security-based swap to be entered into with the counterparty.
    (3) Record. The security-based swap dealer or major security-based
swap participant shall make a written record of the non-written
disclosures made pursuant to paragraph (b) of this section, and provide
a written version of these disclosures to its counterparties in a
timely manner, but in any case no later than the delivery of the trade
acknowledgement of the particular transaction pursuant to Sec.
240.15Fi-1.
    (c) Daily Mark. A security-based swap dealer or major security-
based swap participant shall disclose the daily mark to the
counterparty, other than a security-based swap dealer, major security-
based swap participant, swap dealer or major swap participant, which
shall be:
    (1) For a cleared security-based swap, upon the request of the
counterparty, the daily end-of-day settlement price that the security-
based swap dealer or major security-based swap participant receives
from the appropriate clearing agency; and
    (2) For an uncleared security-based swap, the midpoint between the
bid and offer, or the calculated equivalent thereof, as of the close of
business,

unless the parties agree in writing otherwise to a different time, on
each business day during the term of the security-based swap. The daily
mark may be based on market quotations for comparable security-based
swaps, mathematical models or a combination thereof. The security-based
swap dealer or major security-based swap participant shall also
disclose its data sources and a description of the methodology and
assumptions used to prepare the daily mark, and promptly disclose any
material changes to such data sources, methodology and assumptions
during the term of the security-based swap.
    (d) Disclosure Regarding Clearing Rights. A security-based swap
dealer or major security-based swap participant shall disclose the
following information to a counterparty, other than a security-based
swap dealer, major security-based swap participant, swap dealer or
major swap participant:
    (1) For security-based swaps subject to clearing requirement.
Before entering into a security-based swap subject to the clearing
requirement under Section 3C(a) of the Act, a security-based swap
dealer or major security-based swap participant shall:
    (i) Disclose to the counterparty the names of the clearing agencies
that accept the security-based swap for clearing, and through which of
those clearing agencies the security-based swap dealer or major
security-based swap participant is authorized or permitted, directly or
through a designated clearing member, to clear the security-based swap;
and
    (ii) Notify the counterparty that it shall have the sole right to
select which of the clearing agencies described in paragraph (d)(1)(i)
shall be used to clear the security-based swap.
    (2) For security-based swaps not subject to clearing requirement.
Before entering into a security-based swap not subject to the clearing
requirement under Section 3C(a) of the Act, a security-based swap
dealer or major security-based swap participant shall:
    (i) Determine whether the security-based swap is accepted for
clearing by one or more clearing agencies;
    (ii) Disclose to the counterparty the names of the clearing
agencies that accept the security-based swap for clearing, and whether
the security-based swap dealer or major security-based swap participant
is authorized or permitted, directly or through a designated clearing
member, to clear the security-based swap through such clearing
agencies; and
    (iii) Notify the counterparty that it may elect to require clearing
of the security-based swap and shall have the sole right to select the
clearing agency at which the security-based swap will be cleared,
provided it is a clearing agency at which the security-based swap
dealer or major security-based swap participant is authorized or
permitted, directly or through a designated clearing member, to clear
the security-based swap.
    (3) Record. The security-based swap dealer or major security-based
swap participant shall make a written record of the non-written
disclosures made pursuant to paragraph (d) of this section, and provide
a written version of these disclosures to its counterparties in a
