[Federal Register: January 2, 2009 (Volume 74, Number 1)]
[Notices]
[Page 133-139]
[DOCID:fr02ja09-57]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59165; File No. S7-35-08]

Order Pursuant to Section 36 of the Securities Exchange Act of
1934 Granting Temporary Exemptions From Sections 5 and 6 of the
Exchange Act for Broker-Dealers and Exchanges Effecting Transactions in
Credit Default Swaps

December 24, 2008.

I. Background

    In response to the recent turmoil in the financial markets, the
Securities and Exchange Commission (``Commission'') has taken multiple
actions to protect investors and ensure the integrity of the nation's
securities markets.\1\ Today, we are taking further action designed to
address concerns related to the market in credit default swaps
(``CDS''). The over-the-counter (``OTC'') market for CDS has been a
source of concerns to us and other financial regulators. These concerns
include the systemic risk posed by CDS, highlighted by the possible
inability of parties to meet their obligations as counterparties and
the potential resulting adverse effects on

other markets and the financial system.\2\ Recent credit market events
have demonstrated the seriousness of these risks in a CDS market
operating without meaningful regulation, transparency,\3\ or central
counterparties (``CCPs'').\4\ These events have emphasized the need for
CCPs as mechanisms to help control such risks.\5\ A CCP for CDS could
be an important step in reducing the counterparty risks inherent in the
CDS market, and thereby help mitigate potential systemic impacts. In
November 2008, the President's Working Group on Financial Markets
stated that the implementation of a CCP for CDS was a top priority \6\
and, in furtherance of this recommendation, the Commission, the FRB and
the Commodity Futures Trading Commission (``CFTC'') signed a Memorandum
of Understanding \7\ that establishes a framework for consultation and
information sharing on issues related to CCPs for CDS. Given the
continued uncertainty in this market, taking action to help foster the
prompt development of CCPs, including granting conditional exemptions
from certain provisions of the federal securities laws, is in the
public interest.
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    \1\ A nonexclusive list of the Commission's actions to stabilize
financial markets during this credit crisis includes: Adopting a
package of measures to strengthen investor protections against naked
short selling, including rules requiring a hard T+3 close-out,
eliminating the options market maker exception of Regulation SHO,
and expressly targeting fraud in short selling transactions (See
Securities Exchange Act Release No. 58572 (September 17, 2008), 73
FR 54875 (September 23, 2008)); issuing an emergency order to
enhance protections against naked short selling in the securities of
primary dealers, Fannie Mae, and Freddie Mac (See Securities
Exchange Act Release No. 58166 (July 15, 2008), 73 FR 42379 (July
21, 2008)); taking temporary emergency action to ban short selling
in financial securities (See Securities Exchange Act Release No.
58592 (September 18, 2008), 73 FR 55169 (September 24, 2008));
approving emergency rulemaking to ensure disclosure of short
positions by hedge funds and other institutional money managers (See
Securities Exchange Act Release No. 58591A (September 21, 2008), 73
FR 55557 (September 25, 2008)); proposing rules to strengthen the
regulation of credit rating agencies and making the limits and
purposes of credit ratings clearer to investors (See Securities
Exchange Act Release No. 57967 (June 16, 2008), 73 FR 36212 (June
25, 2008); entering into a Memorandum of Understanding with the
Board of Governors of the Federal Reserve System (``FRB'') to make
sure key federal financial regulators share information and
coordinate regulatory activities in important areas of common
interest (See Memorandum of Understanding Between the U.S.
Securities and Exchange Commission and the Board of Governors of the
Federal Reserve System Regarding Coordination and Information
Sharing in Areas of Common Regulatory and Supervisory Interest (July
7, 2008), http://www.sec.gov/news/press/2008/2008-134_mou.pdf).
    \2\ In addition to the potential systemic risks that CDS pose to
financial stability, we are concerned about other potential risks in
this market, including operational risks, risks relating to
manipulation and fraud, and regulatory arbitrage risks.
    \3\ See Policy Objectives for the OTC Derivatives Market, The
President's Working Group on Financial Markets (November 14, 2008),
http://www.ustreas.gov/press/releases/reports/policyobjectives.pdf
(``Public reporting of prices, trading volumes and aggregate open
interest should be required to increase market transparency for
participants and the public.'').
    \4\ See The Role of Credit Derivatives in the U.S. Economy
Before the H. Agric. Comm., 110th Cong. (2008) (Statement of Erik
Sirri, Director of the Division of Trading and Markets, Commission).
    \5\ See id.
    \6\ See Policy Objectives for the OTC Derivatives Market, The
President's Working Group on Financial Markets (November 14, 2008),
http://www.ustreas.gov/press/releases/reports/policyobjectives.pdf.
See also Policy Statement on Financial Market Developments, The
President's Working Group on Financial Markets (March 13, 2008),
http://www.treas.gov/press/releases/reports/
pwgpolicystatemktturmoil_03122008.pdf; Progress Update on March
Policy Statement on Financial Market Developments, The President's
Working Group on Financial Markets (October 2008), http://
www.treas.gov/press/releases/reports/q4progress%20update.pdf.
    \7\ See Memorandum of Understanding Between the Board of
Governors of the Federal Reserve System, the U.S. Commodity Futures
Trading Commission and the U.S. Securities and Exchange Commission
Regarding Central Counterparties for Credit Default Swaps (November
14, 2008), http://www.treas.gov/press/releases/reports/finalmou.pdf.
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    A CDS is a bilateral contract between two parties, known as
counterparties. The value of this financial contract is based on
underlying obligations (``reference obligations'') of a single entity
(a ``reference entity'') or on a particular security or other debt
obligation (``reference security''), or an index of several such
entities, securities, or obligations. The obligation of a seller under
a CDS to make payments under a CDS contract is triggered by a default
or other credit event as to such entity or entities or such security or
securities. Investors may use CDS for a variety of reasons, including
to offset or insure against risk in their fixed-income portfolios, to
take positions in bonds or in segments of the debt market as
represented by an index, or to capitalize on the volatility in credit
spreads during times of economic uncertainty. In recent years, CDS
market volumes have rapidly increased.\8\ This growth has coincided
with a significant rise in the types and number of entities
participating in the CDS market.\9\
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    \8\ See Semiannual OTC derivatives statistics at end-December
2007, Bank for International Settlements (``BIS''), http://
www.bis.org/statistics/otcder/dt1920a.pdf.
    \9\ CDS were initially created to meet the demand of banking
institutions looking to hedge and diversify the credit risk
attendant with their lending activities. However, financial
institutions such as insurance companies, pension funds, securities
firms, and hedge funds have entered the CDS market.
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    The Commission's authority over this OTC market for CDS is limited.
Specifically, section 3A of the Securities Exchange Act of 1934
(``Exchange Act'') limits the Commission's authority over swap
agreements, as defined in section 206A of the Gramm-Leach-Bliley
Act.\10\ For those CDS that are swap agreements, the exclusion from the
definition of security in section 3A of the Exchange Act, and related
provisions, will continue to apply. The Commission's action today does
not affect these CDS, and this order does not apply to them. For those
CDS that are not swap agreements (``non-excluded CDS''), the
Commission's action today provides certain exemptions to exchanges that
effect transactions in such non-excluded CDS and to brokers and dealers
that effect transactions in non-excluded CDS on exchanges, and is
designed to facilitate the development of one or more CDS
exchanges.\11\
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    \10\ 15 U.S.C. 78c-1. Section 3A excludes both a non-security-
based and a security-based swap agreement from the definition of
``security'' under Section 3(a)(10) of the Exchange Act, 15 U.S.C.
78c(a)(10). Section 206A of the Gramm-Leach-Bliley Act defines a
``swap agreement'' as ``any agreement, contract, or transaction
between eligible contract participants (as defined in section 1a(12)
of the Commodity Exchange Act* * *) * * * the material terms of
which (other than price and quantity) are subject to individual
negotiation.'' 15 U.S.C. 78c note.
    \11\ The Commission found that credit default options and credit
default basket options, which are essentially exchange-traded
equivalents of OTC CDS, proposed by the Chicago Board Options
Exchange, were securities because they are options based on the
value of a security or securities, options on an interest in a
security or securities, or options based on the value of an interest
in a security or securities. See Securities Exchange Act Release No.
55871 (June 6, 2007), 72 FR 32372, 32375-77 (June 12, 2007) (File
No. SR-CBOE-2006-84) (``CBOE CDO Order''); Securities Exchange Act
Release No. 56275 (August 17, 2007), 72 FR 47297 (August 22, 2008)
(File No. SR-CBOE-2007-26) (together with the CBOE CDO Order, the
``CBOE Orders''). The Commission made special note that, ``because
credit default options will be exchange-traded and not individually
negotiated, * * * they are not qualifying swap agreements under
Section 206A of the Gramm-Leach-Bliley Act, * * * and, therefore,
not excluded from the definition of security by Section 3A of the
Exchange Act.'' 72 FR at 32376 n. 39. Unlike the options at issue in
the CBOE Orders, which had fixed payouts in the event of a default
or other credit event, the CDS that are the subject of the
Commission's actions today may provide for the delivery of a debt
security or securities against a specified amount, or a cash payment
based on the value of a debt security or securities. For those CDS
that are not qualifying swap agreements, that have payouts tied to
the delivery of debt securities, or that are based on the value of
debt securities, there may be arguments in addition to those in the
CBOE Orders that such CDS are security options.
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    In companion actions today, the Commission is temporarily
exempting, subject to conditions, LCH.Clearnet Ltd. from the
requirement to register as a clearing agency under section 17A of the
Exchange Act solely to perform the functions of a clearing agency for
non-excluded CDS transactions.\12\ To facilitate the operation of one
or more CCPs for the CDS market, the Commission has also approved
interim final temporary rules providing exemptions under the Securities
Act of 1933 and Exchange Act for non-excluded CDS.
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    \12\ See Securities Exchange Act Release No. 59164 (December 24,
2008) (File No. S7-34-08).
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    In conjunction with these exemptions, the Commission in this order
is providing a temporary exemption to any exchange that effects or
reports transactions in non-excluded CDS and is not otherwise subject
to the requirements under Sections 5 and 6 of the Exchange Act \13\
from the requirement to register as a national securities exchange, and
to any broker or dealer that effects or reports transactions in non-
excluded CDS on such an exempt exchange.\14\ The

