[Federal Register: July 29, 2009 (Volume 74, Number 144)]
[Notices]
[Page 37748-37758]
[DOCID:fr29jy09-133]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60372; File No. S7-16-09]

Order Granting Temporary Exemptions Under the Securities Exchange
Act of 1934 in Connection With Request on Behalf of Ice Clear Europe
Limited Related to Central Clearing of Credit Default Swaps, and
Request for Comments

July 23, 2009.

I. Introduction

    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, including actions\1\ designed to address concerns
related to the market in credit default swaps (``CDS'').\2\ The over-
the-counter

(``OTC'') market for CDS has been a source of concern to us and other
financial regulators, and we have recognized that facilitating the
establishment of central counterparties (``CCPs'') for CDS can play an
important role in reducing the counterparty risks inherent in the CDS
market, and thereby can help mitigate potential systemic impacts.\3\
Thus, 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\ See generally Securities Exchange Act Release No. 59578
(Mar. 13, 2009), 74 FR 11781 (Mar. 19, 2009) (temporary exemption in
connection with CDS clearing by Chicago Mercantile Exchange Inc.),
Securities Exchange Act Release No. 59527 (Mar. 6, 2009), 74 FR
10791 (Mar. 12, 2009) (temporary exemption in connection with CDS
clearing by ICE US Trust LLC), Securities Exchange Act Release No.
59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009) (temporary exemption
in connection with CDS clearing by LIFFE A&M and LCH.Clearnet Ltd.)
and other Commission actions discussed therein.
    \2\ A CDS is a bilateral contract between two parties, known as
counterparties. The value of this financial contract is based on
underlying obligations of a single entity or on a particular
security or other debt obligation, 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. See
Semiannual OTC derivatives statistics at end-December 2008, Bank for
International Settlement (``BIS''), available at http://www.bis.org/
statistics/otcder/dt1920a.pdf.
    This growth has coincided with a significant rise in the types
and number of entities participating in the CDS market. 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.
    \3\ See generally actions referenced in note 1, supra.
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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.\4\ 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 conditional exemptions from certain
requirements of the Exchange Act.
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    \4\ 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.
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    The Commission believes that using well-regulated CCPs to clear
transactions in CDS would provide a number of benefits, by helping to
promote efficiency and reduce risk in the CDS market and among its
participants, requiring maintenance of records of CDS transactions that
would aid the Commission's efforts to prevent and detect fraud and
other abusive market practices, addressing concerns about counterparty
risk--through the novation process--by substituting the
creditworthiness and liquidity of the CCP for the creditworthiness and
liquidity of the counterparties to a CDS,\5\ contributing generally to
the goal of market stability, and reducing CDS risks through
multilateral netting of trades.\6\
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    \5\ ``Novation'' is a ``process through which the original
obligation between a buyer and seller is discharged through the
substitution of the CCP as seller to buyer and buyer to seller,
creating two new contracts.'' Committee on Payment and Settlement
Systems, Technical Committee of the International Organization of
Securities Commissioners, Recommendations for Central Counterparties
(Nov. 2004) at 66. Through novation, the CCP assumes counterparty
risk.
    \6\ See generally actions referenced in note 1, supra.
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    In this context, ICE Clear Europe Limited (``ICE Clear Europe'')
has requested that the Commission grant exemptions from certain
requirements under the Exchange Act with respect to its proposed
activities in clearing and settling certain CDS, as well as the
proposed activities of certain other persons, as described below.\7\
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    \7\ See Letter from Abigail Arms, Shearman & Sterling LLP, to
Elizabeth M. Murphy, Secretary, Commission, July 23, 2009.
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    Based on the facts presented and the representations made in the
request on behalf of ICE Clear Europe,\8\ and for the reasons discussed
in this Order, the Commission temporarily is exempting, subject to
certain conditions, ICE Clear Europe 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 certain non-excluded CDS
transactions. The Commission also temporarily is exempting eligible
contract participants and others from certain Exchange Act requirements
with respect to non-excluded CDS cleared by ICE Clear Europe. In
addition, the Commission temporarily is exempting ICE Clear Europe and
certain members of ICE Clear Europe from the registration requirements
of Sections 5 and 6 of the Exchange Act solely in connection with the
calculation of mark-to-market prices for non-excluded CDS cleared by
ICE Clear Europe. The Commission's exemptions are temporary and will
expire on April 23, 2010.\9\
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    \8\ See id. The exemptions we are granting today are based on
representations made in the request on behalf of ICE Clear Europe.
We recognize, however, that there could be legal uncertainty in the
event that one or more of the underlying representations were to
become inaccurate. Accordingly, if any of these exemptions were to
become unavailable by reason of an underlying representation no
longer being materially accurate, the legal status of existing open
positions in non-excluded CDS associated with persons subject to
those unavailable exemptions would remain unchanged, but no new
positions could be established pursuant to the exemptions until all
of the underlying representations were again accurate.
    \9\ 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 the
Exchange Act for non-excluded CDS. See Securities Act Release No.
8999 (Jan. 14, 2009), 74 FR 3967 (Jan. 22, 2009).
     Further, the Commission has provided temporary exemptions in
connection with Sections 5 and 6 of the Exchange Act for
transactions in non-excluded CDS. See Securities Exchange Act
Release No. 59165 (Dec. 24, 2008), 74 FR 133 (Jan. 2, 2009).
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II. Discussion

A. Description of ICE Clear Europe's Proposal

    The exemptive request on behalf of ICE Clear Europe describes how
its proposed arrangement for central clearing of CDS would operate and
makes representations about the safeguards associated with those
arrangements, as described below:
1. ICE Clear Europe Organization
    ICE Clear Europe is indirectly a wholly-owned subsidiary of the
IntercontinenalExchange, Inc. (``ICE'').\10\ ICE Clear Europe was
incorporated in England and Wales on April 19, 2007 as a private
limited company under the Companies Act 1985 (as amended, now largely
superseded by the Companies Act 2006). ICE Clear Europe is subject to
direct supervision by the United Kingdom's Financial Services Authority
(``FSA'') as a Recognised Clearing House (``RCH'').
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    \10\ ICE Clear Europe is owned by IntercontinentalExchange
Holdings, which itself is over 99% owned by ICE Netherlands C.V. ICE
Netherlands C.V. is owned by ICE Markets, Inc. and by
IntercontinentalExchange International Inc., both of which are
wholly owned by ICE.
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2. ICE Clear Europe Central Counterparty Services for CDS
    ICE Clear Europe will act as a central counterparty for ICE Clear
Europe Clearing Members\11\ by assuming, through novation, the
obligations of all eligible CDS transactions accepted by it for
clearing and collecting margin and other credit support from ICE Clear
Europe Clearing Members to collateralize their obligations to ICE Clear
Europe. ICE Clear Europe's trade submission process is designed to
ensure that it maintains a matched book of offsetting CDS contracts.
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    \11\ See note 33, infra.
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    ICE Clear Europe will leverage the Deriv/SERV infrastructure in
operating its CDS clearing service. Initially, all trades submitted by
ICE Clear Europe Clearing Members for clearing through