timely manner, but in any case no later than the delivery of the trade
acknowledgement of the particular transaction pursuant to Sec.
240.15Fi-1.
    (e) Know Your Counterparty. Each security-based swap dealer shall
establish, maintain and enforce policies and procedures reasonably
designed to obtain and retain a record of the essential facts
concerning each counterparty whose identity is known to the security-
based swap dealer, that are necessary for conducting business with such
counterparty. For purposes of this section, the essential facts
concerning a counterparty are:
    (1) Facts required to comply with applicable laws, regulations and
rules;
    (2) Facts required to implement the security-based swap dealer's
credit and operational risk management policies in connection with
transactions entered into with such counterparty;
    (3) Information regarding the authority of any person acting for
such counterparty; and
    (4) If the counterparty is a special entity, such background
information regarding the independent representative as the security-
based swap dealer reasonably deems appropriate.
    (f) Recommendations of Security-Based Swaps or Trading Strategies.
    (1) A security-based swap dealer that recommends a security-based
swap or trading strategy involving a security-based swap to a
counterparty, other than a security-based swap dealer, major security-
based swap participant, swap dealer, or major swap participant, must
have a reasonable basis to believe:
    (i) Based on reasonable diligence, that the recommended security-
based swap or trading strategy involving a security-based swap is
suitable for at least some counterparties; and
    (ii) That a recommended security-based swap or trading strategy
involving a security-based swap is suitable for the counterparty. To
establish a reasonable basis for a recommendation, a security-based
swap dealer must have or obtain relevant information regarding the
counterparty, including the counterparty's investment profile, trading
objectives, and its ability to absorb potential losses associated with
the recommended security-based swap or trading strategy.
    (2) A security-based swap dealer may also fulfill its obligations
under paragraph (g)(1) with respect to a particular counterparty if:
    (i) The security-based swap dealer reasonably determines that the
counterparty, or an agent to which the counterparty has delegated
decision-making authority, is capable of independently evaluating
investment risks with regard to the relevant security-based swap or
trading strategy involving a security-based swap;
    (ii) The counterparty or its agent affirmatively represents in
writing that it is exercising independent judgment in evaluating the
recommendations of the security-based swap dealer; and
    (iii) The security-based swap dealer discloses that it is acting in
its capacity as a counterparty, and is not undertaking to assess the
suitability of the security-based swap or trading strategy for the
counterparty.
    (3) A security-based swap dealer will be deemed to have satisfied
its obligations under paragraph (f)(1) of this section with respect to
a special entity if:
    (i) The security-based swap dealer is acting as an advisor to the
special entity and complies with the requirements of Sec.  240.15Fh-
4(b); or
    (ii) The security-based swap dealer is deemed not to be acting as
an advisor to the special entity pursuant to Sec.  240.15Fh-2(a).
    (h) Fair and Balanced Communications. A security-based swap dealer
or major security-based swap participant shall communicate with
counterparties in a fair and balanced manner based on principles of
fair dealing and good faith. In particular:
    (1) Communications must provide a sound basis for evaluating the
facts with regard to any particular security-based swap or trading
strategy involving a security-based swap;
    (2) Communications may not imply that past performance will recur
or make any exaggerated or unwarranted claim, opinion or forecast; and
    (3) Any statement referring to the potential opportunities or
advantages presented by a security-based swap shall be balanced by an
equally detailed statement of the corresponding risks.
    (i) Supervision.
    (1) In general. A security-based swap dealer or major security-
based swap

