For a detailed discussion on the
content and requirements of the revisions to New York's regulations,
the reader is referred to EPA's proposed rulemaking action.
    In response to EPA's December 12, 2011 proposed rulemaking action,
EPA received no comments.

VI. What is EPA's conclusion?

    EPA has evaluated New York's submittal for consistency with the
Clean Air Act, EPA regulations, and EPA policy. EPA is approving the
revisions made to Title 6 of the New York Code of Rules and Regulations
(6 NYCRR) Part 228, ``Surface Coating Processes, Commercial and
Industrial Adhesives, Sealants and Primers,'' Part 234, ``Graphic
Arts,'' and new Part 241, ``Asphalt Pavement and Asphalt Based Surface
Coating,'' with effective dates of September 30, 2010, July 8, 2010 and
January 1, 2011, respectively. EPA has determined that the revisions
meet the SIP requirements of the Clean Air Act and fulfill the
recommended controls identified in the applicable CTGs. EPA is
approving these revisions and is also approving the revisions made to 6
NYCRR Part 205, ``Architectural and Industrial Maintenance (AIM)
Coatings'' and Part 211, ``General Prohibitions,'' both effective
January 1, 2011, to avoid redundancy and conflict of the asphalt paving
and coating provisions included in new Part 241.

 VII. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Clean Air Act
and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely approves state law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the state, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.
    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 action 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).
    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by May 7, 2012. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action for the purposes of
judicial review nor does it extend the time within which a petition for
judicial review may be filed, and shall not postpone the effectiveness
of such rule or action. This action may not be challenged later in
proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Oxides of
Nitrogen, Ozone, Reporting and recordkeeping requirements, Volatile
organic compounds.

    Dated: February 27, 2012.
Judith A. Enck,
Regional Administrator, Region 2.

    Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority:  42 U.S.C. 7401 et seq.

Subpart HH--New York

0
2. In Sec.  52.1670, the table in paragraph (c) is amended by revising
the entries for Title 6, Parts 205, 211, 228 and 234 and adding new
entry Part 241 in numerical order to read as follows:

Sec.  52.1670  Identification of plan.

* * * * *
    (c) * * *

                                     EPA-Approved New York State Regulations
----------------------------------------------------------------------------------------------------------------
                                           State
      New York State regulation       effective date    Latest EPA approval date              Comments
----------------------------------------------------------------------------------------------------------------
Title 6

                                                  * * * * * * *
Part 205, Architectural and                   1/1/11  3/8/12 [Insert page number
 Industrial Maintenance (AIM)                          where the document begins].
 Coatings.

                                                  * * * * * * *
Part 211, General Prohibitions......          1/1/11  3/8/12 [Insert page number    Section 211.1 (previously
                                                       where the document begins].   numbered 211.2) is not part
                                                                                of the approved plan. (see
                                                                                11/27/98, 63 FR 65559)

                                                  * * * * * * *
Part 228, Surface Coating Processes,         9/30/10  3/8/12 [Insert page number
 Commercial and Industrial                             where the document begins].
 Adhesives, Sealants and Primers.

                                                  * * * * * * *
Part 234, Graphic Arts..............          7/8/10  3/8/12 [Insert page number    SIP revisions submitted in
                                                       where the document begins].   accordance with Sec.
                                                                                234.3(f) are effective only
                                                                                if approved by EPA.

                                                  * * * * * * *
Part 241, Asphalt Pavement and                1/1/11  3/8/12 [Insert page number
 Asphalt Based Surface Coating.                        where the document begins].

                                                  * * * * * * *
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[FR Doc. 2012-5646 Filed 3-7-12; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 80, Number 243 (Friday, December 18, 2015)]
[Rules and Regulations]
[Pages 78970-78971]
[FR Doc No: 2015-31828]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 558

[Docket No. FDA-2015-N-0002]

New Animal Drugs for Use in Animal Feed; Withdrawal of Approval
of New Animal Drug Applications; Nitarsone

AGENCY: Food and Drug Administration, HHS.

ACTION: Notification of withdrawal.

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SUMMARY: The Food and Drug Administration (FDA) is withdrawing approval
of three new animal drug applications (NADAs) providing for the use of
nitarsone in medicated feed for chickens and turkeys. This action is
being taken at the sponsor's request because these products are no
longer manufactured or marketed.

DATES: Withdrawal of approval is effective December 31, 2015.

FOR FURTHER INFORMATION CONTACT: Sujaya Dessai, Center for Veterinary
Medicine (HFV-212), Food and Drug Administration, 7519 Standish Pl.,
Rockville, MD 20855,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Zoetis Inc., 333 Portage St., Kalamazoo, MI
49007 has requested that FDA withdraw approval of the following NADAs
that provide for the use of nitarsone in medicated feed for chickens
and turkeys because the products are no longer manufactured or
marketed:

------------------------------------------------------------------------
                                                              21 CFR
          File No.                   Product name             Section
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007-616....................  HISTOSTAT 50 (nitarsone)            558.369
                              Type A Medicated Article.
141-088....................  HISTOSTAT 50 (nitarsone)/           558.369
                              BMD (bacitracin methylene
                              disalicylate).
141-132....................  HISTOSTAT 50/ALBAC                  558.369
                              (bacitracin zinc).
------------------------------------------------------------------------

    Therefore, under authority delegated to the Commissioner of Food
and Drugs and redelegated to the Center for Veterinary Medicine, and in
accordance with 21 CFR 514.116 Notice of withdrawal of approval of
application, notice is given that approval of NADAs 007-616, 141-088,
and 141-132, and all supplements and amendments thereto, is hereby
withdrawn, effective December 31, 2015.
    Elsewhere in this issue of the Federal Register, FDA is amending
the animal drug regulations to reflect the voluntary withdrawal of
approval of these applications.

    Dated: December 11, 2015.
Bernadette Dunham,
Director, Center for Veterinary Medicine.
[FR Doc. 2015-31828 Filed 12-17-15; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 82, Number 37 (Monday, February 27, 2017)]
[Notices]
[Pages 11951-11952]
[FR Doc No: 2017-03796]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80076; File No. SR-NYSEArca-2016-89]

Self-Regulatory Organizations; NYSE Arca, Inc; Notice of
Designation of Longer Period for Commission Action on Proceedings To
Determine Whether To Approve or Disapprove a Proposed Rule Change, as
Modified by Amendment Nos. 1-4, To Amend the Co-location Services
Offered by the Exchange To Add Certain Access and Connectivity Fees

February 22, 2017.
    On August 16, 2016, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to (1) provide additional information regarding
access to various NYSE trading and execution services and establish
fees for connectivity to certain NYSE market data feeds; and (2)
provide and establish fees for connectivity to data feeds from third
party markets and other content service providers; access to the
trading and execution services of Third Party markets and other content
service providers; connectivity to Depository Trust & Clearing
Corporation services; connectivity to third party testing and
certification feeds; and the use of virtual control circuits by Users
in the Data Center.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The Commission published the proposed rule change for comment in
the Federal Register on August 26, 2016.\3\ The Commission received no
comments in response to the proposed rule change.\4\ On October 4,
2016, the Commission extended the time period within which to approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether to approve or disapprove the
proposed rule change to November 24, 2016.\5\
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    \3\ See Securities Exchange Act Release No. 34-78628 (August 22,
2016), 81 FR 59004 (``Notice'').
    \4\ The Commission notes that it did receive one comment letter
on a related filing, NYSE-2016-45 (the ``NYSE Companion
Filing''),which is equally relevant to this filing. See letter to
Brent J. Fields, Secretary, Commission, from John Ramsay, Chief
Market Policy Officer, Investors Exchange LLC (IEX), dated September
9, 2016 (``IEX Letter'').
    On September 23, 2016, the NYSE submitted a response (``Response
Letter I'').
    \5\ See Securities Exchange Act Release No. 34-78967 (September
28, 2016), 81 FR 68480.
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    On November 2, 2016, the Exchange filed Amendment No. 1 to the
proposed rule change.\6\ On November 29, 2016, the Commission
instituted proceedings to determine whether to approve or disapprove
the proposed rule change, as modified by Amendment No. 1.\7\ Following
the Order Instituting Proceedings, the Commission received several
additional comment letters regarding the proposed rule change.\8\ On
December 9, 2016, the Exchange filed Amendment No. 2 to the proposed
rule change and on December 13, 2016 also