exemptions in this order are subject to the conditions discussed below.
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    \13\ 15 U.S.C. 78e and 78f.
    \14\ A national securities exchange that effects transactions in
CDS would continue to be required to comply with all requirements
under the Exchange Act applicable to such transactions. A national
securities exchange could form subsidiaries or affiliates that
operate exchanges exempt under this order. Any subsidiary or
affiliate of a registered exchange could not integrate, or otherwise
link, the exempt CDS exchange with the registered exchange,
including the premises or property of such exchange for effecting or
reporting a transaction, without being considered a ``facility of
the exchange.'' See Section 3(a)(2) of the Exchange Act, 15 U.S.C.
78c(a)(2).
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    The Commission believes that the CDS market would benefit from the
development of exchanges for non-excluded CDS. As the Commission has
previously noted when approving a proposed rule change by the Chicago
Board Options Exchange to list and trade certain CDS contracts, there
are several benefits to trading such products on exchanges rather than
over-the-counter.\15\ These benefits include a centralized market,
standardized contract specifications, transparent quotations, and
transaction reporting.\16\ Exchange trading would permit real-time
matching of orders, and enhance transparency of the CDS market by
promoting dissemination of pre-trade quotations as well as post-trade
transaction information. Additional pre-trade and post-trade
transparency would enable exchange subscribers to better assess market
depth and liquidity and allow regulators to better surveil for
violations of the securities laws.
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    \15\ See CBOE Orders, supra note 11.
    \16\ Id.
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    Accordingly, the Commission is using its authority under section 36
of the Exchange Act \17\ to exempt temporarily any exchange that
effects transactions in non-excluded CDS and is not otherwise subject
to the requirements under Sections 5 and 6 of the Exchange Act,\18\ and
the rules and regulations thereunder, from the requirement to register
as a national securities exchange under section 6 of the Exchange
Act,\19\ and from the prohibition in section 5 of the Exchange Act \20\
against effecting transactions as an exchange unless it is registered
as a national securities exchange or exempt from registration due to
the limited volume of its transactions. The Commission finds that such
action is necessary and appropriate in the public interest and
consistent with the protection of investors to facilitate the operation
of one or more CDS exchanges in connection with the establishment of
one or more CCP that clear and settle non-excluded CDS.\21\ The
Commission is also temporarily exempting brokers and dealers from the
section 5 prohibition against effecting or reporting transactions in
securities otherwise than on a national securities exchange or an
exchange that is exempt from registration due to its limited volume.
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    \17\ 15 U.S.C. 78mm.
    \18\ 15 U.S.C. 78e and 78f.
    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78e.
    \21\ See supra note 12.
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    The conditions to these exemptions will enable to the Commission to
oversee the development of CDS exchanges, and to take such additional
action as we may deem necessary to promote the public interest and the
protection of investors. Moreover, the limited duration of the
exemptions provided today will enable one or more CDS exchanges to
become operational while we gain experience with the CDS market and
evaluate public input, including comments we receive on the temporary
exemptions granted in today's order.