participant shall establish, maintain and enforce a system to
supervise, and shall diligently supervise its business and its
associated persons, with a view to preventing violations of the
provisions of applicable federal securities laws and the rules and
regulations thereunder relating to its business as a security-based
swap dealer or major security-based swap participant, respectively.
    (2) Minimum requirements. The system required by paragraph (g)(1)
of this section shall be reasonably designed to achieve compliance with
applicable securities laws and the rules and regulations thereunder,
and at a minimum, shall provide for:
    (i) The designation of at least one person with authority to carry
out the supervisory responsibilities of the security-based swap dealer
or major security-based swap participant for each type of business in
which it engages for which registration as a security-based swap dealer
or major security-based swap participant is required;
    (ii) The use of reasonable efforts to determine that all
supervisors are qualified and meet standards of training, experience,
and competence necessary to effectively supervise the security-based
swap activities of the persons associated with the security-based swap
dealer or major security-based swap participant;
    (iii) Establishment, maintenance and enforcement of written
policies and procedures addressing the supervision of the types of
security-based swap business in which the security-based swap dealer or
major security-based swap participant is engaged that are reasonably
designed to achieve compliance with applicable securities laws and the
rules and regulations thereunder, and that include, at a minimum:
    (A) Procedures for the review by a supervisor of transactions for
which registration as a security-based swap dealer or major security-
based swap participant is required;
    (B) Procedures for the review by a supervisor of incoming and
outgoing written (including electronic) correspondence with
counterparties or potential counterparties and internal written
communications relating to the security-based swap dealer's or major
security-based swap participant's business involving security-based
swaps;
    (C) Procedures for a periodic review, at least annually, of the
security-based swap business in which the security-based swap dealer or
major security-based swap participant engages that is reasonably
designed to assist in detecting and preventing violations of, and
achieving compliance with, applicable federal securities laws and
regulations;
    (D) Procedures to conduct a reasonable investigation regarding the
character, business repute, qualifications, and experience of any
person prior to that person's association with the security-based swap
dealer or major security-based swap participant;
    (E) Procedures to consider whether to permit an associated person
to establish or maintain a securities or commodities account in the
name of, or for the benefit of such associated person, at another
security-based swap dealer, broker, dealer, investment adviser, or
other financial institution; and if permitted, procedures to supervise
the trading at the other security-based swap dealer, broker, dealer,
investment adviser, or financial institution, including the receipt of
duplicate confirmations and statements related to such accounts;
    (F) A description of the supervisory system, including the titles,
qualifications and locations of supervisory persons and the specific
responsibilities of each person with respect to the types of business
in which the security-based swap dealer or major security-based swap
participant is engaged;
    (G) Procedures prohibiting an associated person who performs a
supervisory function from supervising his or her own activities or
reporting to, or having his or her compensation or continued employment
determined by, a person or persons he or she is supervising; and
    (H) Procedures preventing the standards of supervision from being
reduced due to any conflicts of interest of a supervisor with respect
to the associated person being supervised.
    (iv) Written policies and procedures reasonably designed, taking
into consideration the nature of such security-based swap dealer's or
major security-based swap participant's business, to comply with the
duties set forth in Section 15F(j) of the Act.
    (3) Failure to supervise. A security-based swap dealer or major
security-based swap participant or an associated person of a security-
based swap dealer or major security-based swap participant shall not be
deemed to have failed to diligently supervise any other person, if such
other person is not subject to his or her supervision, or if:
    (i) The security-based swap dealer or major security-based swap
participant has established and maintained written policies and
procedures, and a documented system for applying those policies and
procedures, that would reasonably be expected to prevent and detect,
insofar as practicable, any violation of the federal securities laws
and the rules and regulations thereunder relating to security-based
swaps; and
    (ii) The security-based swap dealer or major security-based swap
participant, or associated person of the security-based swap dealer or
major security-based swap participant, has reasonably discharged the
duties and obligations required by the written policies and procedures
and documented system and did not have a reasonable basis to believe
that the written policies and procedures and documented system were not
being followed.
    (4) Maintenance of written supervisory procedures. A security-based
swap dealer or major security-based swap participant shall:
    (i) Promptly amend its written supervisory procedures as
appropriate when material changes occur in applicable securities laws
or rules or regulations thereunder, and when material changes occur in
its business or supervisory system; and
    (ii) Promptly communicate any material amendments to its
supervisory procedures throughout the relevant parts of its
organization.