filed Amendment No. 3 to the proposed rule change.\9\ Amendment Nos. 2
and 3, which together supersede and replace the proposed rule change,
as modified by Amendment No. 1, in its entirety, were published for
comment in the Federal Register on December 29, 2016.\10\ On January
17, 2017, the Exchange responded to the comment letters submitted after
the OIP and prior to January 17, 2017.\11\ On February 7, 2017, the
Exchange filed Amendment No. 4 to the proposed rule change.\12\ On
February 13, 2017, the Exchange responded to a comment letter submitted
after January 17, 2017.\13\
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    \6\ Amendment No. 1 is available on the Commission's Web site at
https://www.sec.gov/comments/sr-nysearca-2016-89/nysearca201689-1.pdf.
    \7\ See Securities Exchange Act Release 34-79379 (November 22,
2016), 81 FR 86036.
    \8\ See letter to Brent J. Fields, Commission, from Melissa
MacGregor, Managing Director and Associate General Counsel, SIFMA,
dated December 12, 2016 (``SIFMA Letter I''); letter to Brent J.
Fields, Commission, from Joe Wald, Chief Executive Officer,
Clearpool Group, dated December 16, 2016 (``Clearpool Letter'');
letter to Brent J. Fields, Secretary, Commission, from John Ramsay,
Chief Market Policy Officer, Investors Exchange LLC (IEX), dated
December 21, 2016 (``IEX Letter II''); letter to Brent J. Fields,
Commission, from Melissa MacGregor, Managing Director and Associate
General Counsel, SIFMA, dated February 6, 2017 (``SIFMA Letter
II''). All comments received by the Commission on the proposed rule
change are available on the Commission's Web site at: https://www.sec.gov/comments/sr-nysearca-2016-89/nysearca201689.shtml.
     The Commission notes that it did receive additional comment
letters on the NYSE Companion Filing which are equally relevant to
this filing. See letter to Brent J. Fields, Commission, from Adam C.
Cooper, Senior Managing Director and Chief Legal Officer, Citadel
Securities, dated December 12, 2016 (``Citadel Letter''); letter to
Brent J. Fields, Commission, from David L. Cavicke, Chief Legal
Officer, Wolverine LLC (``Wolverine Letter''); letter to Bent J.
Fields, Secretary, Commission, from Stefano Durdic, Managing
Director, R2G Services, LLC, dated January 21, 2017 (``R2G
Letter''). All comments received by the Commission on the NYSE
Companion Filing are available on the Commission's Web site at:
https://www.sec.gov/comments/sr-nyse-2016-45/nyse201645.shtml.
    \9\ The Commission notes that the Exhibit 5 filed with Amendment
No. 2 contained erroneous rule text and therefore was corrected in
Amendment No. 3. Amendment Nos. 2 and 3 are available at https://www.sec.gov/comments/sr-nysearca-2016-89/nysearca201689.shtml.
    \10\ See Securities Exchange Act Release No. 34-79673 (December
22, 2016), 81 FR 96107 (``Notice of Current Proposal'').
    \11\ See NYSE Response Letter II (``Response Letter II''),
available at https://www.sec.gov/comments/sr-nyse-2016-45/nyse201645-1502013-130586.pdf. The R2G and SIFMA II Letters, supra
note 8, were submitted after the Response Letter II. The Commission
notes that in footnote 4 of Response Letter II the Exchange notes
that its response to commenters on the NYSE Companion Filing applies
equally to this filing.
    \12\ Amendment No. 4, as filed by the Exchange, is available at
https://www.sec.gov/comments/sr-nysearca-2016-89/nysearca201689-1570736-131691.pdf.
    \13\ See NYSE Response Letter III (``Response Letter III''),
available at https://www.sec.gov/comments/sr-nyse-2016-45/nyse201645-1580192-131885.pdf.
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \14\ provides that, after initiating
proceedings, the Commission shall issue an order approving or
disapproving the proposed rule change not later than 180 days after the
date of publication of notice of the filing of the proposed rule
change. The Commission may extend the period for issuing an order
approving or disapproving the proposed rule change, however, by not
more than 60 days if the Commission determines that a longer period is
appropriate and publishes the reasons for such determination. The
proposed rule change was published for notice and comment in the
Federal Register on August 26, 2016.\15\ February 22, 2017 is 180 days
from that date, and April 23, 2017 is an additional 60 days from that
date.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).
    \15\ See supra note 3.
---------------------------------------------------------------------------

    The Commission finds it appropriate to designate a longer period
within which to issue an order approving or disapproving the proposed
rule change so that it has sufficient time to consider the proposed
rule change, as modified by Amendment Nos. 1-4, the issues raised in
the comment letters that have been submitted in connection therewith,
and the Exchange's response to the comments.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\16\ designates April 23, 2017 as the date by which the Commission
should either approve or disapprove the proposed rule change, as
modified by Amendments Nos. 1-4.
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    \16\ 15 U.S.C. 78s(b)(2).
    \17\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03796 Filed 2-24-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 169 (Thursday, August 30, 2018)]
[Notices]
[Pages 44354-44361]
[FR Doc No: 2018-18866]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83952; File No. SR-NSCC-2017-806]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of No Objection to an Advance Notice, as Modified
by Amendment No. 1, To Amend the Loss Allocation Rules and Make Other
Changes