II. Discussion

    Section 5 of the Exchange Act states that ``[i]t shall be unlawful
for any broker, dealer, or exchange, directly or indirectly, to make
use of the mails or any means or instrumentality of interstate commerce
for the purpose of using any facility of an exchange * * * to effect
any transaction in a security, or to report any such transactions,
unless such exchange (1) is registered as a national securities
exchange under section 6 of [the Exchange Act], or (2) is exempted from
such registration * * * by reason of the limited volume of transactions
effected on such exchange* * *.'' \22\ Section 6 of the Exchange Act
sets forth a procedure whereby an exchange \23\ may register as a
national securities exchange.\24\
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    \22\ 15 U.S.C. 78e.
    \23\ Section 3(a)(1) of the Exchange Act, 15 U.S.C. 78c(a)(1),
defines ``exchange.'' Rule 3b-16 under the Exchange Act, 17 CFR
240.3b-16, defines certain terms used in the statutory definition of
exchange. See Securities Exchange Act Release No. 40760 (December 8,
1998), 63 FR 70844 (December 22, 1998) (``Regulation ATS Adopting
Release'') (adopting Rule 3b-16 in addition to Regulation ATS).
    \24\ 15 U.S.C. 78f. Section 6 of the Exchange Act also sets
forth various requirements to which a national securities exchange
is subject.
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    Section 36 of the Exchange Act provides that the Commission, ``by
rule, regulation, or order, may conditionally or unconditionally exempt
any person, security, or transaction, or any class or classes of
persons, securities, or transactions, from any provision or provisions
of [the Exchange Act] or of any rule or regulation thereunder, to the
extent that such exemption is necessary or appropriate in the public
interest, and is consistent with the protection of investors.'' To
facilitate the establishment of one or more exchanges for non-excluded
CDS, the Commission is exercising its authority under section 36 of the
Exchange Act to temporarily exempt any exchange, broker or dealer that
effects transactions in non-excluded CDS from the prohibition in
Section 5 of the Exchange Act and (in the case of exchanges) the
requirements in Section 6 of the Exchange Act and the rules and
regulations thereunder. These temporary exemptions are subject to
certain conditions, discussed further below. These conditions on
exchanges generally mirror those applicable to alternative trading
systems, which are securities trading systems that the Commission
previously exempted from exchange registration.\25\
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    \25\ See Regulation ATS, 17 CFR 242.300 et seq. In 1998, the
Commission exercised its exemptive authority under Section 36 of the
Exchange Act and its general authority under Section 11A of the
Exchange Act, 15 U.S.C. 78k-1, to establish a regulatory framework
for ``alternative trading systems,'' which perform many of the same
functions as exchanges. Under this framework, an entity that, like
an exchange, matches the orders in securities of multiple buyers and
sellers according to established, non-discretionary methods is
exempt from the definition of ``exchange'' if it instead registers
as a broker-dealer and complies with Regulation ATS. Regulation ATS
is designed, among other things, ``to adopt a regulatory framework
that addresses [the Commission's] concerns without jeopardizing the
commercial viability of these markets.'' Regulation ATS Adopting
Release, supra note 23, 63 FR at 70846.
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    This temporary exemption is designed to allow brokers, dealers, and
exchanges to effect transactions in non-excluded CDS on exchanges,
subject to certain conditions. The Commission believes the exemption,
together with the conditions, is necessary in the public interest and
consistent with the protection of investors. In addition, the
Commission believes that these conditions will not impede the ability
of brokers, dealers, and exchanges to compete in the market for CDS.
The limited term of this exemption will provide the Commission with
adequate time to evaluate the application of this exemption to non-
excluded CDS exchanges, and whether such conditions should be modified.
In particular, the Commission will be considering whether Regulation
ATS, with or without modifications, could apply to systems that match
orders in non-excluded CDS of multiple buyers and sellers.
    This temporary exemption is available only to exchanges that effect
transactions in non-excluded CDS. To the extent that an exchange is
otherwise subject to the requirements of section 5 of the Exchange Act,
it must register with the Commission as a national securities exchange
under Section 6 of the Exchange Act and the rules and regulations
thereunder or comply with the terms of another exemption. Similarly, a
broker or dealer is temporarily exempt from the prohibition in Section
5 only to the extent that it effects transactions in non-

excluded CDS on an exchange or reports such transactions on an
exchange.
    The Commission believes that this order will facilitate the
establishment of one or more exchanges that effect transactions in non-
excluded CDS. For this reason and the reasons discussed above,\26\ the
Commission believes that these exemptions are necessary or appropriate
in the public interest and consistent with the protection of investors.
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    \26\ See supra notes 15-16 and accompanying text.
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    As noted, the conditions under which CDS exchanges must operate to
qualify for the exemption from exchange registration being granted
today are modeled on requirements applicable to alternative trading
systems. Like an alternative trading system, a CDS exchange must keep
records about its operations, its subscribers, and their orders.\27\ A
CDS exchange also must provide the Commission with trading information
on a quarterly basis \28\ and establish procedures to ensure the
confidential treatment of trading information.\29\ Likewise, a CDS
exchange must permit the Commission to examine its premises, systems,
and records and must cooperate with the examination of its
subscribers.\30\ These requirements are designed to allow the
Commission to monitor market developments, to ascertain how new
entrants are affecting the national market system, and to promote
compliance with the federal securities laws generally. The Commission
believes that temporarily exempting exchanges that effect transactions
in non-excluded CDS from exchange registration, subject to these
conditions, is necessary or appropriate in the public interest and is
consistent with the protection of investors.
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    \27\ Compare 17 CFR 242.301(b)(8), 242.302, and 242.303.
    \28\ Compare 17 CFR 242.301(b)(9).
    \29\ Compare 17 CFR 242.301(b)(10).
    \30\ Compare 17 CFR 242.301(b)(7).
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A. Exemption From Sections 5 and 6 of the Exchange Act for Exchanges

1. No Self-Regulatory Authority
    To be exempt under this order, the exchange must not: (a) Set rules
governing the conduct of subscribers other than the conduct of such
subscribers trading on such exchange; or (b) discipline subscribers
under the Exchange Act other than by exclusion from trading. That is,
an exempted exchange may not exercise self-regulatory authority over
its subscribers. The Commission intends this condition to be the same
requirement as applies to alternative trading systems under Regulation
ATS. As described in the Regulation ATS Adopting Release, self-
regulatory authority would include, for example, any restrictions on
subscribers' activities outside of the exchange or imposing as a
condition of participation any requirement for which the exchange would
examine subscribers for compliance. The requirement in Regulation ATS
and this condition are based on the Commission's belief that a
organization, association, or group of persons that could exercise
self-regulatory authority over its subscribers should be registered as
a self-regulatory organization (``SRO'') and subject to the full
responsibilities and supervision that registration entails. The
Commission continues to believe that rules governing exchange
subscriber conduct may be imposed and enforced only by SROs because of
the potential that they may be applied for anti-competitive purposes.
However, as we noted in connection with adopting Regulation ATS, the
Commission does not intend this condition to preclude a trading system
from applying credit standards to its subscribers or requiring
subscribers to provide financial information relevant to their activity
on the system.\31\
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    \31\ See Regulation ATS Adopting Release, supra note 23, 63 FR
at 70859.
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2. Recordkeeping
    In addition, to be exempt under this order, an exchange must
maintain an audit trail of orders that it receives and transactions
that it effects. These records are critical to the Commission's ability
to oversee the CDS market, detect and deter illicit market activity,
and take action as necessary to address manipulation and fraud,
including insider trading. These recordkeeping and record preservation
requirements are comparable to those required under Regulation ATS and
tailored to apply to non-excluded CDS.\32\ Specifically, an exchange
must make and keep the following records for a period of not less than
three years, the first two years in an easily accessible place:
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    \32\ See 17 CFR 242.301(b)(8), 242.302, and 242.303.
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     A record of subscribers in the exchange (identifying any
affiliations between the exchange and subscribers in the exchange,
including common directors, officers, or owners);
     Daily summaries of trading, including: (a) Information
identifying CDS in which transactions are effected; and (b) transaction
volume, expressed in terms of number of trades and total U.S. dollar
notional value;
     Time-sequenced records of order information, including:
(a) Identity of the party entering an order; (b) identification of non-
excluded CDS contract (including the reference entity, security, or
index, and notional value); (c) date and time that order was received;
(d) price (whether expressed as credit spread, rate, strike, or
coupon); (e) whether the order is to buy or sell and any order
conditions; (f) any subsequent modification or cancellation of the
order; (g) date and time the order was executed, the size (e.g.,
notional value amount) executed, and the price; and (h) identity of the
parties to the transaction.\33\
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    \33\ These information items, with one exception, must be
recorded and kept current by alternative trading systems pursuant to
Regulation ATS. See 17 CFR 242.301(b)(8) and 242.302(c). Alternative
trading systems are not required by Regulation ATS to keep records
of the identity of the party entering an order. The Commission
believes, however, that such information could be important to its
ability to enforce the securities laws and is, therefore, to be kept
as a condition to this exemption. Alternative trading systems must
be registered with the Commission as a broker-dealer, and are
therefore subject to additional Commission recordkeeping rules. See
17 CFR 242.301(b)(1). An exchange that avails itself of this
exemption, however, may not otherwise be subject to requirements
under the Exchange Act.
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    In addition, as a condition of this exemption, an exchange must
preserve the following records:
     For a period of not less than three years, the first two
years in an easily accessible place, all notices provided by such
exchange to subscribers generally, whether written or communicated
through automated means, including, but not limited to, notices
addressing hours of system operations, system malfunctions, changes to
system procedures, maintenance of hardware and software, instructions
pertaining to access to the market and denials of, or limitations on,
access to the exchange; and
     During the life of the enterprise and of any successor
enterprise, the exchange's organizational documents and copies of
reports filed with the Commission pursuant to this exemption.