Sec.  240.15Fh-4  Special requirements for security-based swap dealers
acting as advisors to special entities.

    (a) In general. It shall be unlawful for a security-based swap
dealer or major security-based swap participant:
    (1) To employ any device, scheme, or artifice to defraud any
special entity or prospective customer who is a special entity;
    (2) To engage in any transaction, practice, or course of business
that operates as a fraud or deceit on any special entity or prospective
customer who is a special entity; or
    (3) To engage in any act, practice, or course of business that is
fraudulent, deceptive, or manipulative.
    (b) A security-based swap dealer that acts as an advisor to a
special entity regarding a security-based swap shall comply with the
following requirements:
    (1) Duty. The security-based swap dealer shall have a duty to act
in the best interests of the special entity.
    (2) Reasonable Efforts. The security-based swap dealer shall make
reasonable efforts to obtain such information that the security-based
swap dealer considers necessary to make a reasonable determination that
a security-based swap or trading strategy involving a security-based
swap is in the best interests of the special entity.

This information shall include, but not be limited to:
    (i) The authority of the special entity to enter into a security-
based swap;
    (ii) The financial status of the special entity, as well as future
funding needs;
    (iii) The tax status of the special entity;
    (iv) The investment or financing objectives of the special entity;
    (v) The experience of the special entity with respect to entering
into security-based swaps, generally, and security-based swaps of the
type and complexity being recommended;
    (vi) Whether the special entity has the financial capability to
withstand changes in market conditions during the term of the security-
based swap; and
    (vii) Such other information as is relevant to the particular facts
and circumstances of the special entity, market conditions and the type
of security-based swap or trading strategy involving a security-based
swap being recommended.
    (3) Exemption. The requirements of this Sec.  240.15Fh-4(b) shall
not apply with respect to a security-based swap if:
    (i) The transaction is executed on a registered security-based swap
execution facility or registered national securities exchange; and
    (ii) The security-based swap dealer does not know the identity of
the counterparty, at any time up to and including execution of the
transaction.

Sec.  240.15Fh-5  Special requirements for security-based swap dealers
and major security-based swap participants acting as counterparties to
special entities.

    (a) A security-based swap dealer or major security-based swap
participant that offers to enter into or enters into a security-based
swap with a special entity must have a reasonable basis to believe that
special entity has a qualified independent representative. For these
purposes, a qualified independent representative is an independent
representative that:
    (1) Has sufficient knowledge to evaluate the transaction and risks;
    (2) Is not subject to a statutory disqualification;
    (3) Undertakes a duty to act in the best interests of the special
entity;
    (4) Makes appropriate and timely disclosures to the special entity
of material information concerning the security-based swap;
    (5) Will provide written representations to the special entity
regarding fair pricing and the appropriateness of the security-based
swap; and
    (6) In the case of employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, is a fiduciary as defined in
section 3(21) of that Act (29 U.S.C. 1002(21)); and
    (7) In the case of a special entity defined in Sec. Sec.  240.15Fh-
2(e)(2) or (4), is a person that is subject to rules of the Commission,
the Commodity Futures Trading Commission or a self-regulatory
organization subject to the jurisdiction of the Commission or the
Commodity Futures Trading Commission prohibiting it from engaging in
specified activities if certain political contributions have been made,
provided that this paragraph (a)(7) shall not apply if the independent
representative is an employee of the special entity.
    (b) Before initiation of a security-based swap with a special
entity, a security-based swap dealer shall disclose to the special
entity in writing the capacity in which the security-based swap dealer
is acting and, if the security-based swap dealer engages in business,
or has engaged in business within the last twelve months, with the
counterparty in more than one capacity, the security-based swap dealer
shall disclose the material differences between such capacities in
connection with the security-based swap and any other financial
transaction or service involving the counterparty.
    (c) The requirements of this Sec.  240.15Fh-5 shall not apply with
respect to a security-based swap if:
    (1) The transaction is executed on a registered security-based swap
execution facility or registered national securities exchange; and
    (2) The security-based swap dealer or major security-based swap
participant does not know the identity of the counterparty, at any time
up to and including execution of the transaction.

Sec.  240.15Fh-6  Political contributions by certain security-based
swap dealers.