ICE Clear Europe will be recorded in the Deriv/SERV Trade Information
Warehouse (``TIW'').\12\ ICE Clear Europe will, initially on a weekly
basis, obtain from DTCC matched trades that have been recorded in the
Deriv/SERV TIW as having been submitted for clearing through ICE Clear
Europe. Eventually, ICE Clear Europe intends to obtain matched trades
from DTCC on a real-time basis.
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    \12\ Major market participants frequently use the Deriv/SERV
comparison and confirmation service of The Depository Trust &
Clearing Corporation (``DTCC'') when documenting their CDS
transactions. This service creates electronic records of transaction
terms and counterparties. As part of this service, market
participants separately submit the terms of a CDS transaction to
Deriv/SERV in electronic form. Paired submissions are compared to
verify that their terms match in all required respects. If a match
is confirmed, the parties receive an electronic confirmation of the
submitted transaction. All submitted transactions are recorded in
the Deriv/SERV Trade Information Warehouse, which serves as the
primary registry for submitted transactions.
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    Members may use the facilities of an inter-dealer broker to execute
CDS transactions, for example, to access liquidity more rapidly or to
maintain pre-execution anonymity and submit such transactions for
clearance and settlement to ICE Clear Europe. The inter-dealer brokers
do not assume market positions in connection with their intermediation
of CDS transactions.
    Once a matched CDS contract has been forwarded to, or obtained by,
ICE Clear Europe, and has been accepted for clearing by it, ICE Clear
Europe will clear the CDS contract by becoming the central counterparty
to each party to the trade. Deriv/SERV's current infrastructure will
help to ensure that ICE Clear Europe maintains a matched book of
offsetting CDS contracts. Maintaining a matched offsetting book is
essential to managing the credit risk associated with CDS submitted to
ICE Clear Europe for clearing.
    Under ICE Clear Europe's draft CDS rules and CDS procedures (``ICE
Clear Europe Rules''), each bilateral CDS contract between two ICE
Clear Europe Clearing Members that is submitted to and accepted by ICE
Clear Europe for clearing will be ``novated.'' As part of this process,
each bilateral CDS contract submitted to ICE Clear Europe will be
replaced by two superseding CDS contracts between each of the original
parties to the submitted transaction and ICE Clear Europe on standard
terms mandated by ICE Clear Europe. Under these new contracts, ICE
Clear Europe will act as the protection buyer to the original
protection seller and protection seller to the original protection
buyer. As central counterparty to each novated CDS contract, ICE Clear
Europe will be able to net offsetting positions on a multilateral
basis, even though ICE Clear Europe will have different counterparties
with respect to the novated CDS contracts that are being netted.
    As part of the novation process, the terms and conditions governing
the CDS bilaterally negotiated by the submitting counterparties will be
superseded by the relevant provisions of the ICE Clear Europe Rules,
the ISDA 2002 Master Agreement, and the Schedule to the ISDA 2002
Master Agreement that is entered into by ICE Clear Europe and each ICE
Clear Europe Clearing Member. Multilateral netting will significantly
reduce the outstanding notional amount of each ICE Clear Europe
Clearing Member's portfolio. When ICE Clear Europe acts as the central
counterparty to all cleared CDS of an ICE Clear Europe Clearing Member,
that member's positions will be netted down to a single exposure to ICE
Clear Europe.
3. ICE Clear Europe Risk Management
    ICE Clear Europe will mitigate counterparty risk through a six-
tiered waterfall consisting of: (i) Membership criteria; (ii) initial
margin; (iii) mark-to-market margin; (iv) intraday risk monitoring; (v)
guaranty fund; and (vi) a one-time power of assessment. ICE Clear
Europe's risk management infrastructure and related risk metrics are
structured specifically for the CDS products that ICE Clear Europe
clears. Each ICE Clear Europe Clearing Member's credit support
obligations will be governed by a uniform credit support framework and
applicable ICE Clear Europe Rules.
    ICE Clear Europe will maintain strict, objectively determined,
risk-based margin and guaranty fund requirements,\13\ which will be
consistent with clearing industry practice and international standards
established for central counterparties as articulated in the Committee
on Payment and Settlement Systems/International Organization of
Securities Commissions (``CPSS-IOSCO'') Recommendations for Central
Counterparties (``RCCP'').\14\ These requirements will also be subject
to ongoing regulation and oversight by the FSA. The amount of margin
and guaranty fund required of each ICE Clear Europe Clearing Member
will be continuously monitored and periodically adjusted as required to
reflect the size and profile of, and risk associated with, the ICE
Clear Europe Clearing Member's cleared CDS transactions (and related
market factors).
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    \13\ ICE Clear Europe takes collateral, including margin and
guaranty fund contributions and non-cash collateral, by way of a
``title transfer financial collateral arrangement'' for purposes of
the Directive 2002/47/EC on Financial Collateral Arrangements
(``Financial Collateral Regulations''). This is different from
applicable U.S. law, which mandates that a clearinghouse receive
pledged collateral. This collateral structure results in ICE Clear
Europe having an unencumbered property right in all collateral
provided to it, subject only to an obligation to return excess
collateral or such collateral as remains unexpended following a
closeout on a default. The Financial Collateral Regulations also
provide for the effectiveness of financial collateral arrangements
and close-out netting provisions under English law notwithstanding
an insolvency of the counterparty.
    \14\ The RCCP was drafted by a joint task force (``Task Force'')
composed of representative members of IOSCO and CPSS and published
in November 2004. The Task Force consisted of securities regulators
and central bankers from 19 countries and the European Union. The
U.S. representatives on the Task Force included staff from the
Commission, the Federal Reserve Board of Governors, and the
Commodity Futures Trading Commission.
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    Each ICE Clear Europe Clearing Member's margin requirement will
consist of two components: (i) Initial margin, reflecting a risk-based
calculation of potential loss on outstanding CDS positions in the event
of a significant adverse market movement; and (ii) mark-to-market
margin, based upon an end-of-day mark-to-market of outstanding
positions. At any time when a requirement for initial margin falls due
and insufficient permitted cover is held, the ICE Clear Europe Clearing
Member must initially transfer cash. Thereafter, an ICE Clear Europe
Clearing Member may substitute such cash margin with other permitted
cover by delivery of the replacement permitted cover to ICE Clear
Europe.\15\ Mark-to-market margin payments, however, may be made by ICE
Clear Europe or an ICE Clear Europe Clearing Member only in cash. ICE
Clear Europe Clearing Members will be required to cover any end-of-day
margin deficit with Euros (or such other currency as may be permitted
under the proposed CDS finance procedures) by the following morning,
and ICE Clear Europe will have the discretion to require and collect
additional margin, both at the end of the day and intraday, as it deems
necessary.\16\
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    \15\ The full list of permitted cover is set out in ICE Clear
Europe circulars. The most recent circular in this respect is
available at: https://www.theice.com/publicdocs/clear_europe/
circulars/C09015_att.pdf.
    \16\ An ICE Clear Europe Clearing Member would be permitted to
withdraw mark-to-market margin amounts credited to its account to
the extent not required to satisfy its initial margin requirement.
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    ICE Clear Europe will also maintain a guaranty fund in respect of
ICE Clear Europe Clearing Members (the ``CDS Guaranty Fund'') to cover
losses arising

from an ICE Clear Clearing Member's default on cleared CDS transactions
that exceed the amount of margin held by ICE Clear Europe from the
defaulting ICE Clear Europe Clearing Member. Each ICE Clear Europe
Clearing Member will be required to contribute a minimum of 15 million
Euros to the CDS Guaranty Fund initially when it becomes a Clearing
Member and additional amounts based on its actual and anticipated CDS
position exposures plus such other amount as ICE Clear Europe at its
discretion determines is necessary based on projected clearing
activity. The adequacy of the total amount of the CDS Guaranty Fund
will be monitored daily, and if ICE Clear Europe determines the total
amount in the CDS Guaranty Fund is to change, ICE Clear Europe Clearing
Members will be given notice and will be required to deposit their new
contribution prior to the opening of business on the next business day.
As a result, the CDS Guaranty Fund will grow in proportion to the
position risk associated with the aggregate volume of CDS cleared by
ICE Clear Europe.
    ICE Clear Europe will also establish rules that ``mutualize'' the
risk of an ICE Clear Europe Clearing Member default across all such
clearing members.\17\ In the event of an ICE Clear Europe Clearing
Member's default, ICE Clear Europe may look to the margin posted by
such ICE Clear Europe Clearing Members, such an ICE Clear Europe
Clearing Member's CDS Guaranty Fund contributions and, if applicable,
any recovery from a parent guarantor. In addition, at its discretion,
ICE Clear Europe will be authorized to use, to the extent needed, other
ICE Clear Europe Clearing Members' CDS Guaranty Fund contributions to
satisfy any obligations of the defaulting ICE Clear Europe Clearing
Member.
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    \17\ In the event of a default of an ICE Clear Europe Clearing
Member, only the CDS Guaranty Fund will be available to cover losses
from the default. In the event of a default of an energy-only
clearing member, only the Energy Guaranty Fund will be available to
cover losses from the default. In the event of a default of an ICE
Clear Europe Clearing Member that is active in both CDS and energy
contracts, the Clearing Member's margin and guaranty fund are
available to cover any loss, but the CDS Guaranty Fund deposits of
the non-defaulting ICE Clear Europe Clearing Members can only be
applied against losses in CDS contracts, and the Energy Guaranty
Fund deposits of the non-defaulting Energy Clearing Members can only
be applied against losses in energy contracts.
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    In the event that the total CDS Guaranty Fund is exhausted,
remaining ICE Clear Europe Clearing Members will be obligated to
contribute additional amounts to the CDS Guaranty Fund based on a one-
time limited power of assessment. The amount of the assessment will be
up to, but will not exceed,\18\ each ICE Clear Europe Clearing Member's
CDS Guaranty Fund obligation immediately prior to the default.
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    \18\ An ICE Clear Europe Clearing Member can limit the amount of
its assessment to an amount equal to such clearing member's guaranty
fund contribution immediately prior to the relevant default only by
contributing such amount and terminating its membership from ICE
Clear Europe, with the withdrawal effective three months after
notice.
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4. Member Default
    Following a default by an ICE Clear Europe Clearing Member, ICE
Clear Europe has a number of tools available to it under the ICE Clear
Europe Rules to ensure an orderly liquidation and unwinding of the open
positions of such defaulting ICE Clear Europe Clearing Member. In the
first instance, upon determining that a default has occurred, ICE Clear
Europe will have the ability to immediately enter into replacement CDS
transactions with other ICE Clear Europe Clearing Members that are
designed to mitigate, to the greatest extent possible, the market risk
of the defaulting clearing member's open positions. ICE Clear Europe
can also seek to sell or transfer positions to other ICE Clear Europe
clearing members. For open positions in which there is no liquid
trading market, ICE Clear Europe may enter into covering CDS
transactions for which there is a liquid market and that are most
closely correlated with such illiquid open positions.
    After entering into covering transactions in the open market, if
any, ICE Clear Europe will seek to close out any remaining open
positions of the defaulting ICE Clear Europe Clearing Member by using
one or more auctions or other commercially reasonable unwind processes.
ICE Clear Europe may close out its position through auctions, open
market processes, or by allocating replacement transactions to non-
defaulting ICE Clear Europe Clearing Members at the floor price
established by ICE Clear Europe.