August 27, 2018.
    On December 18, 2017, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') advance notice SR-NSCC-2017-806 pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act entitled the Payment, Clearing, and Settlement
Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule
19b-4(n)(1)(i) under the Securities Exchange Act of 1934 (``Act'') \2\
to amend NSCC's loss allocation rules, accelerate the return of certain
deposits to former Members, and make other conforming and technical
changes.\3\ The advance notice was published for comment in the Federal
Register on January 30, 2018.\4\ In that publication, the Commission
also extended the review period of the advance notice for an additional
60 days, pursuant to Section 806(e)(1)(H) of the Clearing Supervision
Act.\5\ On April 10, 2018, the Commission required additional
information from NSCC pursuant to Section 806(e)(1)(D) of the Clearing
Supervision Act,\6\ which tolled the Commission's period of review of
the advance notice until 60 days from the date the information required
by the Commission was received by the Commission.\7\ On June 28, 2018,
NSCC filed Amendment No. 1 to the advance notice to amend and replace
in its entirety the advance notice as originally filed on December 18,
2017.\8\ On July 6, 2018, the Commission received a response to its
request for additional information in consideration of the advance
notice, which, in turn, added a further 60 days to the review period
pursuant to Section 806(e)(1)(E) and (G) of the Clearing Supervision
Act.\9\ The Commission did not receive any comments. This publication
serves as notice that the Commission does not object to the proposed
changes set forth in the advance notice, as modified by Amendment No. 1
(hereinafter, ``Advance Notice'').
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ On December 18, 2017, NSCC filed the advance notice as
proposed rule change SR-NSCC-2017-018 with the Commission pursuant
to Section 19(b)(1) of the Act and Rule 19b-4 thereunder (``Proposed
Rule Change''). 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-4,
respectively. The Proposed Rule Change was published in the Federal
Register on January 8, 2018. Securities Exchange Act Release No.
82428 (January 2, 2018), 83 FR 897 (January 8, 2018) (SR-NSCC-2017-
018). On February 8, 2018, the Commission designated a longer period
within which to approve, disapprove, or institute proceedings to
determine whether to approve or disapprove the Proposed Rule Change.
Securities Exchange Act Release No. 82670 (February 8, 2018), 83 FR
6626 (February 14, 2018) (SR-DTC-2017-022, SR-FICC-2017-022, SR-
NSCC-2017-018). On March 20, 2018, the Commission instituted
proceedings to determine whether to approve or disapprove the
Proposed Rule Change. Securities Exchange Act Release No. 82910
(March 20, 2018), 83 FR 12968 (March 26, 2018) (SR-NSCC-2017-018).
On June 25, 2018, the Commission designated a longer period for
Commission action on the proceedings to determine whether to approve
or disapprove the Proposed Rule Change. Securities Exchange Act
Release No. 83510 (June 25, 2018), 83 FR 30791 (June 29, 2018) (SR-
DTC-2017-022, SR-FICC-2017-022, SR-NSCC-2017-018). On June 28, 2018,
NSCC filed Amendment No. 1 to the Proposed Rule Change, which was
published in the Federal Register on July 19, 2018. Securities
Exchange Act Release No. 83633 (July 13, 2018), 83 FR 34227 (July
19, 2018) (SR-NSCC-2017-018). NSCC submitted a courtesy copy of
Amendment No. 1 to the Proposed Rule Change through the Commission's
electronic public comment letter mechanism. Accordingly, Amendment
No. 1 to the Proposed Rule Change has been publicly available on the
Commission's website at https://www.sec.gov/rules/sro/nscc.htm since
June 29, 2018. The Commission did not receive any comments. The
proposal, as set forth in both the advance notice and the Proposed
Rule Change, each as modified by Amendments No. 1, shall not take
effect until all required regulatory actions are completed.
    \4\ Securities Exchange Act Release No. 82584 (January 24,
2018), 83 FR 4377 (January 30, 2018) (SR-NSCC-2017-806)
(``Notice'').
    \5\ Pursuant to Section 806(e)(1)(H) of the Clearing Supervision
Act, the Commission may extend the review period of an advance
notice for an additional 60 days, if the changes proposed in the
advance notice raise novel or complex issues, subject to the
Commission providing the clearing agency with prompt written notice
of the extension. 12 U.S.C. 5465(e)(1)(H). The Commission found that
the advance notice raised complex issues and, accordingly, extended
the review period of the advance notice for an additional 60 days
until April 17, 2018. See Notice, supra note 4.
    \6\ 12 U.S.C. 5465(e)(1)(D).
    \7\ See 12 U.S.C. 5465(e)(1)(E)(ii) and (G)(ii); see Memorandum
from the Office of Clearance and Settlement Supervision, Division of
Trading and Markets, titled ``Commission's Request for Additional
Information,'' available at https://www.sec.gov/rules/sro/nscc-an.htm.
    \8\ Securities Exchange Act Release No. 83748 (July 31, 2018),
83 FR 38375 (August 6, 2018) (SR-NSCC-2017-806) (``Notice of
Amendment No. 1''). NSCC submitted a courtesy copy of Amendment No.
1 to the advance notice through the Commission's electronic public
comment letter mechanism. Accordingly, Amendment No. 1 to the
advance notice has been publicly available on the Commission's
website at https://www.sec.gov/rules/sro/nscc-an.htm since June 29,
2018.
    \9\ 12 U.S.C. 5465(e)(1)(E) and (G); see Memorandum from the
Office of Clearance and Settlement Supervision, Division of Trading
and Markets, titled ``Response to the Commission's Request for
Additional Information,'' available at https://www.sec.gov/rules/sro/nscc-an.htm.
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I. Description of the Advance Notice

    The Advance Notice consists of proposed changes to NSCC's Rules and
Procedures (``Rules'') \10\ in order to (1) modify the loss allocation
process; (2) align NSCC's loss allocation rules with the three clearing
agencies of The Depository Trust & Clearing Corporation (``DTCC'')--The
Depository Trust Company (``DTC''), Fixed Income Clearing Corporation
(``FICC'') (including the Government Securities Division (``FICC/GSD'')
and the Mortgage-Backed Securities Division (``FICC/MBSD'')), and NSCC
(collectively, the ``DTCC Clearing Agencies''); \11\ (3) reduce the
time within which NSCC is required to return a former Member's Clearing
Fund deposit; and (4) make conforming and technical changes. Each of
these proposed changes is described below. A detailed description of
the specific rule text changes proposed in this Advance

Notice can be found in the Notice of Amendment No. 1.\12\
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    \10\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Rules, available at http://
www.dtcc.com/~/media/Files/Downloads/legal/rules/nscc_rules.pdf.
    \11\ DTCC is a user-owned and user-governed holding company and
is the parent company of DTC, FICC, and NSCC. DTCC operates on a
shared services model with respect to the DTCC Clearing Agencies.
Most corporate functions are established and managed on an
enterprise-wide basis pursuant to intercompany agreements under
which it is generally DTCC that provides a relevant service to a
DTCC Clearing Agency.
    \12\ See Notice of Amendment No. 1, supra note 8.
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A. Changes to the Loss Allocation Process

    NSCC's loss allocation rules currently provide that in the event
NSCC ceases to act \13\ for a Member, the amount on deposit to the
Clearing Fund from the defaulting Member, along with any other
resources of, or attributable to, the defaulting Member that NSCC may
access under the Rules, are the first source of funds NSCC would use to
cover any losses that may result from the closeout of the defaulting
Member's guaranteed positions. If these amounts are not sufficient to
cover all losses incurred, then NSCC will apply the following available
resources, in the following order: (1) As provided in Addendum E of the
Rules, NSCC's corporate contribution of at least 25 percent of NSCC's
retained earnings existing at the time of a Member impairment, or such
greater amount as the Board of Directors may determine; and (2) if a
loss still remains, as provided in Rule 4, the required Clearing Fund
deposits of non-defaulting Members on the date of default.
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    \13\ When NSCC restricts a Member's access to services
generally, NSCC is said to have ``ceased to act'' for the Member.
Rule 46 (Restrictions on Access to Services) sets out the
circumstances under which NSCC may cease to act for a Member, and
Rule 18 (Procedures for When the Corporation Declines or Ceases to
Act) sets out the types of actions NSCC may take when it ceases to
act for a Member. Supra note 10.
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    Pursuant to current Section 5 of Rule 4, if, as a result of
applying the Clearing Fund deposit of a Member, the Member's actual
Clearing Fund deposit is less than its Required Deposit, it will be
required to eliminate such deficiency in order to satisfy its Required
Deposit amount. Pursuant to current Section 4 of Rule 4, Members can
also be assessed for non-default losses incident to the operation of
the clearance and settlement business of NSCC. Pursuant to current
Section 8 of Rule 4, Members may withdraw from membership within
specified timeframes after a loss allocation charge to limit their
obligation for future assessments.
    NSCC proposes to change the manner in which each of the aspects of
the loss allocation process described above would be employed. The
proposal would clarify or adjust certain elements and introduce certain
new loss allocation concepts, as further discussed below. In addition,
the proposal would address the loss allocation process as it relates to
losses arising from or relating to multiple default or non-default
events in a short period of time, also as described below.
    NSCC proposes six key changes to enhance NSCC's loss allocation
process. Specifically, NSCC proposes to make changes regarding (1) the
Corporate Contribution, (2) the Event Period, (3) the loss allocation
round and notice, (4) the look-back period, (5) the loss allocation
withdrawal notice and cap, and (6) the governance around non-default
losses, each of which is discussed below.
(1) Corporate Contribution
    Addendum E of the Rules currently provides that NSCC will
contribute no less than 25 percent of its retained earnings (or such
higher amount as the Board of Directors shall determine) to a loss or
liability that is not satisfied by the impaired Member's Clearing Fund
deposit. Under the proposal, NSCC would amend the calculation of its
corporate contribution from a percentage of its retained earnings to a
mandatory amount equal to 50 percent of the NSCC General Business Risk
Capital Requirement.\14\
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    \14\ NSCC calculates its General Business Risk Capital
Requirement as the amount equal to the greatest of (1) an amount
determined based on its general business profile, (2) an amount
determined based on the time estimated to execute a recovery or
orderly wind-down of NSCC's critical operations, and (3) an amount
determined based on an analysis of NSCC's estimated operating
expenses for a six month period.
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    NSCC's General Business Risk Capital Requirement, as defined in
NSCC's Clearing Agency Policy on Capital Requirements,\15\ is, at a
minimum, equal to the regulatory capital that NSCC is required to
maintain in compliance with Rule 17Ad-22(e)(15) under the Act.\16\ The
proposed Corporate Contribution would be held in addition to NSCC's
General Business Risk Capital Requirement.
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    \15\ See Securities Exchange Act Release No. 81105 (July 7,
2017), 82 FR 32399 (July 13, 2017) (SR-DTC-2017-003, SR-NSCC-2017-
004, SR-FICC-2017-007).
    \16\ 17 CFR 240.17Ad-22(e)(15).
---------------------------------------------------------------------------