An exchange exempt pursuant to this order may comply with these
recordkeeping and record preservation requirements through use of a
service bureau, depository, or other recordkeeping service that
maintains and preserves these records on behalf of the exchange. An
agreement with a service bureau, depository, or other recordkeeping
service will not relieve the exchange from the responsibility to
prepare and maintain the specified records.

    The Commission believes that the types of records an exchange would
be required to make and keep pursuant to this condition are records an
exchange would keep in the normal course of its business and,
therefore, that this condition is not unduly burdensome.
3. Regulatory Reporting
    An exchange that relies on this order must, within five days of
commencing operation, submit a notice to the Commission \34\ that
includes the following information:
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    \34\ Any such notice should be sent to: Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549,
and be noted as regarding ``CDS Exchange Exemption from
Registration.''
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    1. Full legal name of the exchange;
    2. A description of the exchange's ownership structure;
    3. Contact person and contact information;
    4. A general description of the CDS contracts that trade on the
exchange; and
    5. A description of how the exchange operates.

This information is essential for the Commission to understand
developments in the CDS market. Any subsequent action regarding this
exemption--for example, whether it should be modified, extended, or
allowed to expire--is predicated on understanding which market
participants are relying on it. In the future, different regulatory
frameworks may be appropriate for different market participants. These
notices will enable the Commission to commence a dialog with the
relevant market participants.
    In addition, an exchange that relies on this exemption must report
the following information to the Commission within 30 days of the end
of each quarter:
    1. The total dollar volume of transactions executed during the
quarter, broken down by reference entity, security, or index;
    2. The total unit volume and/or notional amount executed during the
quarter, broken down by reference entity, security, or index; and
    3. A list of all subscribers that effected transactions on the
exchange during the quarter.

Reporting of this information will assist the Commission in carrying
out its responsibility to supervise and regulate the securities
markets. This information is similar to that which an alternative
trading system must provide quarterly.\35\
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    \35\ See 17 CFR 242.301(b)(9)(i); Form ATS-R, 17 CFR 249.638.
The Commission notes that an alternative trading system is not
required to report to the Commission its transaction volume by
security; only aggregate volumes must be reported to the Commission.
Reports in most equity securities and many debt securities traded on
an ATS are required to be reported to an SRO on a transaction-by-
transaction basis. This is the not the case for CDS. For this
reason, the Commission is conditioning this exemption on an exchange
providing quarterly information to the Commission on trading volume
broken down by reference entity, security, or index. The Commission
believes it is appropriate to require this more specific information
from CDS exchanges to better understand the development of the
exchange-traded market in non-excluded CDS.
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4. Confidentiality of Trading Information
    An exchange relying on this order also must establish adequate
safeguards and procedures to protect subscribers' confidential trading
information. Such safeguards and procedures shall include: (a) Limiting
access to the confidential trading information of subscribers to those
employees of the exchange who are operating the system or responsible
for its compliance with this exemption or any other applicable rules;
and (b) implementing standards controlling employees of the exchange
trading for their own accounts. The exchange must adopt and implement
adequate oversight procedures to ensure that the safeguards and
procedures established pursuant to this condition are followed. This
condition, which closely tracks a requirement applicable to alternative
trading systems,\36\ is designed to prevent the misuse of subscriber
trading information that is available to the exchange. This should
strengthen confidence in the exchange, promoting participation.
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    \36\ See 17 CFR 242.301(b)(10).
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5. Commission Jurisdiction
    Finally, an exchange that relies on this order must provide access
to the Commission to conduct on-site inspections of its facilities
(including automated systems and systems environment), records, and
personnel related to exchange activities. The exchange must cooperate
with the Commission in connection with the investigation of any
exchange subscribers. This requirement is similar to one in Regulation
ATS that applies to alternative trading systems.\37\
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    \37\ See 17 CFR 242.301(b)(7).
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    Recent market events have clearly demonstrated the importance of
the CDS market and its potential to impact other markets, including the
equity securities markets. It is therefore imperative that the
Commission have examination authority over any exchange that effects
transactions in non-excluded CDS, with regard to its compliance with
the conditions of the exemption provided under this order as well as
enforcement of the antifraud provisions of the securities laws,
including the prohibitions on insider trading. Particularly because the
CDS market is so large and involves many market participants that are
not directly subject to the Commission's authority, cooperation by the
CDS exchange with the Commission in any investigation or enforcement
action is crucial.

B. Exemption From Section 5 of the Exchange Act for Brokers and Dealers

    Absent an exemption, section 5 of the Exchange Act \38\ would
prohibit brokers and dealers from effecting transactions in non-
excluded CDS on an exchange that is not a national securities exchange
because of that exchange's reliance on this order. The Commission finds
that temporarily exempting brokers and dealers that effect transactions
in non-excluded CDS on such an exchange from this restriction in
section 5 is necessary and appropriate in the public interest and is
consistent with the protection of investors because it will facilitate
brokers' and dealers' use of CDS exchanges, which for the reasons noted
above the Commission believes would be beneficial. Without also
exempting brokers and dealers from this section 5 requirement, the
Commission's temporary exemption of CDS exchanges would be ineffective,
because brokers and dealers would not be permitted to effect
transactions on those exchanges.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78e.
---------------------------------------------------------------------------

    Section 5 of the Exchange Act recognizes that there are situations
where brokers and dealers should be permitted to trade on an exchange
that is not registered as a national securities exchange. Section 5
provides in relevant part that brokers and dealers may effect
transactions on an exchange that the Commission, by reason of the
limited volume of transactions effected on such exchange, has exempted
from registration under Section 6. Brokers and dealers are also
permitted to effect transactions on alternative trading systems, which
are exempted from the definition of ``exchange'' and thus do not fall
within the restriction of Section 5. For the reasons noted above, the
Commission finds that it is consistent with the public interest and the
protection of investors to grant a temporary exemption from section 5
of the Exchange Act to any broker or dealer that effects transactions
in non-excluded CDS, or reports such transactions, on an exchange that
is exempted pursuant to this order.

C. Solicitation of Comments

    The Commission intends to monitor closely the development of the
CDS market and intends to determine to what extent, if any, additional
regulatory action may be necessary. For example, as circumstances
warrant, certain conditions could be added, altered, or eliminated.
Moreover, because this exemption is temporary, the Commission will in
the future consider whether it should be extended or allowed to expire.
The Commission believes it would be prudent to solicit public comment
on its action today, and what action it should take with respect to the
CDS market in the future. The Commission is soliciting public comment
on all aspects of this exemption, including:
    1. Whether the length of this temporary exemption (until September
25, 2009) is appropriate. If not, what should the appropriate duration
be?
    2. Whether the conditions to the exemption are appropriate. Why or
why not? Should other conditions apply? Are any of the present
conditions to the exemption provided in this order unnecessary? If so,
please specify and explain why such conditions are not needed.
    3. Whether exchanges relying on this exemption should ultimately be
required to register under the Exchange Act. Why or why not?
    4. Whether exchanges for non-excluded CDS can reasonably comply
with Regulation ATS. Why or why not? If not, what aspects or conditions
of Regulation ATS are problematic?

Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml);
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-35-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov/). Follow the instructions for submitting comments.

Paper Comments

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

All submissions should refer to File Number S7-35-08. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/other.shtml). Comments are
also available for public inspection and copying in the Commission's
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on
official business days between the hours of 10 a.m. and 3 p.m. All
comments received will be posted without change; we do not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.

III. Conclusion

    It is hereby ordered pursuant to section 36 of the Exchange Act
that until September 25, 2009, an exchange is exempt from the
requirements of sections 5 and 6 of the Exchange Act \39\ and the rules
and regulations thereunder to the extent that such exchange effects or
reports transactions in non-excluded CDS and is not otherwise required
to register as a national securities exchange, subject to the following
conditions:
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78e and 78f.
---------------------------------------------------------------------------

    (1) The exchange must not: (a) Set rules governing the conduct of
subscribers other than the conduct of such subscribers trading on such
exchange; or (b) discipline subscribers other than by exclusion from
trading;
    (2) The exchange must make and keep for a period of not less than
three years, the first two years in an easily accessible place, the
following records:
     A record of subscribers in the exchange (identifying any
affiliations between the exchange and subscribers in the exchange,
including common directors, officers, or owners);
     Daily summaries of trading, including (a) information
identifying CDS in which transactions are effected; and (b) transaction
volume, expressed in terms of number of trades and total U.S. dollar
notional value;
     Time-sequenced records of order information, including:
(a) Identity of the party entering an order; (b) identification of non-
excluded CDS contract (including the reference entity, security, or
index, and notional value); (c) date and time that order was received;
(d) price (whether expressed as credit spread, rate, strike, or
coupon); (e) whether the order is to buy or sell and any order
conditions; (f) any subsequent modification or cancellation of the
order; (g) date and time the order was executed, the size (e.g.,
notional value amount) executed, and the price; and (h) identity of the
parties to the transaction;
    (3) The exchange must preserve the following records:
     For a period of not less than three years, the first two
years in an easily accessible place, all notices provided by such
exchange to subscribers generally, whether written or communicated
through automated means, including, but not limited to, notices
addressing hours of system operations, system malfunctions, changes to
system procedures, maintenance of hardware and software, instructions
pertaining to access to the market and denials of, or limitations on,
access to the exchange; and
     During the life of the enterprise and of any successor
enterprise, the exchange's organizational documents and copies of
reports filed with the Commission pursuant to this exemption;
    (4) An exchange must, within five days of commencing operation,
submit a notice to the Commission that includes the following
information:
     Full legal name of the exchange;
     A description of the exchange's ownership structure;
     Contact person and contact information;
     A general description of what CDS contracts trade on the
exchange; and
     A description of how the exchange operates;
    (5) An exchange must report the following information to the
Commission within 30 days of the end of each quarter:
     The total dollar volume of transactions executed during
the quarter, broken down by reference entity, security, or index;
     The total unit volume and/or notional amount executed
during the quarter, broken down by reference entity, security, or
index; and
     A list of all subscribers that effected transactions on
the exchange during the quarter;
    (6) The exchange must establish adequate safeguards and procedures
to protect subscribers' confidential trading information. Such
safeguards and procedures shall include: (a) Limiting access to the
confidential trading information of subscribers to those employees of
the exchange who are operating the system or responsible for its
compliance with this exemption or any other applicable rules; and (b)
implementing standards controlling employees of the exchange trading
for their own accounts. The exchange must adopt and implement adequate
oversight procedures to ensure that the safeguards and procedures
established pursuant to this condition are followed; and

    (7) The exchange must provide access to the Commission to conduct
on-site inspections of its facilities (including automated systems and
systems environment), records, and personnel related to exchange
activities. The exchange must cooperate with the Commission in
connection with the investigation of any exchange subscribers.
    It is further ordered pursuant to section 36 of the Exchange Act
that until September 25, 2009, a broker or dealer that effects
transactions in non-excluded CDS, or reports such transactions, on an
exchange that is exempted pursuant to this order is exempt from section
5 of the Exchange Act.

    By the Commission.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-31190 Filed 12-31-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 140 (Friday, July 20, 2012)]
[Rules and Regulations]
[Pages 42638-42640]
[FR Doc No: 2012-17694]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2012-0435]
RIN 1625-AA00

Safety Zone: Sea World San Diego Fireworks, Mission Bay; San
Diego, CA

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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

SUMMARY: The Coast Guard is establishing a safety zone on the navigable
waters of Mission Bay in support of the Sea World San Diego Fireworks.
This safety zone is necessary to provide for the safety of the
participants, crew, spectators, participating vessels, and other
vessels and users of the waterway. Persons and vessels are prohibited
from entering into, transiting through, or anchoring within this safety
zone unless authorized by the Captain of the Port, or his designated
representative.

DATES: This rule is effective with actual notice from 8:50 p.m. on May
26, 2012, until July 20, 2012. This rule is effective in the Federal
Register from July 20, 2012 until September 3, 2012.

ADDRESSES: Documents mentioned in this preamble are part of docket
USCG-2012-0435. To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type the
docket number in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rulemaking. You may also
visit the Docket Management Facility in Room W12-140 on the ground
floor of the Department of Transportation West Building, 1200 New
Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email Petty Officer David Varela, Waterways Management, U.S.
Coast Guard Sector San Diego, Coast Guard; telephone<PHONE_NUMBER>,
email<EMAIL_ADDRESS>If you have questions on viewing or
submitting material to the docket, call Renee V. Wright, Program
Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Acronyms

DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking

A. Regulatory History and Information

    The Coast Guard is issuing this final rule without prior notice and
opportunity to comment pursuant to authority under section 4(a) of the
Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
because such a publication would be impracticable. Immediate action is
necessary to ensure the safety of vessels, spectators, participants,
and others in the vicinity of the marine event on the dates and times
this rule will be in effect.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. Publishing an NPRM would be
impracticable, since immediate action is needed to ensure the public's
safety.

B. Basis and Purpose

    Sea World is sponsoring the Sea World Fireworks, which will include
a fireworks presentation from a barge in Mission Bay. The fireworks
display is scheduled to occur between 8:50 p.m. and 10 p.m. on most
evenings between May 26, 2012 and September 3, 2012. This safety zone
is necessary to provide for the safety of the crew, spectators,
participants, and other vessels and users of the waterway.

C. Discussion of the Final Rule

    The Coast Guard is establishing a safety zone that will be enforced
from 8:50 p.m. to 10 p.m. on the following evenings: May 26 to May 28,
June 2 and 3, June 9 and 10, June 14 through August 19, August 24
through August 26, and September 1 through September 3. The safety zone
will cover a 600 foot

radius surrounding the fireworks barge in approximate position
32[deg]46'03'' N, 117[deg]13'11'' W. The safety zone is necessary to
provide for the safety of the crew, spectators, participants, and other
vessels and users of the waterway. When this safety zone is being
enforced, persons and vessels are prohibited from entering into,
transiting through, or anchoring within this safety zone unless
authorized by the Captain of the Port, or his designated
representative.

D. Regulatory Analyses

    We developed this rule after considering numerous statutes and
executive orders related to rulemaking. Below we summarize our analyses
based on 13 of these statutes or executive orders.