B. Temporary Conditional Exemptions From Clearing Agency and Exchange
Registration Requirements

1. Exemption From Section 17A of the Exchange Act
    Section 17A of the Exchange Act sets forth the framework for the
regulation and operation of the U.S. clearance and settlement system,
including CCPs. Specifically, Section 17A directs the Commission to use
its authority to promote enumerated Congressional objectives and to
facilitate the development of a national clearance and settlement
system for securities transactions. Absent an exemption, a CCP that
novates trades of non-excluded CDS that are securities and generates
money and settlement obligations for participants is required to
register with the Commission as a clearing agency.
    Section 36 of the Exchange Act authorizes the Commission to
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
any rule or regulation thereunder, by rule, regulation, or order, to
the extent that such exemption is necessary or appropriate in the
public interest, and is consistent with the protection of
investors.\19\
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    \19\ 15 U.S.C. 78mm.
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    Accordingly, pursuant to Section 36 of the Exchange Act, the
Commission finds that it is necessary or appropriate in the public
interest and is consistent with the protection of investors to exercise
its authority to grant an exemption until April 23, 2010 to ICE Clear
Europe from Section 17A of the Exchange Act, solely to perform the
functions of a clearing agency for Cleared CDS,\20\ subject to the
conditions discussed below.
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    \20\ For purposes of this exemption, and the other exemptions
addressed in this Order, ``Cleared CDS'' means a credit default swap
that is submitted (or offered, purchased, or sold on terms providing
for submission) to ICE Clear Europe, that is offered only to,
purchased only by, and sold only to eligible contract participants
(as defined in Section 1a(12) of the Commodity Exchange Act as in
effect on the date of this Order (other than a person that is an
eligible contract participant under paragraph (C) of that section)),
and in which: (i) The reference entity, the issuer of the reference
security, or the reference security is one of the following: (A) An
entity reporting under the Exchange Act, providing Securities Act
Rule 144A(d)(4) information, or about which financial information is
otherwise publicly available; (B) a foreign private issuer whose
securities are listed outside the United States and that has its
principal trading market outside the United States; (C) a foreign
sovereign debt security; (D) an asset-backed security, as defined in
Regulation AB, issued in a registered transaction with publicly
available distribution reports; or (E) an asset-backed security
issued or guaranteed by the Federal National Mortgage Association
(``Fannie Mae''), the Federal Home Loan Mortgage Corporation
(``Freddie Mac''), or the Government National Mortgage Association
(``Ginnie Mae''); or (ii) the reference index is an index in which
80 percent or more of the index's weighting is comprised of the
entities or securities described in subparagraph (i). As discussed
above, the Commission's action today does not affect CDS that are
swap agreements under Section 206A of the Gramm-Leach-Bliley Act.
See note 4, supra. The Commission's action today also does not
affect activities in CDS that are outside the jurisdiction of the
United States.
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    Our action today balances the aim of facilitating the prompt
establishment of ICE Clear Europe as a CCP for non-

excluded CDS transactions--which should help reduce systemic risks--
with ensuring that important elements of Commission oversight are
applied to the non-excluded CDS market. In doing so, we are mindful
that applying the full scope of the Exchange Act to transactions
involving non-excluded CDS could deter the prompt establishment of ICE
Clear Europe as a CCP to settle those transactions.
    While we are acting so that the prompt establishment of ICE Clear
Europe as a CCP for non-excluded CDS will not be delayed by the need to
apply the full scope of Exchange Act Section 17A's requirements that
govern clearing agencies, the relief we are providing is temporary and
conditional. The limited duration of the exemptions will permit the
Commission to continue to gain more direct experience with the non-
excluded CDS market after ICE Clear Europe becomes operational, giving
the Commission the ability to oversee the development of the centrally
cleared non-excluded CDS market as it evolves. During the exemptive
period, the Commission will closely monitor the impact of the CCPs on
the CDS market. In particular, the Commission will seek to assure
itself that the CCPs do not act in an anticompetitive manner or
indirectly facilitate anticompetitive behavior with respect to fees
charged to members, the dissemination of market data and the access to
clearing services by independent CDS exchanges or CDS trading
platforms. The Commission will take that experience into account in
future actions.
    Moreover, this temporary exemption in part is based on ICE Clear
Europe's representation that it meets the standards set forth in the
CPSS-IOSCO RCCP report. The RCCP establishes a framework that requires
a CCP to have: (i) The ability to facilitate the prompt and accurate
clearance and settlement of CDS transactions and to safeguard its
users' assets; and (ii) sound risk management, including the ability to
appropriately determine and collect clearing fund and monitor its
users' trading. This framework is generally consistent with the
requirements of Section 17A of the Exchange Act.
    In addition, this Order is designed to assure that--as represented
in the request on behalf of ICE Clear Europe--information will be
available to market participants about the terms of the CDS cleared by
ICE Clear Europe, the creditworthiness of ICE Clear Europe or any
guarantor, and the clearing and settlement process for the CDS.
Moreover, to be within the definition of Cleared CDS for purposes of
this exemption (as well as the other exemptions granted through this
Order), a CDS may only involve a reference entity, a reference
security, an issuer of a reference security, or a reference index that
satisfies certain conditions relating to the availability of
information about such persons or securities. For non-excluded CDS that
are index-based, the definition provides that at least 80 percent of
the weighting of the index must be comprised of reference entities,
issuers of a reference security, or reference securities that satisfy
the information conditions. The definition does not prescribe the type
of financial information that must be available or the location of the
particular information, recognizing that eligible contract participants
have access to information about reference entities and reference
securities through multiple sources. The Commission believes, however,
that it is important in the CDS market, as in the market for securities
generally, that parties to transactions should have access to financial
information that would allow them to appropriately evaluate the risks
relating to a particular investment and make more informed investment
decisions.\21\ Such information availability also will assist ICE Clear
Europe and the buyers and sellers in valuing their Cleared CDS and
their counterparty exposures. As a result of the Commission's actions
today, the Commission believes that information should be available for
market participants to be able to make informed investment decisions,
and value and evaluate their Cleared CDS and their counterparty
exposures.
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    \21\ The Commission notes the recommendations of the President's
Working Group on Financial Markets regarding the informational needs
and due diligence responsibilities of investors. See Policy
Statement on Financial Market Developments, The President's Working
Group on Financial Markets, Mar. 13, 2008, available at: http://
www.ustreas.gov/press/releases/reports/pwgpolicystatemktturmoil_
03122008.pdf.
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    This temporary exemption is subject to a number of conditions that
are designed to enable Commission staff to monitor ICE Clear Europe's
clearance and settlement of CDS transactions and help reduce risk in
the CDS market. These conditions require that ICE Clear Europe: (i)
Make available on its Web site its annual audited financial statements;
(ii) preserve records of all activities related to the conduct of its
Cleared CDS clearance and settlement services for at least five years
(in an easily accessible place for the first two years); (iii) supply
information relating to its Cleared CDS clearance and settlement
services as may be reasonably requested by the Commission and provide
access to the Commission to conduct on-site inspections of facilities,
records, and personnel related to its Cleared CDS clearance and
settlement services, subject to cooperation with the FSA and upon terms
and conditions agreed between the FSA and the Commission; (iv) notify
the Commission about material disciplinary actions taken against any of
its members using its Cleared CDS clearance and settlement services,
and about the involuntary termination of the membership of an entity
that is using ICE Clear Europe's Cleared CDS clearance and settlement
services; (v) notify the Commission not less than one day prior to
implementation or effectiveness of changes to rules, procedures, and
any other material events affecting its Cleared CDS clearance and
settlement services, or, in exigent circumstances, as promptly as
reasonably practicable under the circumstances; (vi) provide the
Commission with reports prepared by independent audit personnel that
are generated in accordance with risk assessment of the areas set forth
in the Commission's Automation Review Policy Statements \22\ and its
annual audited financial statements prepared by independent audit
personnel; and (vii) provide notice to the Commission regarding the
suspension of services or inability to operate facilities in connection
with Cleared CDS clearance and settlement services at the same time it
provides notice to the FSA.
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    \22\ See Automated Systems of Self-Regulatory Organizations,
Securities Exchange Act Release No. 27445 (Nov. 16, 1989), 54 FR
48703 (Nov. 24, 1989), and Automated Systems of Self-Regulatory
Organizations, Securities Exchange Act Release No. 29185 (May 9,
1991), 56 FR 22490 (May 15, 1991).
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    In addition, this relief is conditioned on ICE Clear Europe,
directly or indirectly, making available to the public on terms that
are fair and reasonable and not unreasonably discriminatory: (i) All
end-of-day settlement prices and any other prices with respect to
Cleared CDS that ICE Clear Europe may establish to calculate mark-to-
market margin requirements for ICE Clear Europe Clearing Members; and
(ii) any other pricing or valuation information with respect to Cleared
CDS as is published or distributed by ICE Clear Europe. The Commission
believes this is an appropriate condition for ICE Clear Europe's
exemption from registration as a clearing agency. In Section 11A of the
Exchange Act, Congress found that ``[i]t is in the public interest and
appropriate for the protection of investors and the maintenance of fair
and orderly markets to assure * * * the availability to brokers,
dealers, and investors of