    Under the current Addendum E of the Rules, NSCC has the discretion
to contribute amounts higher than the specified percentage of retained
earnings, as determined by the Board of Directors, to any loss or
liability incurred by NSCC as result of a Member's impairment. This
option would be retained and expanded under the proposal so that NSCC
can voluntarily apply amounts greater than the Corporate Contribution
against any loss or liability (including non-default losses) of NSCC,
if the Board of Directors, in its sole discretion, believes such to be
appropriate under the factual situation existing at the time.
    Currently, the Rules do not require NSCC to contribute its retained
earnings to losses and liabilities other than those from Member
impairments. Under the proposal, NSCC would apply its Corporate
Contribution to non-default losses as well. The proposed Corporate
Contribution would apply to losses arising from Defaulting Member
Events and Declared Non-Default Loss Events, as defined in the proposed
change, and would be a mandatory contribution by NSCC prior to any
allocation of the loss among NSCC's Members.\17\
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    \17\ NSCC does not propose to apply the Corporate Contribution
if the Clearing Fund is used as a liquidity resource; however, if
NSCC uses the Clearing Fund as a liquidity resource for more than 30
calendar days, as set forth in proposed Section 2 of Rule 4, then
NSCC would have to consider the amount used as a loss to the
Clearing Fund incurred as a result of a Defaulting Member Event and
allocate the loss pursuant to proposed Section 4 of Rule 4, which
would then require the application of a Corporate Contribution.
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    As proposed, if the Corporate Contribution is fully or partially
used against a loss or liability relating to an Event Period, the
Corporate Contribution would be reduced to the remaining unused amount,
if any, during the following 250 business days in order to permit NSCC
to replenish the Corporate Contribution.\18\ Under the proposal,
Members would receive notice of any such reduction to the Corporate
Contribution.
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    \18\ NSCC states that 250 business days would be a reasonable
estimate of the time frame that NSCC would be required to replenish
the Corporate Contribution by equity in accordance with NSCC's
Clearing Agency Policy on Capital Requirements, including a
conservative additional period to account for any potential delays
and/or unknown exigencies in times of distress.
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(2) Event Period
    NSCC states that in order to clearly define the obligations of NSCC
and its Members regarding loss allocation and to balance the need to
manage the risk of sequential loss events against Members' need for
certainty concerning their maximum loss allocation exposures, NSCC
proposes to introduce the concept of an Event Period to the Rules to
address the losses and liabilities that may arise from or relate to
multiple Defaulting Member Events and/or Declared Non-Default Loss
Events that arise in quick succession. Specifically, the proposal would
group Defaulting Member Events and Declared Non-Default Loss Events
occurring within a period of 10 business days (``Event Period'') for
purposes of allocating losses to Members in one or

more rounds, subject to the limitations of loss allocation as explained
below.\19\
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    \19\ NSCC states that having a 10 business day Event Period
would provide a reasonable period of time to encompass potential
sequential Defaulting Member Events or Declared Non-Default Loss
Events that are likely to be closely linked to an initial event and/
or a severe market dislocation episode, while still providing
appropriate certainty for Members concerning their maximum exposure
to mutualized losses with respect to such events.
---------------------------------------------------------------------------

    In the case of a loss or liability arising from or relating to a
Defaulting Member Event, an Event Period would begin on the day NSCC
notifies Members that it has ceased to act for the Defaulting Member
(or the next business day, if such day is not a business day). In the
case of a loss or liability arising from or relating to a Declared Non-
Default Loss Event, an Event Period would begin on the day that NSCC
notifies Members of the Declared Non-Default Loss Event (or the next
business day, if such day is not a business day). If a subsequent
Defaulting Member Event or Declared Non-Default Loss Event occurs
during an Event Period, any losses or liabilities arising out of or
relating to any such subsequent event would be resolved as losses or
liabilities that are part of the same Event Period, without extending
the duration of such Event Period. An Event Period may include both
Defaulting Member Events and Declared Non-Default Loss Events, and
there would not be separate Event Periods for Defaulting Member Events
or Declared Non-Default Loss Events occurring during overlapping 10
business day periods.
    The amount of losses that may be allocated by NSCC, subject to the
required Corporate Contribution, and to which a Loss Allocation Cap
would apply for any Member that elects to withdraw from membership in
respect of a loss allocation round, would include any and all losses
from any Defaulting Member Events and any Declared Non-Default Loss
Events during the Event Period, regardless of the amount of time,
during or after the Event Period, required for such losses to be
crystallized and allocated.\20\
---------------------------------------------------------------------------

    \20\ Under the proposal, each Member that is a Member on the
first day of an Event Period would be obligated to pay its pro rata
share of losses and liabilities arising out of or relating to each
Defaulting Member Event (other than a Defaulting Member Event with
respect to which it is the Defaulting Member) and each Declared Non-
Default Loss Event occurring during the Event Period.
---------------------------------------------------------------------------

(3) Loss Allocation Round and Loss Allocation Notice
    Under the proposal, a loss allocation ``round'' would mean a series
of loss allocations relating to an Event Period, the aggregate amount
of which is limited by the sum of the Loss Allocation Caps of affected
Members (a ``round cap''). When the aggregate amount of losses
allocated in a round equals the round cap, any additional losses
relating to the applicable Event Period would be allocated in one or
more subsequent rounds, in each case subject to a round cap for that
round. NSCC may continue the loss allocation process in successive
rounds until all losses from the Event Period are allocated among
Members that have not submitted a Loss Allocation Withdrawal Notice in
accordance with proposed Section 6 of Rule 4.
    Each loss allocation would be communicated to Members by the
issuance of a notice that advises each Member of the amount being
allocated to it (``Loss Allocation Notice''). Each Member's pro rata
share of losses and liabilities to be allocated in any round would be
equal to (1) the average of its Required Fund Deposit for the 70
business days preceding the first day of the applicable Event Period or
such shorter period of time that the Member has been a Member (each
Member's ``Average RFD''), divided by (2) the sum of Average RFD
amounts of all Members subject to loss allocation in such round.
    Each Loss Allocation Notice would specify the relevant Event Period
and the round to which it relates. The first Loss Allocation Notice in
any first, second, or subsequent round would expressly state that such
Loss Allocation Notice reflects the beginning of the first, second, or
subsequent round, as the case may be, and that each Member in that
round has five business days from the issuance of such first Loss
Allocation Notice for the round to notify NSCC of its election to
withdraw from membership with NSCC pursuant to proposed Section 6 of
Rule 4, and thereby benefit from its Loss Allocation Cap.\21\ In other
words, the proposed change would link the Loss Allocation Cap to a
round in order to provide Members the option to limit their loss
allocation exposure at the beginning of each round. After a first round
of loss allocations with respect to an Event Period, only Members that
have not submitted a Loss Allocation Withdrawal Notice, in accordance
with proposed Section 6 of Rule 4, would be subject to further loss
allocation with respect to that Event Period.
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    \21\ Pursuant to current Section 8 of Rule 4, the time period
for a Member to give notice of its election to terminate its
business with NSCC in respect of a pro rata charge is 10 business
days after receiving notice of a pro rata charge. Supra note 10.
NSCC states that it would be appropriate to shorten such time period
from 10 business days to five business days because NSCC needs
timely notice of which Members would remain in its membership for
purposes of calculating the loss allocation for any subsequent
round. NSCC states that five business days would provide Members
with sufficient time to decide whether to cap their loss allocation
obligations by withdrawing from their membership in NSCC.
---------------------------------------------------------------------------