1. Regulatory Planning and Review

    This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866, Regulatory Planning and Review, as
supplemented by Executive Order 13563, Improving Regulation and
Regulatory Review, and does not require an assessment of potential
costs and benefits under section 6(a)(3) of Executive Order 12866 or
under section 1 of Executive Order 13563. The Office of Management and
Budget has not reviewed it under those Orders. This determination is
based on the size and location of the safety zone. Commercial vessels
will not be hindered by the safety zone. Recreational vessels will not
be allowed to transit through the designated safety zone during the
specified times.

2. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as
amended, requires federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The Coast Guard
certifies under 5 U.S.C. 605(b) that this rule will not have a
significant economic impact on a substantial number of small entities.
    (1) This rule will affect the following entities, some of which may
be small entities: The owners or operators of vessels intending to
transit or anchor in a portion of Mission Bay from 8:50 p.m. to 10 p.m.
from May 26, 2012 through September 3, 2012.
    (2) This safety zone will not have a significant economic impact on
a substantial number of small entities for the following reasons: The
safety zone will only be in effect for one hour and 10 minutes late in
the evening when vessel traffic is low.

3. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT,
above.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

4. Collection of Information

    This rule will not call for a new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

5. Federalism

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and determined
that this rule does not have implications for federalism.

6. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INTFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places or vessels.

7. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such an expenditure, we do discuss the effects of this rule elsewhere
in this preamble.

8. Taking of Private Property

    This rule will not cause a taking of private property or otherwise
have taking implications under Executive Order 12630, Governmental
Actions and Interference with Constitutionally Protected Property
Rights.

9. Civil Justice Reform

    This rule meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, Civil Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce burden.

10. Protection of Children

    We have analyzed this rule under Executive Order 13045, Protection
of Children from Environmental Health Risks and Safety Risks. This rule
is not an economically significant rule and does not create an
environmental risk to health or risk to safety that may
disproportionately affect children.

11. Indian Tribal Governments

    This rule does not have tribal implications under Executive Order
13175, Consultation and Coordination with Indian Tribal Governments,
because it does not have a substantial direct effect on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.

12. Energy Effects

    This action is not a ``significant energy action'' under Executive
Order 13211, Actions Concerning Regulations That Significantly Affect
Energy Supply, Distribution, or Use.

13. Technical Standards

    This rule does not use technical standards. Therefore, we did not
consider the use of voluntary consensus standards.

14. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have determined
that this action is one

of a category of actions that do not individually or cumulatively have
a significant effect on the human environment. This rule involves
establishment of a temporary safety zone. This rule is categorically
excluded from further review under paragraph 34(g) of Figure 2-1 of the
Commandant Instruction. An environmental analysis checklist supporting
this determination and a Categorical Exclusion Determination are
available in the docket where indicated under ADDRESSES. We seek any
comments or information that may lead to the discovery of a significant
environmental impact from this rule.

List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for Part 165 continues to read as follows:

    Authority:  33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701, 3306,
3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5;
Pub. L. 107-295, 116 Stat. 2064; Department of Homeland Security
Delegation No. 0170.1.

0
2. Add Sec.  165.T11-495 to read as follows:

Sec.  165.T11-495  Safety Zone; Sea World San Diego Fireworks, Mission
Bay; San Diego, CA.

    (a) Location. The safety zone will include the area within 600 feet
of the fireworks barge in approximate position 32[deg]46'03'' N,
117[deg]13'11'' W.
    (b) Enforcement Period. This safety zone will be enforced from 8:50
p.m. to 10 p.m. on the following evenings: May 26 to May 28, June 2 and
3, June 9 and 10, June 14 through August 19, August 24 through August
26, and September 1 through September 3.
    (c) Definitions. The following definition applies to this section:
designated representative means any commissioned, warrant, or petty
officer of the Coast Guard on board Coast Guard, Coast Guard Auxiliary,
local, state, or federal law enforcement vessels who have been
authorized to act on the behalf of the Captain of the Port.
    (d) Regulations. (1) In accordance with general regulations in 33
CFR part 165, subpart C, entry into, transit through or anchoring
within this safety zone is prohibited unless authorized by the Captain
of the Port of San Diego or his designated representative.
    (2) Mariners requesting permission to transit through the safety
zone may request authorization to do so from the Sector San Diego
Command Center. The Command Center may be contacted on VHF-FM Channel
16.
    (3) All persons and vessels shall comply with the instructions of
the Coast Guard Captain of the Port or his designated representative.
    (4) Upon being hailed by U.S. Coast Guard patrol personnel by
siren, radio, flashing light, or other means, the operator of a vessel
shall proceed as directed.
    (5) The Coast Guard may be assisted by other federal, state, or
local agencies.

    Dated: May 24, 2012.
J.A. Janszen,
Commander, U.S. Coast Guard, Acting Captain of the Port San Diego.
[FR Doc. 2012-17694 Filed 7-19-12; 8:45 am]
BILLING CODE 9110-04-P


ATTACHMENT 3

Wage Rates Estimation

Overview

Unit labor costs are calculated by adding fringe benefits and overhead to the wage or salary to derive a fully loaded labor cost.  The basic method is described in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (Rice, 2002).

In March 2004, BLS began using the North American Industry Classification System (NAICS) codes instead of the Standard Industrial Classification (SIC) System, and the Standard Occupational Classification (SOC) system instead of the Occupational Classification System (OCS).  The following table shows the crosswalk between old and new occupational titles.

EPAB Reports Labor Category	BLS Old Title (OCS)	BLS New Title (SOC)

Managerial	Executive, administrative, and managerial 	Management, business, and financial

Professional/Technical	Professional specialty and technical	Professional and related

Clerical	Administrative support, including clerical 	Office and administrative support

Source: Employer Costs for Employee Compensation: Changes to NAICS and SOC, Table 2. ECEC Occupational Comparability between SOC and OCS (BLS, 2006a); and Weinstein, 2004.

Costs are calculated for several labor categories: Managerial, Professional/ Technical, Clerical, Production Workers, and EPA staff.  The resulting loaded labor rates used in this document are given in the table below.

LABOR CATEGORY	LOADED HOURLY RATE

Government

   GS-13, Step 1

$60.86

Industry

   Managerial

   Professional / Technical

   Clerical

$65.22

$54.72

$27.00

B.	Government

Agency labor costs are calculated based on annual Federal salaries for the Washington-Baltimore area published by the Office of Personnel Management effective January 2007 (OPM, 2007).  The average salary for one Full Time Equivalent (FTE) staff is estimated as the salary for a GS-13 Step 1 employee.

Multiplying the annual pay by an assumed loading factor of 1.6 to reflect Federal fringe benefits and overhead, the loaded annual salary of EPA staff was calculated to be $127,035.

The Agency loading factor is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30, footnote 9).  The 60 percent assumption was labeled “the benefits multiplication factor” in the EPA Guide, but has been used in many EPA Office of Pollution Prevention and Toxics ICRs to reflect both fringe benefits and overhead for Federal staff.  For example, it was used in an August 2000 document supporting ICR No. 1139.06, with the following explanation:

“The annual costs per FTE are derived by multiplying the annual pay rate by 1.6 (the benefits multiplication factor). The multiplication factor used is recommended in EPA's Office of Policy, Planning, and Evaluation's Instructions for Preparing Information Collection Requests (ICRs) (June 1, 1992). An EPA internal phone call between Carol Rawie (OPPT/EETD/RIB) and Carl Koch (OPPE/RMD/IMB) on May 3, 1994, indicated that the 1.6 factor included not only benefits but also overhead.”  (ICR No.1139.06)

C.	Technical, Managerial, and Clerical Labor

Wages and fringe benefits for managerial, professional/technical, clerical and production labor were taken from the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation (ECEC) data, for December, for manufacturing industries.