information with respect to quotations for and transactions in
securities.'' \23\ The President's Working Group on Financial Markets
has stated that increased transparency is a policy objective for the
over-the-counter derivatives market,\24\ which includes the market for
CDS. The condition is designed to further this policy objective of both
Congress and the President's Working Group by requiring ICE Clear
Europe to make useful pricing data available to the public on terms
that are fair and reasonable and not unreasonably discriminatory.
Congress adopted these standards for the distribution of data in
Section 11A. The Commission long has applied the standards in the
specific context of securities market data,\25\ and it anticipates that
ICE Clear Europe will distribute its data on terms that generally are
consistent with the application of these standards to securities market
data. For example, data distributors generally are required to treat
subscribers equally and not grant special access, fees, or other
privileges to favored customers of the distributor. Similarly,
distributors must make their data feeds reasonably available to data
vendors for those subscribers who wish to receive their data indirectly
through a vendor rather than directly from the distributor. In
addition, a distributor's attempt to tie data products that must be
made available to the public with other products or services of the
distributor would be inconsistent with the statutory requirements.\26\
The Commission carefully evaluates any type of discrimination with
respect to subscribers and vendors to assess whether there is a
reasonable basis for the discrimination given, among other things, the
Exchange Act objective of promoting price transparency.\27\ Moreover,
preventing unreasonable discrimination is a practical means to promote
fair and reasonable terms for data distribution because distributors
are more likely to act appropriately when the terms applicable to the
broader public also must apply to any favored classes of customers.\28\
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    \23\ 15 U.S.C. 78k-1(a)(1)(C)(iii). See also 15 U.S.C. 78k-
1(a)(1)(D).
    \24\ See President's Working Group on Financial Markets, Policy
Objectives for the OTC Derivatives Market (Nov. 14, 2008), available
at 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.''). See also
Department of the Treasury, Financial Regulatory Reform: A New
Foundation, available at http://www.financialstability.gov/docs/
regs/FinalReport_web.pdf, at p.48 (``[m]arket efficiency and price
transparency should be improved in derivatives markets * * * by
requiring development of a system for timely reporting of trades and
prompt dissemination of prices and other trade information.'').
    \25\ See Securities Exchange Act Release No. 42209 (Dec. 9,
1999), 64 FR 70613, 70621-70623 (Dec. 17, 1999) (``Market
Information Concept Release'') (discussion of legal standards
applicable to market data distribution since Section 11A was adopted
in 1975).
    \26\ See Securities Exchange Act Release No. 59039 (Dec. 2,
2008), 73 FR 74770, 74793 (Dec. 9, 2008) (``NYSE ArcaBook Order'')
(``[S]ection 6 and Exchange Act Rule 603(a) require NYSE Arca to
distribute the ArcaBook data on terms that are not tied to other
products in a way that is unfairly discriminatory or
anticompetitive.'').
    \27\ See Market Information Concept Release, 64 FR at 70630
(``The most important objectives for the Commission to consider in
evaluating fees are to assure (1) the wide availability of market
information, (2) the neutrality of fees among markets, vendors,
broker-dealers, and users, (3) the quality of market information--
its integrity, reliability, and accuracy, and (4) fair competition
and equal regulation among markets and broker-dealers.'').
    \28\ See NYSE ArcaBook Order, 73 FR at 74794 (``[T]he proposed
fees for ArcaBook data will apply equally to all professional
subscribers and all non-professional subscribers * * * The fees
therefore do not unreasonably discriminate among types of
subscribers, such as by favoring participants in the NYSE Arca
market or penalizing participants in other markets.'').
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    As a CCP, ICE Clear Europe will collect and process information
about CDS transactions, prices, and positions from all of its
participants. With this information, a CCP will, among other things,
calculate and disseminate current values for open positions for the
purpose of setting appropriate margin levels. The availability of such
information can improve fairness, efficiency, and competitiveness of
the market--all of which enhance investor protection and facilitate
capital formation. Moreover, with pricing and valuation information
relating to Cleared CDS, market participants would be able to derive
information about underlying securities and indexes. This may improve
the efficiency and effectiveness of the securities markets by allowing
investors to better understand credit conditions generally.
2. Exemption From Sections 5 and 6 of the Exchange Act
    ICE Clear Europe represents that, in connection with its clearing
and risk management process, it will calculate an end-of-day settlement
price for each Cleared CDS in which an ICE Clear Europe Clearing Member
has a cleared position, based on prices submitted by ICE Clear Europe
Clearing Members. As part of this mark-to-market process, ICE Clear
Europe will periodically require ICE Clear Europe Clearing Members to
execute certain CDS trades at the applicable end-of-day settlement
price. Requiring ICE Clear Europe Clearing Members to trade CDS
periodically in this manner is designed to help ensure that such
submitted prices reflect each ICE Clear Europe Clearing Member's best
assessment of the value of each of its open positions in Cleared CDS on
a daily basis, thereby reducing risk by allowing ICE Clear Europe to
impose appropriate margin requirements.
    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 * * *.'' \29\ Section 6 of the Exchange Act
sets forth a procedure whereby an exchange \30\ may register as a
national securities exchange.\31\ To facilitate the establishment of
ICE Clear Europe's end-of-day settlement price process, including the
periodically required trading described above, the Commission is
exercising its authority under Section 36 of the Exchange Act to
temporarily exempt ICE Clear Europe and ICE Clear Europe Clearing
Members from Sections 5 and 6 of the Exchange Act and the rules and
regulations thereunder in connection with ICE Clear Europe's
calculation of mark-to-market prices for open positions in Cleared CDS.
This temporary exemption is subject to the following conditions:
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    \29\ 15 U.S.C. 78e.
    \30\ 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 (Dec. 8,
1998), 63 FR 70844 (Dec. 22, 1998) (adopting Rule 3b-16 in addition
to Regulation ATS).
    \31\ 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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    First, ICE Clear Europe must report the following information with
respect to the calculation of mark-to-market prices for Cleared CDS to
the Commission within 30 days of the end of each quarter, and preserve
such reports during the life of the enterprise and of any successor
enterprise:
     The total dollar volume of transactions executed during
the quarter, broken down by reference entity, security, or index; and
     The total unit volume and/or notional amount executed
during the

quarter, broken down by reference entity, security, or index.

Reporting of this information will assist the Commission in carrying
out its responsibility to supervise and regulate the securities
markets.
    Second, ICE Clear Europe must establish adequate safeguards and
procedures to protect members' confidential trading information. Such
safeguards and procedures shall include: (i) Limiting access to the
confidential trading information of members to those employees of ICE
Clear Europe who are operating the system or responsible for its
compliance with this exemption or any other applicable rules; and (ii)
implementing standards controlling employees of ICE Clear Europe
trading for their own accounts. ICE Clear Europe must adopt and
implement adequate oversight procedures to ensure that the safeguards
and procedures established pursuant to this condition are followed.
This condition is designed to prevent any misuse of ICE Clear Europe
Clearing Members' trading information that may be available to ICE
Clear Europe in connection with the daily marking-to-market process of
open positions in Cleared CDS. This should strengthen confidence in ICE
Clear Europe as a CCP for CDS, promoting participation.
    Third, ICE Clear Europe must comply with the conditions to the
temporary exemption from registration as a clearing agency granted in
this Order. As set forth above, this Order is designed to facilitate
the prompt establishment of ICE Clear Europe as a CCP for non-excluded
CDS. ICE Clear Europe has represented that, to enhance the reliability
of end-of-day settlement prices submitted as part of the daily mark-to-
market process, it must require periodic trading of Cleared CDS
positions by ICE Clear Europe Clearing Members whose submitted end-of-
day prices lock or cross. The Commission's temporary exemption from
Sections 5 and 6 of the Exchange Act is based on ICE Clear Europe's
representation that the end-of-day settlement pricing process,
including the periodically required trading, is integral to its risk
management. Accordingly, as a condition to ICE Clear Europe's temporary
exemption from Sections 5 and 6 of the Exchange Act, ICE Clear Europe
must comply with the conditions to the temporary exemption from Section
17A of the Exchange Act in this Order.
    The Commission is also temporarily exempting each ICE Clear Europe
Clearing Member from the prohibition in Section 5 of the Exchange Act
to the extent that such ICE Clear Europe Clearing Member uses any
facility of ICE Clear Europe to effect any transaction in Cleared CDS,
or to report any such transaction, in connection with ICE Clear
Europe's calculation of mark-to-market prices for open positions in
Cleared CDS. Absent an exemption, Section 5 would prohibit any ICE
Clear Europe Clearing Member that is a broker or dealer from effecting
transactions in Cleared CDS on ICE Clear Europe, which will rely on
this Order for an exemption from exchange registration. The Commission
believes that temporarily exempting ICE Clear Europe Clearing Members
from the restriction in Section 5 is necessary and appropriate in the
public interest and is consistent with the protection of investors
because it will facilitate their use of ICE Clear Europe's CCP for
Cleared CDS, which for the reasons noted in this Order the Commission
believes to be beneficial. Without also temporarily exempting ICE Clear
Europe Clearing Members from this Section 5 requirement, the
Commission's temporary exemption of ICE Clear Europe from Sections 5
and 6 of the Exchange Act would be ineffective, because ICE Clear
Europe Clearing Members that are brokers or dealers would not be
permitted to effect transactions on ICE Clear Europe in connection with
the end-of-day settlement price process.