    NSCC's current loss allocation provisions provide that if a charge
is made against a Member's actual Clearing Fund deposit, and as result
thereof the Member's deposit is less than its Required Deposit, the
Member will, upon demand by NSCC, be required to replenish its deposit
to eliminate the deficiency within such time as NSCC shall require.
Under the proposal, Members would receive two business days' notice of
a loss allocation, and be required to pay the requisite amount no later
than the second business day following the issuance of such notice.\22\
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    \22\ NSCC states that allowing Members two business days to
satisfy their loss allocation obligations would provide Members
sufficient notice to arrange funding, if necessary, while allowing
NSCC to address losses in a timely manner.
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(4) Look-Back Period
    Currently, the Rules calculate a Member's pro rata share for
purposes of loss allocation based on the Member's activity in each of
the various services or Systems offered by NSCC.\23\ NSCC states that
it would be more appropriate to determine a Member's pro rata share of
losses and liabilities based on the amount of risk that the Member
brings to NSCC, which is represented by the Member's Required Deposit
(NSCC proposes that ``Required Deposits'' be renamed ``Required Fund
Deposits,'' as described below). Accordingly, NSCC proposes to
calculate each Member's pro rata share of losses and liabilities to be
allocated in any round (as described above) to be equal to (1) the
Member's Average RFD divided by (2) the sum of Average RFD amounts for
all Members that are subject to loss allocation in such round. The
proposed rule would define a Member's Average RFD as the average of the
Member's Required Fund Deposit for the 70 business days \24\ preceding
the first day of the applicable Event Period or such shorter period of
time that the Member has been a Member. Additionally, if a Member
withdraws from membership pursuant to proposed

Section 6 of Rule 4, NSCC proposes that the Member's Loss Allocation
Cap be equal to the greater of (1) its Required Fund Deposit on the
first day of the applicable Event Period or (2) its Average RFD.
---------------------------------------------------------------------------

    \23\ NSCC states that its current loss allocation rules pre-date
NSCC's move to a risk-based margining methodology.
    \24\ NSCC states that having a look-back period of 70 business
days is appropriate because it would be long enough to enable NSCC
to capture a full calendar quarter of a Member's activities,
including quarterly option expirations, and smooth out the impact
from any abnormalities and/or arbitrariness that may have occurred,
but not too long that the Member's business strategy and outlook
could have shifted significantly, resulting in material changes to
the size of its portfolios.
---------------------------------------------------------------------------

    NSCC states that employing a backward-looking average to calculate
a Member's loss allocation pro rata share and Loss Allocation Cap would
disincentivize Member behavior that could heighten volatility or reduce
liquidity in markets in the midst of a financial crisis. Specifically,
NSCC states that the proposed look-back period would discourage a
Member from reducing its settlement activity during a time of stress
primarily to limit its loss allocation pro rata share, which, as
proposed, would now be based on the Member's average settlement
activity over the look-back period rather than its settlement activity
at a point in time that the Member may not be able to estimate.
Similarly, NSCC states that taking a backward-looking average into
consideration when determining a Member's Loss Allocation Cap would
also deter a Member from reducing its settlement activity during a time
of stress primarily to limit its Loss Allocation Cap.
(5) Loss Allocation Withdrawal Notice and Loss Allocation Cap
    NSCC's current loss allocation rules allow a Member to withdraw if
the Member notifies NSCC, within 10 business days after receipt of
notice of a pro rata charge, of its election to terminate its
membership and thereby avail itself of a cap on loss allocation. The
proposed change would shorten the withdrawal notification period from
10 business days to five business days, and would also change the
beginning of such notification period from the receipt of the notice of
a pro rata charge to the issuance of the notice.\25\ Each round would
allow a Member the opportunity to notify NSCC of its election to
withdraw from membership after satisfaction of the losses allocated in
such round. Multiple Loss Allocation Notices may be issued with respect
to each round to allocate losses up to the round cap.
---------------------------------------------------------------------------

    \25\ NSCC states that setting the start date of the withdrawal
notification period to the date of issuance of a notice would
provide a single withdrawal timeframe that would be consistent
across the Members.
---------------------------------------------------------------------------

    Pursuant to the proposed change, in order to avail itself of its
Loss Allocation Cap, a Member would be able to elect to withdraw from
membership by following the requirements in proposed Section 6 of Rule
4: (1) Specify in its Loss Allocation Withdrawal Notice (as defined
below) an effective date of withdrawal, which date shall be no later
than 10 business days following the last day of the applicable Loss
Allocation Withdrawal Notification Period (as defined below) (i.e., no
later than 10 business days after the fifth business day following the
first Loss Allocation Notice in that round of loss allocation); \26\
(2) cease all activity that would result in transactions being
submitted to NSCC for clearance and settlement for which such Member
would be obligated to perform, where the scheduled final settlement
date would be later than the effective date of the Member's withdrawal;
and (3) ensure that all clearance and settlement activity for which
such Member is obligated to NSCC is fully and finally settled by the
effective date of the Member's withdrawal, including, without
limitation, by resolving by such date all fails and buy-in obligations.
---------------------------------------------------------------------------

    \26\ NSCC states that having an effective date of withdrawal
that is not later than 10 business days following the last day of
the Loss Allocation Withdrawal Notification Period would provide
Members with a reasonable period of time to wind down their
activities at NSCC while minimizing any uncertainty typically
associated with a longer withdrawal period.
---------------------------------------------------------------------------

    Under the current Rules, a Member's cap on loss allocation is its
Required Deposit as fixed immediately prior to the time of the pro rata
charge. Under the proposal, the first round and each subsequent round
of loss allocation would allocate losses up to a round cap of the
aggregate of all Loss Allocation Caps of those Members included in the
round. In addition, a Member that withdraws in compliance with proposed
Section 6 of Rule 4 would remain obligated for its pro rata share of
losses and liabilities with respect to any Event Period for which it is
otherwise obligated under Rule 4; \27\ however, its aggregate
obligation would be limited to the amount of its Loss Allocation Cap as
fixed in the round for which it withdrew.\28\ If the first round of
loss allocation does not fully cover NSCC's losses, a second round
would be noticed to those Members that did not elect to withdraw from
membership in the previous round; however, the amount of any second or
subsequent round cap may differ from the first or preceding round cap
because there may be fewer Members in a second or subsequent round if
Members elect to withdraw from membership with NSCC as provided in
proposed Section 6 of Rule 4 following the first Loss Allocation Notice
in any round. To the extent that a Member's Loss Allocation Cap exceeds
the Member's Required Fund Deposit on the first day of the applicable
Event Period, NSCC may in its discretion retain any excess amounts on
deposit from the Member, up to the Member's Loss Allocation Cap.
---------------------------------------------------------------------------