The cost of fringe benefits such as paid leave and insurance, specific to each labor category, are taken from the same ECEC series.  Fringe benefits as a percent of wages are calculated separately for each labor category.  For example, for December 2006, the average wage rate for professional/technical labor was $32.38; the average fringe benefit was $16.77.  Fringe benefits as a percent of wages were $16.77/$32.38, or approximately 51.8 percent.

An additional loading factor of 17 percent is applied to wages to account for overhead.  This approach is used for consistency with Office of Pollution Prevention and Toxics economic analyses for two major rulemakings: Wage Rates for Economic Analyses of the Toxics Release Inventory Program (Rice, 2002), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPAB, 2002).  This overhead loading factor is added to the benefits loading factor, and the total is then applied to the base wage to derive the fully loaded wage.  For example, the December 2006 fully loaded wage for professional/technical labor is $32.38 × (1+0.5179 + 0.17) = $54.72.

Fully loaded costs for managerial, clerical, and production labor are calculated in a similar manner, as shown in Table 1.

Table 1  Derivation of Loaded Wage Rates1

EPAB Labor Category	Data Sources	Un-inflated wages and fringes / hour Fringe benefits as % of wage	Over-head as % of wage 2 	Fringe + Overhead factor	Loaded Wage Rate before inflation	Inflation factor 3	Loaded Wage Rate (2006 dollars)

Date	Wages

$	Fringe benefits

$

	(a)	(b)	(c) = (b)/(a)	(d)	(e) =(c) + (d) + 1	(f) = (a) x (e)	(g)	(h) = (f) x (g)

Managerial 	BLS ECEC, Private Manufacturing industries, "Mgt, Business, and Financial". [BLS, 2006b]	Dec	$39.77 	$18.83 	47.35%	17%	1.64	65.22	1 $65.22

2006

Professional/Technical	BLS ECEC, Private Manufacturing industries "Professional and Related." [BLS, 2006b]	Dec-06	$32.38 	$16.77 	51.79% 17%	1.69	54.72	1	$54.72

Clerical	BLS ECEC, Private Manufacturing industries "Office and Administrative Support." [BLS, 2006b]	Dec	$16.07 	$8.20 	51.03%	17%	1.68 27.0019	1	$27.00

2006

EPA staff FTE	Annual Federal staff cost: OPM Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV area, GS-13 Step 1 pay rates, with 60% overhead. [OPM 2007]	Jan-07	$79,397 	--	[Included in 60% overhead]	60%	1.60	$127,035 	1	$127,035

	per year

	per year

per year

	$38.04

	$60.86

$60.86

	per hour

	per hour

per hour

Notes:

1 Wage data are rounded to the nearest cent in this table.

2 An overhead rate of 17% was used based on assumption in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (Rice, 2002), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPAB, 2002).

3 An inflation factor of "1" means wage data was not escalated to reflect inflation.

4  The Federal salary is the unloaded Federal GS-13 Step 1 salary ($79,397) for January 2007, from the Office of Personnel Management salary table for Washington-Baltimore-Northern Virginia (OPM, 2007).  The 60% fringes-and-overhead rate is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30, footnote 9).

D. 	References

BLS, 2006a.  U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation: Changes to NAICS and SOC, Table 2. ECEC Occupational Comparability between SOC and OCS.  Downloaded February 2006 from   HYPERLINK "http://www.bls.gov/ncs/ect/sp/ecsm0003.htm"  http://www.bls.gov/ncs/ect/sp/ecsm0003.htm .

BLS, 2006b. U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation Supplemental Tables.  Supplementary Table 2. Employer costs per hour for employee compensation and costs as a percent of total compensation:  Private industry workers in manufacturing industries, by occupational group, establishment size and bargaining status. December 2006.

EPAB, 2002.  U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch. Revised Economic Analysis for the Amended Inventory Update Rule: Final Report.  Washington, DC.  August 2002.

OPM, 2007.  Office of Personnel Management, Salary Table 2007-DCB, Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV. accessed from   HYPERLINK "http://www.opm.gov/oca/06tables/indexGS.asp" \t "_blank"  http://www.opm.gov/oca/06tables/indexGS.asp .

OPPE, 1992.  U.S. EPA, Office of Policy, Planning, and Evaluation.  Instructions for Preparing Information Collection Requests (ICRs). Washington, DC, June 1, 1992.

Rice, 2002.  Cody Rice. Wage Rates for Economic Analysis of the Toxics Release Inventory Program.  Washington, DC: U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch, June 10, 2002.

Weinstein, 2004.  Harriet G. Weinstein and Mark A. Loewenstein, U.S. Bureau of Labor Statistics. Comparing Current and Former Industry and Occupation ECEC Series. Originally posted August 25, 2004 at   HYPERLINK "http://www.bls.gov/opub/cwc/print/cm20040823ar01p1.htm"  http://www.bls.gov/opub/cwc/print/cm20040823ar01p1.htm .

 Past economic analyses, used ECEC data for “All Goods Producing” sectors (manufacturing, mining, and construction).  However, the manufacturing sector data seems more relevant since the information collection mainly affects the chemicals industry.

	 Past economic analyses have used the term “technical” labor. Here the category is called “professional/technical” labor, to make clear how it relates to BLS categories.  In 2004, BLS changed from the Occupational Classification System, OCS, to the Standard Occupational Classification system, SOC.  In the process, the “Professional specialty and technical” category became the “Professional and related” category.  However, the coverage of the old and new occupational groups is approximately the same. See the BLS article, Comparing Current and Former Industry and Occupation ECEC Series (Weinstein, 2004).

 PAGE   1

 PAGE   6


[Federal Register: August 7, 2006 (Volume 71, Number 151)]
[Notices]
[Page 44757-44758]
[DOCID:fr07au06-121]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54230; File No. SR-NYSEArca-2006-41]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change To
Extend the Linkage Fee Pilot Program

July 27, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 7, 2006, the NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons and is approving the
proposal on an accelerated basis for a pilot period through July 31,
2007.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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 I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The NYSE Arca is proposing to amend the NYSE Arca Options, Trade-
Related Charges section of the Schedule of Fees and Charges
(``Schedule'') in order to extend until July 31, 2007, the current
pilot program regarding transaction fees charged for trades executed
through the intermarket options linkage plan (``Linkage''). The text of
the proposed rule change is available on the NYSE Arca's Web site at
(http://www.archipelago.com), at the Exchange's Office of the

Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this proposed rule change is to extend for one year
the pilot program establishing NYSE Arca fees for Principal (``P'')
Orders and Principal Acting as Agent (``P/A'') Orders executed through
Linkage. The fees currently are effective for a pilot program set to
expire on July 31, 2006, and this filing would extend the fees through
July 31, 2007. Executions on NYSE Arca resulting from Linkage orders
are subject to the same billing treatment as other broker-dealer
(``BD'') executions. The present execution fee is $0.26, which is
comprised of a $0.21 transaction fee and a $0.05 per contract
comparison fee. These are the same fees that all NYSE Arca Option
Trading Permit Holders pay for non-customer transactions executed on
the Exchange. The Exchange does not charge for the execution of
Satisfaction Orders sent through Linkage and is not proposing to charge
for such orders.
    BD orders that are entered and executed electronically on NYSE Arca
are presently subject to a $0.25 BD surcharge. Linkage orders that are
electronically executed on the Exchange are subject to the same billing
treatment as other BD transactions. The Exchange recently filed
NYSEArca-2006-20,\3\ which proposes a change to the Schedule to reflect
that the $0.25 BD surcharge will also be applied to Linkage orders
submitted and executed electronically on the Exchange. The extension of
the existing Linkage fee pilot program proposed with this filing does
not reflect the changes proposed to the Schedule pursuant to NYSEArca-
2006-20.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 54130 (July 11,
2006) 71 FR 41305 (July 20, 2006).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\4\ in general, and Section 6(b)(4) of the Act,\5\ in
particular, in that the proposed rule change provides for the equitable
allocation of reasonable dues, fees and other charges among its members
and other persons using its facilities.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange believes that the proposed rule change does not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

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

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

 III. Solicitation of Comments

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

Electronic Comments

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

File Number SR-NYSEArca-2006-41 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission,

Station Place, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2006-41. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2006-41 and should be submitted on or before
August 28, 2006.

 IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange,\6\ and, in particular, the requirements of Section 6(b) of
the Act \7\ and the rules and regulations thereunder. The Commission
finds that the proposed rule change is consistent with Section 6(b)(4)
of the Act,\8\ which requires that the rules of the Exchange provide
for the equitable allocation of reasonable dues, fees and other charges
among its members and other persons using its facilities. The
Commission believes that the extension of the Linkage fee pilot until
July 31, 2007 will give the Exchange and the Commission further
opportunity to evaluate whether such fees are appropriate.
---------------------------------------------------------------------------

    \6\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\9\ for approving the proposed rule change prior to the
thirtieth day after publication of notice thereof in the Federal
Register. The Commission believes that granting accelerated approval of
the proposed rule change will preserve the Exchange's existing pilot
program for Linkage fees without interruption as the Exchange and the
Commission further consider the appropriateness of Linkage fees.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

 V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSEArca-2006-41) is hereby
approved on an accelerated basis for a pilot period to expire on July
31, 2007.
---------------------------------------------------------------------------

    \10\ Id.
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-12701 Filed 8-4-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 85, Number 50 (Friday, March 13, 2020)]
[Notices]
[Pages 14677-14678]
[FR Doc No: 2020-05136]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPPT-2019-0677; FRL-10006-03]

Preliminary Lists Identifying Manufacturers Subject to Fee
Obligations for EPA-Initiated Risk Evaluations Under Section 6 of the
Toxic Substances Control Act (TSCA); Notice of Availability and Request
for Comment; Extension of Comment Period

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice; extension of comment period.

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

SUMMARY: EPA is extending the comment period for a notice issued in the
Federal Register of January 27, 2020, announcing the availability of
the preliminary lists of manufacturers (including importers) of 20
chemical substances that have been designated as a High-Priority
Substance for risk evaluation under the Toxic Substances Control Act
(TSCA) and for which fees will be charged. This document extends the
comment period and window for self-identification by an additional 60-
days, from March 27, 2020 to May 27, 2020.

DATES: Comments must be received on or before May 27, 2020.

ADDRESSES: Follow the detailed instructions provided under ADDRESSES in
the Federal Register document of January 27, 2020 (85 FR 4661) (FRL-
10003-14).

FOR FURTHER INFORMATION CONTACT: For technical information contact:
Benjamin Dyson, Environmental Assistance Division (7408M), Office of
Pollution Prevention and Toxics, Environmental Protection Agency, 1200
Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number:
(202) 774-8976; email address<EMAIL_ADDRESS>    For general information contact: The TSCA-Hotline, ABVI-Goodwill,
422 South Clinton Ave., Rochester, NY 14620; telephone number: (202)
554-1404; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: This document extends the public comment
period established in the Federal Register document of January 27, 2020
(85 FR 4661) (FRL-10003-14) by an additional 60-days, from March 27,
2020 to May 27, 2020. EPA is extending the comment period in response
to several requests for additional time.
    In that document, EPA published preliminary lists identifying

manufacturers (including importers) that may be subject to fee
obligations under 40 CFR 700.45, associated with each EPA-initiated
risk evaluation of 20 High-Priority Substances under TSCA section 6.
That document also announced that EPA was providing an opportunity for
public comment during which manufacturers (including importers) are
required to self-identify as a manufacturer (including importer) of a
High-Priority Substance, irrespective of whether they are listed on the
preliminary list. During the comment period, manufacturers and
importers may make certain certifications under 40 CFR 700.45(b) to EPA
to avoid or reduce fee obligations. The public also has the opportunity
to correct errors or provide comments on the preliminary lists.
    EPA's initial 60-day comment period, which is being extended by an
additional 60-days, exceeds the minimum 30-day comment period
established in the Fees Rule codified at 40 CFR 700.45(b)(4) to
maximize public participation during the first comment period for an
initial lists of manufacturers (including importers) subject to fee
obligations for EPA-initiated risk evaluations under TSCA section 6.
EPA expects to publish final lists of manufacturers (including
importers) subject to fees no later than concurrently with the
publication of the final scope document for risk evaluations of these
20 High-Priority Substances. Manufacturers (including importers)
identified on the final lists will be subject to applicable fees under
40 CFR 700.45.
    To submit comments, or access the docket, please follow the
detailed instructions provided under ADDRESSES in the Federal Register
document of January 27, 2020 (85 FR 4661) (FRL-10003-14). If you have
questions, consult the technical person listed under FOR FURTHER
INFORMATION CONTACT.

    Authority: 15 U.S.C. 2625.

    Dated: March 8, 2020.
Alexandra Dapolito Dunn,
Assistant Administrator, Office of Chemical Safety and Pollution
Prevention.
[FR Doc. 2020-05136 Filed 3-12-20; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 83, Number 175 (Monday, September 10, 2018)]
[Notices]
[Page 45625]
[FR Doc No: 2018-19556]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL18-195-000]

NorthWestern Corporation; Notice of Petition for Declaratory
Order

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

------------------------------------------------------------------------
Beaver Creek Wind I, LLC.................  QF17-672-002
Beaver Creek Wind II, LLC................  QF17-673-003
Beaver Creek Wind III, LLC...............  QF17-674-002
Beaver Creek Wind IV, LLC................  QF17-675-002
------------------------------------------------------------------------

    Take notice that on August 31, 2018, pursuant to Rule 207 of the
Federal Energy Regulatory Commission's (Commission) Rules of Practice
and Procedure, 18 CFR 385.207 and Rule 292.207(d) of the Commission's
regulations under sections 201 and 210 of the Public Utility Regulatory
Policies Act of 1978 (PURPA),\1\ 18 CFR 292.207(d), NorthWestern
Corporation, (Petitioner) filed a petition for declaratory order
(petition) requesting that the Commission revoke the Qualifying
Facility status of Beaver Creek Wind I, LLC, Beaver Creek Wind II, LLC,
Beaver Creek Wind III, LLC and Beaver Creek Wind IV, LLC, all as more
fully explained in the petition.
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 791A-825r.
---------------------------------------------------------------------------

    Any person desiring to intervene or to protest in this proceeding
must file in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214) on or
before 5:00 p.m. Eastern time on the specified comment date. Protests
will be considered by the Commission in determining the appropriate
action to be taken, but will not serve to make protestants parties to
the proceeding. Any person wishing to become a party must file a notice
of intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Petitioner.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE, Washington, DC 20426.
    The filings in the above proceeding are accessible in the
Commission's eLibrary system by clicking on the appropriate link in the
above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the website that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email [email protected], or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.
    Comment Date: 5:00 p.m. Eastern time on October 1, 2018.

    Dated: September 4, 2018.
Kimberly D. Bose,
Secretary.
[FR Doc. 2018-19556 Filed 9-7-18; 8:45 am]
 BILLING CODE 6717-01-P