C. Temporary General Exemption for ICE Clear Europe, ICE Clear Europe
Clearing Members, and Certain Eligible Contract Participants

    Applying the full panoply of Exchange Act requirements to
participants in transactions in non-excluded CDS likely would deter
some participants from using CCPs to clear CDS transactions. At the
same time, it is important that the antifraud provisions of the
Exchange Act apply to transactions in non-excluded CDS; indeed, OTC
transactions subject to individual negotiation that qualify as
security-based swap agreements already are subject to these antifraud
provisions.\32\
---------------------------------------------------------------------------

    \32\ While Section 3A of the Exchange Act excludes ``swap
agreements'' from the definition of ``security,'' certain antifraud
and insider trading provisions under the Exchange Act explicitly
apply to security-based swap agreements. See (a) paragraphs (2)
through (5) of Section 9(a), 15 U.S.C. 78i(a), prohibiting the
manipulation of security prices; (b) Section 10(b), 15 U.S.C.
78j(b), and underlying rules prohibiting fraud, manipulation or
insider trading (but not prophylactic reporting or recordkeeping
requirements); (c) Section 15(c)(1), 15 U.S.C. 78o(c)(1), which
prohibits brokers and dealers from using manipulative or deceptive
devices; (d) Sections 16(a) and (b), 15 U.S.C. 78p(a) and (b), which
address disclosure by directors, officers and principal
stockholders, and short-swing trading by those persons, and rules
with respect to reporting requirements under Section 16(a); (e)
Section 20(d), 15 U.S.C. 78t(d), providing for antifraud liability
in connection with certain derivative transactions; and (f) Section
21A(a)(1), 15 U.S.C. 78u-1(a)(1), related to the Commission's
authority to impose civil penalties for insider trading violations.
    ``Security-based swap agreement'' is defined in Section 206B of
the Gramm-Leach-Bliley Act as a swap agreement in which a material
term is based on the price, yield, value, or volatility of any
security or any group or index of securities, or any interest
therein.
---------------------------------------------------------------------------

    We thus believe that it is appropriate in the public interest and
consistent with the protection of investors temporarily to apply
substantially the same framework to transactions by market participants
in non-excluded CDS that applies to transactions in security-based swap
agreements. Applying substantially the same set of requirements to
participants in transactions in non-excluded CDS as apply to
participants in OTC CDS transactions will avoid deterring market
participants from promptly using CCPs, which would detract from the
potential benefits of central clearing.
    Accordingly, pursuant to Section 36 of the Exchange Act, the
Commission finds that it is necessary or appropriate in the public
interest and is consistent with the protection of investors to exercise
its authority to grant an exemption until April 23, 2010 from certain
requirements under the Exchange Act. This temporary exemption applies
to ICE Clear Europe, any ICE Clear Europe Clearing Member \33\ which is
not a broker or dealer registered under Section 15(b) of the Exchange
Act (other than paragraph (11) thereof), and any eligible contract
participants \34\ other than: Eligible contract participants that
receive or hold funds or securities for the purpose of purchasing,
selling, clearing, settling or holding Cleared CDS positions for other
persons; \35\ eligible contract

participants that are self-regulatory organizations; or eligible
contract participants that are registered brokers or dealers.\36\
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    \33\ For purposes of this Order, an ``ICE Clear Europe Clearing
Member'' means any clearing member of ICE Clear Europe that submits
Cleared CDS to ICE Clear Europe for clearance and settlement
exclusively (i) for its own account or (ii) for the account of an
affiliate that controls, is controlled by, or is under common
control with the clearing member of ICE Clear Europe. In general,
this exemption does not apply to any ICE Clear Europe Clearing
Member that is registered with the Commission as a broker-dealer. A
separate temporary exemption addresses the Cleared CDS activities of
registered broker-dealers. See Part II.D., infra.
    \34\ This exemption in general applies to eligible contract
participants, as defined in Section 1a(12) of the Commodity Exchange
Act as in effect on the date of this Order, other than persons that
are eligible contract participants under paragraph (C) of that
section.
    \35\ Solely for purposes of this requirement, an eligible
contract participant would not be viewed as receiving or holding
funds or securities for purpose of purchasing, selling, clearing,
settling, or holding Cleared CDS positions for other persons, if the
other persons involved in the transaction would not be considered
``customers'' of the eligible contract participant under the
analysis used for determining whether certain persons would be
considered ``customers'' of a broker-dealer under Exchange Act Rule
15c3-3(a)(1). For these purposes, and for the purpose of the
definition of ``Cleared CDS,'' the terms ``purchasing'' and
``selling'' mean the execution, termination (prior to its scheduled
maturity date), assignment, exchange, or similar transfer or
conveyance of, or extinguishing the rights or obligations under, a
Cleared CDS, as the context may require. This is consistent with the
meaning of the terms ``purchase'' or ``sale'' under the Exchange Act
in the context of security-based swap agreements. See Exchange Act
Section 3A(b)(4).
    \36\ A separate temporary exemption addresses the Cleared CDS
activities of registered broker-dealers. See Part II.D., infra.
Solely for purposes of this Order, a registered broker-dealer, or a
broker or dealer registered under Section 15(b) of the Exchange Act,
does not refer to someone that would otherwise be required to
register as a broker or dealer solely as a result of activities in
Cleared CDS in compliance with this Order.
---------------------------------------------------------------------------

    Under this temporary exemption, and solely with respect to Cleared
CDS, these persons generally are exempt from the provisions of the
Exchange Act and the rules and regulations thereunder that do not apply
to security-based swap agreements. Those persons thus would still be
subject to those Exchange Act requirements that explicitly are
applicable in connection with security-based swap agreements.\37\ In
addition, all provisions of the Exchange Act related to the
Commission's enforcement authority in connection with violations or
potential violations of such provisions would remain applicable.\38\ In
this way, the temporary exemption would apply the same Exchange Act
requirements in connection with non-excluded CDS as apply in connection
with OTC credit default swaps.
---------------------------------------------------------------------------

    \37\ See note 32, supra.
    \38\ Thus, for example, the Commission retains the ability to
investigate potential violations and bring enforcement actions in
the Federal courts and administrative proceedings, and to seek the
full panoply of remedies available in such cases.
---------------------------------------------------------------------------

    This temporary exemption, however, does not extend to Sections 5
and 6 of the Exchange Act.\39\ The Commission separately issued a
conditional exemption from these provisions to all broker-dealers and
exchanges.\40\ This temporary exemption also does not extend to Section
17A of the Exchange Act; instead, ICE Clear Europe is exempt from
registration as a clearing agency under the conditions discussed above.
In addition, this temporary exemption does not apply to Exchange Act
Sections 12, 13, 14, 15(d), and 16; \41\ eligible contract participants
and other persons instead should refer to the interim final temporary
rules issued by the Commission. Finally, this temporary exemption does
not extend to the Commission's administrative proceeding authority
under Sections 15(b)(4) and (b)(6),\42\ or to certain provisions
related to government securities.\43\
---------------------------------------------------------------------------

    \39\ This Order includes a separate temporary exemption
regarding the mark-to-market process of ICE Clear Europe, discussed
above.
    \40\ See note 9, supra. A national securities exchange that
effects transactions in Cleared 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 that
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), 15
U.S.C. 78c(a)(2).
    \41\ 15 U.S.C. 78l, 78m, 78n, 78o(d), 78p.
    \42\ Exchange Act Sections 15(b)(4) and 15(b)(6), 15 U.S.C.
78o(b)(4) and (b)(6), grant the Commission authority to take action
against broker-dealers and associated persons in certain situations.
Accordingly, while this exemption generally extends to persons that
act as inter-dealer brokers in the market for Cleared CDS and do not
hold funds or securities for others, such inter-dealer brokers may
be subject to actions under Sections 15(b)(4) and (b)(6) of the
Exchange Act.
    In addition, such inter-dealer brokers may be subject to actions
under Exchange Act Section 15(c)(1), 15 U.S.C. 78o(c)(1), which
prohibits brokers and dealers from using manipulative or deceptive
devices. As noted above, Section 15(c)(1) explicitly applies to
security-based swap agreements. Sections 15(b)(4), 15(b)(6) and
15(c)(1), of course, would not apply to persons subject to this
exemption who do not act as broker-dealers or associated persons of
broker-dealers.
    \43\ This exemption specifically does not extend to the Exchange
Act provisions applicable to government securities, as set forth in
Section 15C, 15 U.S.C. 78o-5, and its underlying rules and
regulations; nor does the exemption extend to related definitions
found at paragraphs (42) through (45) of Section 3(a), 15 U.S.C.
78c(a). The Commission does not have authority under Section 36 to
issue exemptions in connection with those provisions. See Exchange
Act Section 36(b), 15 U.S.C. 78mm(b).
---------------------------------------------------------------------------

D. Temporary General Exemption for Certain Registered Broker-Dealers

    The temporary exemptions addressed above--with regard to ICE Clear
Europe, certain ICE Clear Europe Clearing Members, and certain eligible
contract participants--are not available to persons that are registered
as broker-dealers with the Commission (other than those that are notice
registered pursuant to Section 15(b)(11)).\44\ The Exchange Act and its
underlying rules and regulations require broker-dealers to comply with
a number of obligations that are important to protecting investors and
promoting market integrity. We are mindful of the need to avoid
creating disincentives to the prompt use of CCPs, and we recognize that
the factors discussed above suggest that the full panoply of Exchange
Act requirements should not immediately be applied to registered
broker-dealers that engage in transactions involving Cleared CDS. At
the same time, we also are sensitive to the critical importance of
certain broker-dealer requirements to promoting market integrity and
protecting customers (including those broker-dealer customers that are
not involved with CDS transactions).
---------------------------------------------------------------------------