    \27\ For the avoidance of doubt, pursuant to Section 13(d) of
Rule 4(A) (Supplemental Liquidity Deposits), a Special Activity
Supplemental Deposit of a Member may not be used to calculate or be
applied to satisfy any pro rata charge pursuant to Section 4 of Rule
4. Supra note 10.
    \28\ If a Member's Loss Allocation Cap exceeds the Member's
then-current Required Fund Deposit, it must still cover the excess
amount.
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(6) Declared Non-Default Loss Event
    Aside from losses that NSCC might face as a result of a Defaulting
Member Event, NSCC could incur non-default losses incident to its
clearance and settlement business.\29\ The Rules currently permit NSCC
to apply the Clearing Fund to non-default losses. Specifically,
pursuant to Section 2(b) of Rule 4,\30\ NSCC can use the Clearing Fund
to satisfy losses or liabilities of NSCC incident to the operation of
the clearance and settlement business of NSCC. Section II of Addendum K
of the Rules provides additional details regarding the application of
the Clearing Fund to losses outside of a System.
---------------------------------------------------------------------------

    \29\ Non-default losses may arise from events such as damage to
physical assets, a cyber-attack, or custody and investment losses.
    \30\ Current Section 2(b) of Rule 4 provides that ``the use of
the Clearing Fund . . . shall be limited to satisfaction of losses
or liabilities of the Corporation incident to the operation of the
clearance and settlement business of the Corporation other than
losses and liabilities of a System.'' Supra note 10.
---------------------------------------------------------------------------

    NSCC proposes to enhance the governance around non-default losses
that would trigger loss allocation to Members by specifying that the
Board of Directors would have to determine that there is a non-default
loss that may be a significant and substantial loss or liability that
may materially impair the ability of NSCC to provide clearance and
settlement services in an orderly manner and would potentially generate
losses to be mutualized among the Members in order to ensure that NSCC
may continue to offer clearance and settlement services in an orderly
manner. The proposed change would provide that NSCC would then be
required to promptly notify Members of this determination, which would
be referred to as a Declared Non-Default Loss Event. In addition, NSCC
proposes to specify that a mandatory Corporate Contribution would apply
to a Declared Non-Default Loss Event prior to any allocation of the
loss among Members, as described above. Additionally, NSCC proposes
language to clarify Members' obligations for Declared Non-Default Loss
Events.

B. Changes To Align the Loss Allocation Rules
    The proposed changes would align the loss allocation rules, to the
extent practicable and appropriate, of the three DTCC Clearing Agencies
so as to provide consistent treatment for firms that are participants
of multiple DTCC Clearing Agencies. As proposed, the loss allocation
process and certain related provisions would be consistent across the
DTCC Clearing Agencies to the extent practicable and appropriate.

C. Accelerated Return of Former Member's Clearing Fund Deposit

    NSCC proposes to reduce the time in which NSCC may retain a
Member's Clearing Fund deposit. Specifically, NSCC proposes that if a
Member gives notice to NSCC of its election to withdraw from
membership, NSCC would return the Member's Actual Deposit in the form
of (1) cash or securities within 30 calendar days and (2) Eligible
Letters of Credit within 90 calendar days, after all of the Member's
transactions have settled and all matured and contingent obligations to
NSCC, for which the Member was responsible while a Member, have been
satisfied, except that NSCC may retain for up to two years the Actual
Deposits from Members who have Sponsored Accounts at DTC.
    NSCC states that shortening the time for the return of a Member's
Clearing Fund deposit would be helpful to firms that have exited NSCC,
so that such firms could have use of the deposits sooner than under the
current Rules. However, such return would only occur if all obligations
of the terminating Member to NSCC have been satisfied, which would
include both matured as well as contingent obligations.

D. Conforming and Technical Changes

    NSCC proposes to make various conforming and technical changes
necessary to harmonize the remaining current Rules with the proposed
changes. The proposed defined terms in the loss allocation process
would be included in Rule 1 (Definitions and Descriptions), and
obsolete terms would be replace with the proposed terms. In addition,
the rule numbers appear in the remaining current Rules would be updated
to reflect the changes made by the proposal. NSCC further proposes to
modify its Voluntary Termination process to avoid any potential
conflicts with the loss allocation process.

II. Discussion and Commission Findings

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, its stated purpose is instructive: To
mitigate systemic risk in the financial system and promote financial
stability by, among other things, promoting uniform risk management
standards for systemically important financial market utilities and
strengthening the liquidity of systemically important financial market
utilities.\31\
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    \31\ See 12 U.S.C. 5461(b).
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    Section 805(a)(2) of the Clearing Supervision Act \32\ authorizes
the Commission to prescribe risk management standards for the payment,
clearing and settlement activities of designated clearing entities
engaged in designated activities for which the Commission is the
supervisory agency. Section 805(b) of the Clearing Supervision Act \33\
provides the following objectives and principles for the Commission's
risk management standards prescribed under Section 805(a):
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    \32\ 12 U.S.C. 5464(a)(2).
    \33\ 12 U.S.C. 5464(b).
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     To promote robust risk management;
     to promote safety and soundness;
     to reduce systemic risks; and
     to support the stability of the broader financial system.
    The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act \34\ and Section 17A of the
Act \35\ (``Rule 17Ad-22'').\36\ Rule 17Ad-22 requires registered
clearing agencies to establish, implement, maintain, and enforce
written policies and procedures that are reasonably designed to meet
certain minimum requirements for their operations and risk management
practices on an ongoing basis.\37\ Therefore, it is appropriate for the
Commission to review proposed changes in advance notices against the
objectives and principles of these risk management standards as
described in Section 805(b) of the Clearing Supervision Act \38\ and
against Rule 17Ad-22.\39\
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    \34\ 12 U.S.C. 5464(a)(2).
    \35\ 15 U.S.C. 78q-1.
    \36\ 17 CFR 240.17Ad-22.
    \37\ Id.
    \38\ 12 U.S.C. 5464(b).
    \39\ 17 CFR 240.17Ad-22.
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A. Consistency With Section 805(b) of the Clearing Supervision Act

    The Commission believes that the proposed changes in the Advance
Notice are designed to help NSCC promote robust risk management,
promote safety and soundness, reduce systemic risks, and support the
stability of the broader financial system as discussed below.
    NSCC proposes to make the following changes to its loss allocation
process as described above. First, NSCC would apply a mandatory fixed
percentage of its General Business Risk Capital Requirement as compared
to the current Rules, which provide for a ``no less than'' percentage
of retained earnings. The proposed changes also would clarify that the
proposed Corporate Contribution would apply to Declared Non-Default
Loss Events, as well as Defaulting Member Events, on a mandatory basis.
Moreover, the proposal specifies that if the Corporate Contribution is
applied to a loss or liability relating to an Event Period, then for
any subsequent Event Periods that occur during the 250 business days
thereafter, the Corporate Contribution would be reduced to the
remaining, unused portion of the Corporate Contribution. The Commission
believes that these changes set clear expectations about how and when
NSCC's Corporate Contribution would be applied to help address a loss,
and allow NSCC to better anticipate and prepare for potential exposures
that may arise during an Event Period.
    Second, as described above, NSCC proposes to determine a Member's
loss allocation obligation based on the average of its Required Fund
Deposit over a look-back period of 70 business days and to determine
its Loss Allocation Cap based on the greater of its Required Fund
Deposit or the average thereof over a look-back period of 70 business
days. These proposed changes are designed to allow NSCC to calculate a
Member's pro rata share of losses and liabilities based on the amount
of risk that the Member brings to NSCC. Moreover, using a look-back
period to determine a Member's loss allocation obligation is designed
to deter Members from reducing their settlement activities during a
time of stress primarily to limit their Loss Allocation Caps. As a
result of these changes, the Commission believes that NSCC should be in
a better position to manage its risk by curtailing the chance that
reduced settlement activities contribute to higher volatility or lower
liquidity during an already stressed period.
    Third, as described above, NSCC proposes to introduce the concept
of an Event Period, which would group Defaulting Member Events and
Declared Non-Default Loss Events occurring within a period of 10
business days for purposes of allocating losses to Members in one or
more rounds. Under the current Rules, every time NSCC incurs a loss or
liability, NSCC will