    \44\ Exchange Act Section 15(b)(11) provides for notice
registration of certain persons that effect transactions in security
futures products. 15 U.S.C. 78o(b)(11).
---------------------------------------------------------------------------

    This calls for balancing the facilitation of the development and
prompt implementation of CCPs with the preservation of certain key
investor protections. Pursuant to Section 36 of the Exchange Act, the
Commission finds that it is necessary or appropriate in the public
interest and is consistent with the protection of investors to exercise
its authority to grant an exemption until April 23, 2010 from certain
Exchange Act requirements. Consistent with the temporary exemptions
discussed above, and solely with respect to Cleared CDS, we are
temporarily exempting registered broker-dealers in general from the
provisions of the Exchange Act and its underlying rules and regulations
that do not apply to security-based swap agreements. As above, we are
not excluding registered broker-dealers from Exchange Act provisions
that explicitly apply in connection with security-based swap agreements
or from related enforcement authority provisions.\45\ As above, and for
similar reasons, we are not exempting registered broker-dealers from:
Sections 5, 6, 12(a) and (g), 13, 14, 15(b)(4), 15(b)(6), 15(d), 16 and
17A of the Exchange Act.\46\
---------------------------------------------------------------------------

    \45\ See notes 32 and 38, supra. As noted above, broker-dealers
also would be subject to Section 15(c)(1) of the Exchange Act, which
prohibits brokers and dealers from using manipulative or deceptive
devices, because that provision explicitly applies in connection
with security-based swap agreements. In addition, to the extent the
Exchange Act and any rule or regulation thereunder imposes any other
requirement on a broker-dealer with respect to security-based swap
agreements (e.g., requirements under Rule 17h-1T to maintain and
preserve written policies, procedures, or systems concerning the
broker or dealer's trading positions and risks, such as policies
relating to restrictions or limitations on trading financial
instruments or products), these requirements would continue to apply
to broker-dealers' activities with respect to Cleared CDS.
    \46\ We also are not exempting those members from provisions
related to government securities, as discussed above.
---------------------------------------------------------------------------

    Further we are not exempting registered broker-dealers from the
following additional provisions under

the Exchange Act: (i) Section 7(c),\47\ which addresses the unlawful
extension of credit by broker-dealers; (ii) Section 15(c)(3),\48\ which
addresses the use of unlawful or manipulative devices by broker-
dealers; (iii) Section 17(a),\49\ regarding broker-dealer obligations
to make, keep and furnish information; (iv) Section 17(b),\50\
regarding broker-dealer records subject to examination; (v) Regulation
T,\51\ a Federal Reserve Board regulation regarding extension of credit
by broker-dealers; (vi) Exchange Act Rule 15c3-1, regarding broker-
dealer net capital; (vii) Exchange Act Rule 15c3-3, regarding broker-
dealer reserves and custody of securities; (viii) Exchange Act Rules
17a-3 through 17a-5, regarding records to be made and preserved by
broker-dealers and reports to be made by broker-dealers; and (ix)
Exchange Act Rule 17a-13, regarding quarterly security counts to be
made by certain exchange members and broker-dealers.\52\ Registered
broker-dealers should comply with these provisions in connection with
their activities involving non-excluded CDS because these provisions
are especially important to helping protect customer funds and
securities, ensure proper credit practices and safeguard against fraud
and abuse.\53\
---------------------------------------------------------------------------

    \47\ 15 U.S.C. 78g(c).
    \48\ 15 U.S.C. 78o(c)(3).
    \49\ 15 U.S.C. 78q(a).
    \50\ 15 U.S.C. 78q(b).
    \51\ 12 CFR 220.1 et seq.
    \52\ Solely for purposes of this exemption, in addition to the
general requirements under the referenced Exchange Act sections,
registered broker-dealers shall only be subject to the enumerated
rules under the referenced Exchange Act sections.
    \53\ Indeed, Congress directed the Commission to promulgate
broker-dealer financial responsibility rules, including rules
regarding custody, the use of customer securities and the use of
customers' deposits or credit balances, and regarding establishment
of minimum financial requirements.
---------------------------------------------------------------------------

E. Solicitation of Comments

    The Commission is continuing 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 these exemptions are temporary, the
Commission will in the future consider whether they should be extended
or allowed to expire. The Commission believes it would be prudent to
solicit public comment on its action today, and on what action it
should take with respect to the CDS market in the future. The
Commission is soliciting public comment on all aspects of these
temporary exemptions, including:
    1. Whether the length of this temporary exemption (until April 23,
2010) is appropriate. If not, what should the appropriate duration be?
    2. Whether the conditions to these temporary exemptions are
appropriate. Why or why not? Should other conditions apply? Are any of
the present conditions to the temporary exemptions provided in this
Order unnecessary? If so, please specify and explain why such
conditions are not needed.
    3. Whether ICE Clear Europe ultimately should be required to
register as a clearing agency under the Exchange Act. Why or why not?
    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 ); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-16-09 on the subject line.
Paper Comments
     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-16-09. 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. We will post all comments on the Commission's Internet Web site
(http://www.sec.gov/rules/exorders.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 10:00 am and 3:00 pm. 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(a) of the Exchange
Act, that, until April 23, 2010:

(a) Exemption From Section 17A of the Exchange Act

    ICE Clear Europe Limited (``ICE Clear Europe'') shall be exempt
from Section 17A of the Exchange Act solely to perform the functions of
a clearing agency for Cleared CDS (as defined in paragraph (e)(1) of
this Order), subject to the following conditions:
    (1) ICE Clear Europe shall make available on its Web site its
annual audited financial statements.
    (2) ICE Clear Europe shall keep and preserve at least one copy of
all documents, including all correspondence, memoranda, papers, books,
notices, accounts, and other such records as shall be made or received
by it relating to its Cleared CDS clearance and settlement services.
These records shall be kept for at least five years and for the first
two years shall be held in an easily accessible place.
    (3) ICE Clear Europe shall supply information and periodic reports
relating to its Cleared CDS clearance and settlement services as may be
reasonably requested by the Commission and, subject to cooperation with
the FSA and upon such terms and conditions as may be agreed between the
FSA and the Commission, shall provide access to the Commission to
conduct on-site inspections of all facilities (including automated
systems and systems environment), records, and personnel related to ICE
Clear Europe's Cleared CDS clearance and settlement services.
    (4) ICE Clear Europe shall notify the Commission, on a monthly
basis, of any material disciplinary actions taken against any of its
members using its Cleared CDS clearance and settlement services,
including the denial of services, fines, or penalties. ICE Clear Europe
shall notify the Commission promptly when ICE Clear Europe terminates
on an involuntary basis the membership of an entity that is using ICE
Clear Europe's Cleared CDS clearance and settlement services. Both
notifications shall describe the facts and circumstances that led to
the ICE Clear Europe's disciplinary action.
    (5) ICE Clear Europe shall notify the Commission of all changes to
its rules, procedures, and any other material events affecting its
Cleared CDS clearance and settlement services, including its fee
schedule and changes to risk management practices, not less than one
day prior to effectiveness or implementation of such changes or, in
exigent circumstances, as promptly as reasonably practicable under the
circumstances. If ICE Clear Europe gives notice to, or seeks approval
from, the FSA regarding any other changes to its rules regarding its
Cleared CDS clearance and settlement services, ICE Clear Europe will
also provide notice to the Commission. All such rule changes will be
posted on ICE Clear Europe's Web site. Such notifications will not be

deemed rule filings that require Commission approval.
    (6) ICE Clear Europe shall provide the Commission with reports
prepared by independent audit personnel concerning its Cleared CDS
clearance and settlement services that are generated in accordance with
risk assessment of the areas set forth in the Commission's Automation
Review Policy Statements. ICE Clear Europe shall provide the Commission
with annual audited financial statements for ICE Clear Europe prepared
by independent audit personnel.
    (7) ICE Clear Europe shall notify the Commission at the same time
it notifies the FSA in accordance with FSA REC 3.15 and FSA REC 3.16
regarding the suspension of services or inability to operate its
facilities in connection with its Cleared CDS clearance and settlement
services.
    (8) ICE Clear Europe, directly or indirectly, shall make available
to the public on terms that are fair and reasonable and not
unreasonably discriminatory: (i) All end-of-day settlement prices and
any other prices with respect to Cleared CDS that ICE Clear Europe may
establish to calculate mark-to-market margin requirements for ICE Clear
Europe Clearing Members; and (ii) any other pricing or valuation
information with respect to Cleared CDS as is published or distributed
by ICE Clear Europe.