initiate its current loss allocation process by applying its retained
earnings and allocating losses. The current Rules do not contemplate a
situation where loss events occur in quick succession. Accordingly,
even if multiple losses occur within a short period, the current Rules
dictate that NSCC start the loss allocation process separately for each
loss event. Having multiple loss allocation calculations and notices
from NSCC and withdrawal notices from Members after multiple sequential
loss events could cause operational risk to NSCC, since multiple
notices may cause confusion at a time of significant stress.
    The Commission believes that the proposed change to introduce an
Event Period would improve upon the current loss allocation process
described immediately above. Specifically, the introduction of an Event
Period would provide a more defined and transparent structure than the
current loss allocation process. Such an improved structure should
enable both NSCC and each Member to more effectively manage the risks
and potential financial obligations presented by sequential Defaulting
Member Events or Declared Non-Default Loss Events that are likely to
arise in quick succession, and could be closely linked to an initial
event and/or market dislocation episode. In other words, the proposed
Event Period structure should help clarify and define for both NSCC and
Members how NSCC would initiate a single defined loss allocation
process to cover all loss events within 10 business days. As a result,
all loss allocation calculation and notices from NSCC and potential
withdrawal notices from Members would be tied back to one Event Period
instead of each individual loss event.
    Fourth, as described above, the proposal would improve upon the
approach laid out in NSCC's current Rules by providing for a loss
allocation round, a Loss Allocation Notice process, a Loss Allocation
Withdrawal Notice process, and a Loss Allocation Cap. A loss allocation
round would be a series of loss allocations relating to an Event
Period, the aggregate amount of which would be limited by the round
cap. When the losses allocated in a round equals the round cap, any
additional losses relating to the Event Period would be allocated in
subsequent rounds until all losses from the Event Period are allocated
among Members. Each loss allocation would be communicated to Members by
the issuance of a Loss Allocation Notice. Each Member in a loss
allocation round would have five business days from the issuance of
such first Loss Allocation Notice for the round to notify NSCC of its
election to withdraw from membership with NSCC, and thereby benefit
from its Loss Allocation Cap. The Loss Allocation Cap of a Member would
be equal to the greater of its Required Fund Deposit on the first day
of the applicable Event Period and its Average RFD. Members would have
two business days after NSCC issues a first round Loss Allocation
Notice to pay the amount specified in such notice.
    The Commission believes that those four proposed changes, to (1)
establish a specific Event Period, (2) continue the loss allocation
process in successive rounds, (3) clearly communicate with its Members
regarding their loss allocation obligations, and (4) effectively
identify continuing Members for the purpose of calculating loss
allocation obligations in successive rounds, are designed to make
NSCC's loss allocation process more certain. In addition, the changes
are designed to provide Members with a clear set of procedures that
operate within the proposed loss allocation structure, and provide
increased predictability and certainty regarding Members' exposures and
obligations. Furthermore, by grouping all loss events within 10
business days, the loss allocation process relating to multiple loss
events can be streamlined. With enhanced certainty, predictability, and
efficiency, NSCC would then be able to better manage its risks from
loss events occurring in quick succession, and Members would be able to
better manage their risks by deciding whether and when to withdraw from
membership and limit their exposures to NSCC. Furthermore, the proposed
changes are designed to reduce liquidity risk to Members by providing a
two-day window to arrange funding to pay for loss allocation, while
still allowing NSCC to address losses in a timely manner.
    Fifth, as described above, NSCC proposes to clarify the governance
around Declared Non-Default Loss Events by providing that the Board of
Directors would have to determine that there is a non-default loss that
may be a significant and substantial loss or liability that may
materially impair the ability of NSCC to provide its services in an
orderly manner. NSCC also proposes to provide that NSCC would then be
required to promptly notify Members of this determination and start the
loss allocation process concerning the loss stemming from a Declared
Non-Default Loss Event.
    The Commission believes that the immediately above described
changes should provide an orderly and transparent procedure to allocate
a non-default loss by requiring the Board of Directors to make a
definitive decision to announce an occurrence of a Declared Non-Default
Loss Event, and requiring NSCC to provide a notice to Members of such
decision. The Commission further believes that an orderly and
transparent procedure should result in a risk management process at
NSCC that is more robust as a result of enhanced governance around
NSCC's response to non-default losses, thereby promoting safety and
soundness.
    Collectively, the Commission believes that the proposed changes to
NSCC's loss allocation process would provide greater transparency,
certainty, and efficiency to both NSCC and Members regarding the amount
of resources and the instances in which NSCC would apply such resources
to address risks arising from Defaulting Member Events and Declared
Non-Default Loss Events, which could occur in quick succession. The
Commission believes that such transparency, certainty, and efficiency
would allow better predictability to NSCC and its Members regarding
their exposures, and in turn, would allow a risk management process at
NSCC and its Members that is more robust in response to such events and
would improve their ability to continue to operate and recover in a
safe and sound manner during such events. Therefore, the Commission
believes that the proposal promotes robust risk management as well as
safety and soundness.
    In addition to the key changes discussed above, NSCC proposes to
align the loss allocation rules of the DTCC Clearing Agencies to the
extent practicable and appropriate. The alignment is designed to help
provide consistent treatment for firms that are participants of
multiple DTCC Clearing Agencies. The Commission believes that providing
consistent treatment through consistent procedures among the DTCC
Clearing Agencies would help firms that participate in multiple DTCC
Clearing Agencies from encountering unnecessary complexities and
confusion stemming from differences in procedures regarding loss
allocation processes, particularly at times of significant stress.
Accordingly, the Commission believes that the change is designed to
reduce systemic risk and support the stability of the broader financial
system.
    Furthermore, NSCC proposes to reduce the time within which NSCC is
required to return a former Member's Clearing Fund deposit that is cash
or securities from 90 days to 30 calendar days. The Commission believes
that this reduction in time would enable firms

that have exited NSCC to have access to their funds sooner than under
the current Rules. While acknowledging that the reduction in time could
lesson NSCC's flexibility in liquidity management for the period
between 31 calendar days and 90 days, the Commission believes that
NSCC's procedures would continue to protect NSCC and its clearance and
settlement services because a Member's Clearing Fund deposit would only
be returned if all obligations of the terminating Member to NSCC have
been satisfied. Therefore, NSCC could maintain necessary coverage for
possible claims arising in connection with the NSCC activities of a
former Member. Accordingly, the Commission believes that the proposed
changes to accelerate the return of a former Member's Clearing Fund
deposit are designed to reduce the systemic risks by reducing financial
risks for participants of multiple DTCC Clearing Agencies, and in turn,
support the stability of the broader financial system.
    Finally, NSCC proposes to make conforming and technical changes
necessary to harmonize the current Rules with the proposed changes. The
Commission believes that these changes are designed to provide clear
and coherent Rules concerning loss allocation process to NSCC and its
Members. The Commission further believes that clear and coherent Rules
should help enhance the ability of NSCC and Members to more effectively
plan for, manage, and address the risks and financial obligations that
loss events present to NSCC and its Members. Accordingly, the
Commission believes that the conforming and technical changes are
designed to promote robust risk management.
    Therefore, for all of the reasons stated above, the Commission
believes that the changes proposed in the Advance Notice are consistent
with the objectives and principles of Section 805(b) of the Clearing
Supervision Act.\40\
---------------------------------------------------------------------------

    \40\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(4)(viii)

    Rule 17Ad-22(e)(4)(viii) under the Act requires, in part, that a
covered clearing agency \41\ establish, implement, maintain and enforce
written policies and procedures reasonably designed to effectively
identify, measure, monitor, and manage its credit exposures to
participants and those arising from its payment, clearing, and
settlement processes, including by addressing allocation of credit
losses the covered clearing agency may face if its collateral and other
resources are insufficient to fully cover its credit exposures.\42\
---------------------------------------------------------------------------

    \41\ A ``covered clearing agency'' means, among other things, a
clearing agency registered with the Commission under Section 17A of
the Exchange Act (15 U.S.C. 78q-1 et seq.) that is designated
systemically important by the Financial Stability Oversight Counsel
(``FSOC'') pursuant to the Clearing Supervision Act (12 U.S.C. 5461
et seq.). See 17 CFR 240.17Ad-22(a)(5) and (6). On July 18, 2012,
FSOC designated NSCC as systemically important. U.S. Department of
the Treasury, ``FSOC Makes First Designations in Effort to Protect
Against Future Financial Crises,'' available at https://www.treasury.gov/press-center/press-releases/Pages/tg1645.aspx.
Therefore, NSCC is a covered clearing agency.
    \42\ 17 CFR 240.17Ad-22(e)(4)(viii).
---------------------------------------------------------------------------

    As described above, the proposal would revise the loss allocation
process to address how NSCC would manage loss events, including
Defaulting Member Events. Under the proposal, if losses arise out of or
relate to a Defaulting Member Event, NSCC would first apply its
Corporate Contribution. If such funds prove insufficient, the proposal
provides for allocating the remaining losses to the remaining Members
through the proposed process. Accordingly, the Commission believes that
the proposal is reasonably designed to manage NSCC's credit exposures
to its Members, by addressing allocation of credit losses.
    Therefore, the Commission believes that NSCC's proposal is
consistent with Rule 17Ad-22(e)(4)(viii) under the Act.\43\
---------------------------------------------------------------------------

    \43\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(13)

    Rule 17Ad-22(e)(13) under the Act requires, in part, that a covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to ensure the covered
clearing agency has the authority to take timely action to contain
losses and liquidity demands and continue to meet its obligations.\44\
---------------------------------------------------------------------------

    \44\ 17 CFR 240.17Ad-22(e)(13).
---------------------------------------------------------------------------

    As described above, the proposal would establish a more detailed
and structured loss allocation process by (1) modifying the calculation
and application of the Corporate Contribution; (2) introducing an Event
Period; (3) introducing a loss allocation round and notice process; (4)
implementing a look-back period to calculate a Member's loss allocation
obligation; (5) modifying the withdrawal process and the cap of
withdrawing Member's loss allocation exposure; and (6) providing the
governance around a non-default loss. The Commission believes that each
of these proposed changes helps establish a more transparent and clear
loss allocation process and authority of NSCC to take certain actions,
such as announcing a Declared Non-Default Loss Event, within the loss
allocation process. Further, having a more transparent and clear loss
allocation process as proposed would provide clear authority to NSCC to
allocate losses from Defaulting Member Events and Declared Non-Default
Loss Events and take timely actions to contain losses, and continue to
meet its clearance and settlement obligations.
    Therefore, the Commission believes that NSCC's proposal is
consistent with Rule 17Ad-22(e)(13) under the Act.\45\
---------------------------------------------------------------------------

    \45\ Id.
---------------------------------------------------------------------------

D. Consistency With Rule 17Ad-22(e)(23)(i) and (ii)

    Rule 17Ad-22(e)(23)(i) under the Act requires that a covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to publicly disclose all
relevant rules and material procedures, including key aspects of its
default rules and procedures.\46\ Rule 17Ad-22(e)(23)(ii) under the Act
requires that a covered clearing agency establish, implement, maintain
and enforce written policies and procedures reasonably designed to
provide sufficient information to enable participants to identify and
evaluate the risks, fees, and other material costs they incur by
participating in the covered clearing agency.\47\
---------------------------------------------------------------------------

    \46\ 17 CFR 240.17Ad-22(e)(23)(i).
    \47\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------

    As described above, the proposal would publicly disclose how NSCC's
Corporate Contribution would be calculated and applied. In addition,
the proposal would establish and publicly disclose a detailed procedure
in the Rules for loss allocation. More specifically, the proposed
changes would establish an Event Period, loss allocation rounds, a
look-back period to calculate each Member's loss allocation obligation,
a withdrawal process followed by a loss allocation process, and a Loss
Allocation Cap that would apply to Members after withdrawal.
Additionally, the proposal would align the loss allocation rules across
the DTCC Clearing Agencies to help provide consistent treatment, and
clarify that non-default losses would trigger loss allocation to
Members. The proposal would also provide for and make known to members
the procedures to trigger a loss allocation procedure, contribute
NSCC's Corporate Contribution, allocate losses, and withdraw and limit
Member's loss exposure. Accordingly, the Commission believes that the

proposal is reasonably designed to (1) publicly disclose all relevant
rules and material procedures concerning key aspects of NSCC's default
rules and procedures, and (2) provide sufficient information to enable
Members to identify and evaluate the risks by participating in NSCC.
    Therefore, the Commission believes that NSCC's proposal is
consistent with Rules 17Ad-22(e)(23)(i) and (ii) under the Act.\48\
---------------------------------------------------------------------------

    \48\ 17 CFR 240.17Ad-22(e)(23)(i) and (ii).
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III. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act,\49\ that the Commission does not object to
advance notice SR-NSCC-2017-806, as modified by Amendment No. 1, and
that NSCC is authorized to implement the proposal as of the date of
this notice or the date of an order by the Commission approving
proposed rule change SR-NSCC-2017-018, as modified by Amendment No. 1,
whichever is later.
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    \49\ 12 U.S.C. 5465(e)(1)(I).

    By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18866 Filed 8-29-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Notices]
[Page 34614]
[FR Doc No: 2020-12219]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2629-014]

Village or Morrisville, Vermont; Notice of Petition for
Declaratory Order

    Take notice that on May 28, 2020, the Village of Morrisville
(Morrisville), applicant for relicensing the Morrisville Hydroelectric
Project No. 2629, filed a petition for declaratory order (petition)
pursuant to Rule 207(a)(2) of the Federal Energy Regulatory
Commission's Rules of Practice and Procedure, 18 CFR 385.207(a)(2).
Morrisville requests that the Commission declare that the Vermont
Agency of Natural Resources has waived its authority to issue a
certification for the Morrisville Hydroelectric Project under Section
401 of the Clean Water Act, 33 U.S.C. 1341(a)(1), as more fully
explained in the petition.
    Any person wishing to comment on Morrisville's petition may do
so.\1\ The deadline for filing comments is 30 days from the issuance of
this notice. The Commission encourages electronic submission of
comments in lieu of paper using the eFiling link at http://www.ferc.gov. Persons unable to file electronically should send
comments to the following address: Federal Energy Regulatory
Commission, 888 First Street NE, Washington, DC 20426. Be sure to
reference the project docket number (P-2629-014) with your submission.
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    \1\ Morrisville's request is part of its relicensing proceeding
in Project No. 2629-014. Thus, any person that intervened in the
relicensing proceeding is already a party. The filing of the
petition in this case does not trigger a new opportunity to
intervene.
---------------------------------------------------------------------------

    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) using
the eLibrary link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to Commission' s Public Reference
Room, due to the proclamation declaring a National Emergency concerning
the Novel Coronavirus Disease (COVID-19), issued by the President on
March 13, 2020. For assistance, contact FERC at
<EMAIL_ADDRESS>or call toll-free,<PHONE_NUMBER> or TYY,
(202) 502-8659.
    Comment Date: 5:00 p.m. Eastern Time on July 1, 2020.

    Dated: June 1, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-12219 Filed 6-4-20; 8:45 am]
BILLING CODE 6717-01-P