(b) Exemption From Sections 5 and 6 of the Exchange Act

    (1) ICE Clear Europe shall be exempt from the requirements of
Sections 5 and 6 of the Exchange Act and the rules and regulations
thereunder in connection with its calculation of mark-to-market prices
for open positions in Cleared CDS, subject to the following conditions:
    (i) ICE Clear Europe shall report the following information with
respect to the calculation of mark-to-market prices for Cleared CDS to
the Commission within 30 days of the end of each quarter, and preserve
such reports during the life of the enterprise and of any successor
enterprise:
    (A) The total dollar volume of transactions executed during the
quarter, broken down by reference entity, security, or index; and
    (B) The total unit volume and/or notional amount executed during
the quarter, broken down by reference entity, security, or index;
    (ii) ICE Clear Europe shall establish adequate safeguards and
procedures to protect members' confidential trading information. Such
safeguards and procedures shall include: (A) Limiting access to the
confidential trading information of members to those employees of ICE
Clear Europe 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 ICE Clear Europe
trading for their own accounts. ICE Clear Europe must adopt and
implement adequate oversight procedures to ensure that the safeguards
and procedures established pursuant to this condition are followed; and
    (iii) ICE Clear Europe shall satisfy the conditions of the
temporary exemption from Section 17A of the Exchange Act set forth in
paragraphs (a)(1)-(8) of this Order.
    (2) Any ICE Clear Europe Clearing Member shall be exempt from the
requirements of Section 5 of the Exchange Act to the extent such ICE
Clear Europe Clearing Member uses any facility of ICE Clear Europe to
effect any transaction in Cleared CDS, or to report any such
transaction, in connection with ICE Clear Europe's clearance and risk
management process for Cleared CDS.
    (c) Exemption for ICE Clear Europe, ICE Clear Europe Clearing
Members, and certain eligible contract participants.
    (1) Persons eligible. The exemption in paragraph (c)(2) is
available to:
    (i) ICE Clear Europe;
    (ii) Any ICE Clear Europe Clearing Member (as defined in paragraph
(e)(2) of this Order), which is not a broker or dealer registered under
Section 15(b) of the Exchange Act (other than paragraph (11) thereof);
and
    (iii) Any eligible contract participant (as defined in Section
1a(12) of the Commodity Exchange Act as in effect on the date of this
Order (other than a person that is an eligible contract participant
under paragraph (C) of that section)), other than: (A) An eligible
contract participant that receives or holds funds or securities for the
purpose of purchasing, selling, clearing, settling, or holding Cleared
CDS positions for other persons; (B) an eligible contract participant
that is a self-regulatory organization, as that term is defined in
Section 3(a)(26) of the Exchange Act; or (C) a broker or dealer
registered under Section 15(b) of the Exchange Act (other than
paragraph (11) thereof).
    (2) Scope of exemption.
    (i) In general. Such persons generally shall, solely with respect
to Cleared CDS, be exempt from the provisions of the Exchange Act and
the rules and regulations thereunder that do not apply in connection
with security-based swap agreements. Accordingly, under this exemption,
those persons would remain subject to those Exchange Act requirements
that explicitly are applicable in connection with security-based swap
agreements (i.e., paragraphs (2) through (5) of Section 9(a), Section
10(b), Section 15(c)(1), paragraphs (a) and (b) of Section 16, Section
20(d) and Section 21A(a)(1) and the rules thereunder that explicitly
are applicable to security-based swap agreements). All provisions of
the Exchange Act related to the Commission's enforcement authority in
connection with violations or potential violations of such provisions
also remain applicable.
    (ii) Exclusions from exemption. The exemption in paragraph
(c)(2)(i), however, does not extend to the following provisions under
the Exchange Act:
    (A) Paragraphs (42), (43), (44), and (45) of Section 3(a);
    (B) Section 5;
    (C) Section 6;
    (D) Section 12 and the rules and regulations thereunder;
    (E) Section 13 and the rules and regulations thereunder;
    (F) Section 14 and the rules and regulations thereunder;
    (G) Paragraphs (4) and (6) of Section 15(b);
    (H) Section 15(d) and the rules and regulations thereunder;
    (I) Section 15C and the rules and regulations thereunder;
    (J) Section 16 and the rules and regulations thereunder; and
    (K) Section 17A (other than as provided in paragraph (a)).
    (d) Exemption for certain registered broker-dealers.
    A broker or dealer registered under Section 15(b) of the Exchange
Act (other than paragraph (11) thereof) shall be exempt from the
provisions of the Exchange Act and the rules and regulations thereunder
specified in paragraph (c)(2), solely with respect to Cleared CDS,
except:
    (1) Section 7(c);
    (2) Section 15(c)(3);
    (3) Section 17(a);
    (4) Section 17(b);
    (5) Regulation T, 12 CFR 200.1 et seq.;
    (6) Rule 15c3-1;
    (7) Rule 15c3-3;
    (8) Rule 17a-3;
    (9) Rule 17a-4;
    (10) Rule 17a-5; and
    (11) Rule 17a-13.
    (e) Definitions.
    For purposes of this Order:
    (1) ``Cleared CDS'' shall mean a credit default swap that is
submitted (or offered, purchased, or sold on terms providing for
submission) to ICE Clear Europe, that is offered only to,

purchased only by, and sold only to eligible contract participants (as
defined in Section 1a(12) of the Commodity Exchange Act as in effect on
the date of this Order (other than a person that is an eligible
contract participant under paragraph (C) of that section)), and in
which:
    (i) The reference entity, the issuer of the reference security, or
the reference security is one of the following:
    (A) An entity reporting under the Exchange Act, providing
Securities Act Rule 144A(d)(4) information, or about which financial
information is otherwise publicly available;
    (B) A foreign private issuer whose securities are listed outside
the United States and that has its principal trading market outside the
United States;
    (C) A foreign sovereign debt security;
    (D) An asset-backed security, as defined in Regulation AB, issued
in a registered transaction with publicly available distribution
reports; or
    (E) An asset-backed security issued or guaranteed by Fannie Mae,
Freddie Mac or Ginnie Mae; or
    (ii) The reference index is an index in which 80 percent or more of
the index's weighting is comprised of the entities or securities
described in subparagraph (i).
    (2) ``ICE Clear Europe Clearing Member'' shall mean any clearing
member of ICE Clear Europe that submits Cleared CDS to ICE Clear Europe
for clearance and settlement exclusively (i) for its own account or
(ii) for the account of an affiliate that controls, is controlled by,
or is under common control with the clearing member of ICE Clear
Europe.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-17990 Filed 7-28-09; 8:45 am]

BILLING CODE 8010-01-P


Attachment 1 Response to Questions Chevron Hawaii Refinery Polycyclic Aromatic Compounds ( PACs) Your company reported to TRI that you released 277 pounds of polycyclic aromatic compounds to surface water ( Pacific Ocean) in 2002. Your company reported that the basis of estimate for this discharge was " measurements".

Could you please explain how the reported discharge was estimated?

We based the Polycyclic Aromatic Compounds ( PACs) release to water in the 2002 TRI report for the Chevron Hawaii Refinery on the total volume of water discharged and the sum of all TRI reportable PAC's sampled in 2000 for NPDES permit renewal. All of the PACs analytical results were non detect; therefore, we used ½ the detection limit.

In 2002, did your company ever analyze any wastewater for any of the polycyclic aromatic compounds listed below, either an inplant stream, such as catalytic reformer regeneration, or the final discharge to the Pacific Ocean?

No.

If so, were any polycyclic aromatic compounds ever detected? If so, which compounds? How did your company determine the wastewater flow associated with the polycyclic aromatic compound discharges in order to calculate the reported pounds discharged?

Not applicable, see response to previous question.

What was the reason for the increase in PACs discharge from 2000 to 2001, 20 pounds and 253 pounds, respectively?

In 2000, the TRI reportable PACs were estimated based on the assumption that they were equivalent to the amount of naphthalene in the refinery's effluent discharge. The naphthalene release was estimated from ½ the detection limit from the 2000 NPDES permit renewal sampling. In 2001, PAC's were estimated by summing all of the reportable PACs analyzed in 2000 for NPDES permit renewal. All of the PACs were non detect; therefore, we used ½ the detection limit for the calculation. There were no process changes in the refinery between 2000 and 2001 that would affect the actual release of PACs.


[Federal Register: March 26, 2010 (Volume 75, Number 58)]
[Notices]
[Page 14602-14603]
[DOCID:fr26mr10-59]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2010-D-0143] (formerly Docket No. FDA-2008-D-0128)

Guidance for Industry on Drug-Induced Liver Injury: Premarketing
Clinical Evaluation; Opening of Comment Period for Future Revision of
Guidance Dated July 2009; Public Conference

AGENCY:  Food and Drug Administration, HHS.

ACTION:  Notice of opening of comment period; notice of public
conference.

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SUMMARY:  The Food and Drug Administration (FDA) is opening a comment
period for submission of suggestions for revising the guidance for
industry published in the Federal

Register July 30, 2009, entitled ``Drug-Induced Liver Injury:
Premarketing Clinical Evaluation.'' In addition, FDA, along with the
American Association for the Study of Liver Diseases (AASLD) and the
Pharmaceutical and Research Manufacturers of America, is sponsoring a
public conference to be held on March 24 and 25, 2010, to discuss and
debate issues contained in the published guidance document. The purpose
of the conference is to consider the effect of the recommendations in
the guidance since its publication, and to seek suggestions for future
revisions that will incorporate the views expressed.

DATES:  The public conference will be held on March 24, 2010, from 8
a.m. to 6 p.m. and March 25, 2010, from 8 a.m. until 3:15 p.m. Submit
written or electronic comments on agency guidances at any time.

ADDRESSES:  The conference will take place at the National Labor
College, 10000 New Hampshire Ave., Silver Spring MD 20993.
    Submit written requests for single copies of the July 2009 guidance
to the Division of Drug Information, Center for Drug Evaluation and
Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
51, rm. 2201, Silver Spring, MD 20993-0002. Send one self-addressed
adhesive label to assist that office in processing your requests.
Submit written comments on the guidance to the Division of Dockets
Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane,
rm. 1061, Rockville, MD 20852. Submit electronic comments to http://
www.regulations.gov. See the SUPPLEMENTARY INFORMATION section for
electronic access to the guidance document.

FOR FURTHER INFORMATION CONTACT: Lana L. Pauls, Center for Drug
Evaluation and Research, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 22, rm. 4307, Silver Spring MD 20993-0002, 301-
796-0518, e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    FDA announced in July 2009 the availability of a guidance for
industry entitled ``Guidance for Industry on Drug-Induced Liver Injury:
Premarketing Clinical Evaluation.'' The guidance explained that drug-
induced liver injury (DILI) has been the most frequent cause of acute
liver failure in the United States in the last 10 years, exceeding all
other causes combined. It discussed methods of detecting DILI by
periodic tests of serum enzyme activities and bilirubin concentration
elevations, and how those laboratory tests might change over time,
along with symptoms and physical findings, to allow estimation of
severity of the injury. It suggested some rules for stopping or
interrupting drug treatment, and the need to obtain additional clinical
information to estimate the likelihood of the true cause. Previous
periods for comments on the draft guidance were opened in 2007 and
2008, and those comments were taken into consideration when issuing the
final guidance in July 2009. The guidance was issued consistent with
FDA's good guidance practices regulation (21 CFR 10.115), representing
the agency's current thinking on evidence for DILI in premarketing
clinical evaluation. It does not create or confer any rights for or on
any person and does not operate to bind FDA or the public. An
alternative approach may be used if such approach satisfies the
requirements of the applicable statutes and regulations.

II. The Public Conference

A. Why Are We Holding This Conference?

    The purpose of the 2010 conference is to discuss the most current
information and thinking about clinical and basic aspects of the still-
unsolved problems of exactly how drugs cause liver injury and why
certain individual people are more susceptible than others, combining
views of both basic science and clinical experts, and selecting for
specific debate and discussion some controversial issues such as:
     Whether indications of cholestasis (biliary tract
obstruction) are less important than evidence of primarily
hepatocellular injury with secondary functional impairment;
     What findings could lead to interrupting or permanently
stopping administration of new drugs under evaluation; and
     The appropriate use of rechallenge testing to study
hepatotoxicity.

B. Is There a Fee and How Do I Register for the Conference?

    A modest registration fee will be charged to attendees other than
invited speakers, to help defray the costs of rental of the meeting
spaces, meals and snacks provided, and if possible to cover travel
costs incurred by invited academic (but not Government or industry)
speakers, and other costs. The fee for the 2-day meeting for industry
registrants is $450, and $225 for Federal Government and academic
registrants. Registration fees will be waived for invited speakers and
moderators.
    The registration process will be handled by AASLD, a not-for-profit
organization which has extensive experience in planning, organizing,
and executing educational meetings.
    The presentations and discussions will be recorded and published on
the Internet for public availability after minor editing by FDA. It
will then be posted on the Internet by AASLD following the meeting, to
allow consideration of the issues and material presented by those
unable to attend the conference in person.
    Additional information on the conference, program, and registration
procedures, as well as on past conferences 2001 through 2009, is
available on the Internet at http://www.aasld.org (go to Conferences
and Education, Meetings and Conferences), and also at http://
www.fda.gov by typing into the search box ``liver toxicity.'' (FDA has
verified the AASLD Web site address, but FDA is not responsible for any
subsequent changes to the Web site after this document publishes in the
Federal Register.)

III. Comments

    Interested persons may submit to the Division of Dockets Management
(see ADDRESSES) written or electronic comments regarding the guidance
and the issues and questions presented at the conference. Submit a
single copy of electronic comments or two paper copies of any mailed
comments, except that individuals may submit one paper copy. Comments
are to be identified with the docket number found in brackets in the
heading of this document. Received comments may be seen in the Division
of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

IV. Electronic Access

    Persons with access to the Internet may obtain the document at
either http://www.fda.gov/Drugs/
GuidanceComplianceRegulatoryInformation/Guidances/default.htm or http:/
/www.regulations.gov.

    Dated: March 17, 2010.
Leslie Kux,
Acting Assistant Commissioner for Policy.
[FR Doc. 2010-6701 Filed 3-25-10; 8:45 am]
BILLING CODE 4160-01-S


[Federal Register Volume 80, Number 6 (Friday, January 9, 2015)]
[Notices]
[Pages 1400-1401]
[FR Doc No: 2015-00087]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP14-543-000]

Notice of Availability of the Environmental Assessment for the
Proposed Jackson Prairie Storage Facility Project; Puget Sound Energy,
Inc.

    The staff of the Federal Energy Regulatory Commission (FERC or
Commission) has prepared an environmental assessment (EA) for the
Jackson Prairie Storage Facility Project proposed by Puget Sound
Energy, Inc. (Puget Energy) in the above-referenced docket. Puget
Energy requests authorization to construct, operate, and abandon
certain facilities at its existing Jackson Prairie Storage Facility in
Lewis County, Washington.
    The EA assesses the potential environmental effects of the
construction and operation of the Jackson Prairie Storage Facility
Project in accordance with the requirements of the National
Environmental Policy Act. The FERC staff concludes that approval of the
proposed project, with appropriate mitigating measures, would not
constitute a major federal action significantly affecting the quality
of the human environment.
    The proposed project includes the following activities:
     Permanently plug and abandon four gas wells (Well Nos. 1,
11, 31, and 47) that have not been used in several years and may
contribute to cushion gas

migration from the principal storage zone (Zone 2) of the Jackson
Prairie Storage Facility into the gas recapture zone (Zone 1);
     renew the authorization to convert an observation well
(Well No. 52) to a gas recycle well in Zone 1 and to build
approximately 500 feet of 3-inch-diameter natural gas pipeline to tie
Well No. 52 into a gathering pipeline; and
     drill a new water withdrawal well (Well No. 91) and
construct related facilities to continue normal maintenance water
withdrawal.
    The FERC staff mailed copies of the EA to federal, state, and local
government representatives and agencies; elected officials; Native
American tribes; potentially affected landowners and other interested
individuals and groups; newspapers and libraries in the project area;
and parties to this proceeding. In addition, the EA is available for
public viewing on the FERC's Web site (www.ferc.gov) using the eLibrary
link. A limited number of copies of the EA are available for
distribution and public inspection at: Federal Energy Regulatory
Commission, Public Reference Room, 888 First Street NE., Room 2A,
Washington, DC 20426,<PHONE_NUMBER>.
    Any person wishing to comment on the EA may do so. Your comments
should focus on the potential environmental effects, reasonable
alternatives, and measures to avoid or lessen environmental impacts.
The more specific your comments, the more useful they will be. To
ensure that the Commission has the opportunity to consider your
comments prior to making its decision on this project, it is important
that we receive your comments in Washington, DC on or before February
2, 2015.
    For your convenience, there are three methods you can use to file
your comments with the Commission. In all instances please reference
the project docket number (CP14-543-000) with your submission. The
Commission encourages electronic filing of comments and has expert
staff available to assist you at<PHONE_NUMBER> or<EMAIL_ADDRESS>    (1) You can file your comments electronically using the eComment
feature on the Commission's Web site (www.ferc.gov) under the link to
Documents and Filings. This is an easy method for submitting brief,
text-only comments on a project;
    (2) You can also file your comments electronically using the
eFiling feature on the Commission's Web site (www.ferc.gov) under the
link to Documents and Filings. With eFiling, you can provide comments
in a variety of formats by attaching them as a file with your
submission. New eFiling users must first create an account by clicking
on ``eRegister.'' You must select the type of filing you are making. If
you are filing a comment on a particular project, please select
``Comment on a Filing''; or
    (3) You can file a paper copy of your comments by mailing them to
the following address: Kimberly D. Bose, Secretary, Federal Energy
Regulatory Commission, 888 First Street NE., Room 1A, Washington, DC
20426.
    Any person seeking to become a party to the proceeding must file a
motion to intervene pursuant to Rule 214 of the Commission's Rules of
Practice and Procedures (18 CFR 385.214).\1\ Only intervenors have the
right to seek rehearing of the Commission's decision. The Commission
grants affected landowners and others with environmental concerns
intervenor status upon showing good cause by stating that they have a
clear and direct interest in this proceeding which no other party can
adequately represent. Simply filing environmental comments will not
give you intervenor status, but you do not need intervenor status to
have your comments considered.
---------------------------------------------------------------------------

    \1\ See the previous discussion on the methods for filing
comments.
---------------------------------------------------------------------------

    Additional information about the project is available from the
Commission's Office of External Affairs, at (866) 208-FERC, or on the
FERC Web site (www.ferc.gov) using the eLibrary link. Click on the
eLibrary link, click on ``General Search,'' and enter the docket number
excluding the last three digits in the Docket Number field (i.e., CP14-
543). Be sure you have selected an appropriate date range. For
assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at<PHONE_NUMBER>, or for TTY,
contact<PHONE_NUMBER>. The eLibrary link also provides access to the
texts of formal documents issued by the Commission, such as orders,
notices, and rulemakings.
    In addition, the Commission offers a free service called
eSubscription which allows you to keep track of all formal issuances
and submittals in specific dockets. This can reduce the amount of time
you spend researching proceedings by automatically providing you with
notification of these filings, document summaries, and direct links to
the documents. Go to www.ferc.gov/docs-filing/esubscription.asp.

    Dated: January 2, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015-00087 Filed 1-8-15; 8:45 am]
BILLING CODE 6717-01-P