    (a) Definitions. For the purposes of this section:
    (1) The term contribution means any gift, subscription, loan,
advance, or deposit of money or anything of value made:
    (i) For the purpose of influencing any election for state or local
office;
    (ii) For payment of debt incurred in connection with any such
election; or
    (iii) For transition or inaugural expenses incurred by the
successful candidate for state or local office.
    (2) The term covered associate means:
    (i) Any general partner, managing member or executive officer, or
other person with a similar status or function;
    (ii) Any employee who solicits a municipal entity to enter into a
security-based swap with the security-based swap dealer and any person
who supervises, directly or indirectly, such employee; and
    (iii) A political action committee controlled by the security-based
swap dealer or by a person described in paragraphs (c)(2)(i) and
(c)(2)(ii) of this section.
    (3) The term executive officer of a security-based swap dealer
means:
    (i) The president;
    (ii) Any vice president in charge of a principal business unit,
division or function (such as sales, administration or finance);
    (iii) Any other officer of the security-based swap dealer who
performs a policy-making function; or
    (iv) Any other person who performs similar policy-making functions
for the security-based swap dealer.
    (4) The term municipal entity is defined in Section 15B(e)(8) of
the Act.
    (5) The term official of a municipal entity means any person
(including any election committee for such person) who was, at the time
of the contribution, an incumbent, candidate or successful candidate
for elective office of a municipal entity, if the office:
    (i) Is directly or indirectly responsible for, or can influence the
outcome of, the selection of a security-based swap dealer by a
municipal entity; or
    (ii) Has authority to appoint any person who is directly or
indirectly responsible for, or can influence the outcome of, the
selection of a security-based swap dealer by a municipal entity.
    (6) The term payment means any gift, subscription, loan, advance,
or deposit of money or anything of value.
    (7) The term regulated person means:
    (i) A person that is subject to rules of the Commission, the
Commodity Futures Trading Commission or a self-regulatory organization
subject to the jurisdiction of the Commission or the Commodity Futures
Trading Commission prohibiting it from engaging in specified activities
if certain political contributions have been made, or its officers or
employees;
    (ii) A general partner, managing member or executive officer of
such person, or other individual with a similar status or function; or
    (iii) An employee of such person who solicits a municipal entity
for the security-based swap dealer and any person who supervises,
directly or indirectly, such employee.
    (8) The term solicit means a direct or indirect communication by
any person with a municipal entity for the purpose of obtaining or
retaining an engagement related to a security-based swap.
    (b) Prohibitions and Exceptions.
    (1) It shall be unlawful for a security-based swap dealer to offer
to enter into,

or enter into, a security-based swap, or a trading strategy involving a
security-based swap, with a municipal entity within two years after any
contribution to an official of such municipal entity was made by the
security-based swap dealer, or by any covered associate of the
security-based swap dealer.
    (2) The prohibition in paragraph (b)(1) does not apply:
    (i) If the only contributions made by the security-based swap
dealer to an official of such municipal entity were made by a covered
associate:
    (A) To officials for whom the covered associate was entitled to
vote at the time of the contributions, if the contributions in the
aggregate do not exceed $350 to any one official per election; or
    (B) To officials for whom the covered associate was not entitled to
vote at the time of the contributions, if the contributions in the
aggregate do not exceed $150 to any one official, per election;
    (ii) To a security-based swap dealer as a result of a contribution
made by a natural person more than six months prior to becoming a
covered associate of the security-based swap dealer, however, this
exclusion shall not apply if the natural person, after becoming a
covered associate, solicits the municipal entity on behalf of the
security-based swap dealer to offer to enter into, or to enter into,
security-based swap, or a trading strategy involving a security-based
swap; or
    (iii) With respect to a security-based swap that is initiated by a
municipal entity on a registered national securities exchange or
registered security-based swap execution facility and the security-
based swap dealer does not know the identity of the counterparty to the
transaction at any time up to and including execution of the
transaction.
    (3) No security-based swap dealer or any covered associate of the
security-based swap dealer shall:
    (i) Provide or agree to provide, directly or indirectly, payment to
any person to solicit a municipal entity to offer to enter into, or to
enter into, a security-based swap or any trading strategy involving a
security-based swap with that security-based swap dealer unless such
person is a regulated person; or
    (ii) Coordinate, or solicit any person or political action
committee to make, any:
    (A) Contribution to an official of a municipal entity with which
the security-based swap dealer is offering to enter into, or has
entered into, a security-based swap security-based swap, or a trading
strategy involving a security-based swap; or
    (B) Payment to a political party of a state or locality with which
the security-based swap dealer is offering to enter into, or has
entered into, a security-based swap security-based swap, or a trading
strategy involving a security-based swap.
    (c) Circumvention of Rule. No security-based swap dealer shall,
directly or indirectly, through or by any other person or means, do any
act that would result in a violation of paragraph (a) or (b) of this
section.
    (d) Requests for Exemption. The Commission, upon application, may
conditionally or unconditionally exempt a security-based swap dealer
from the prohibition under paragraph (a)(1) of this section. In
determining whether to grant an exemption, the Commission will
consider, among other factors:
    (1) Whether the exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes of the Act;
    (2) Whether the security-based swap dealer:
    (i) Before the contribution resulting in the prohibition was made,
adopted and implemented policies and procedures reasonably designed to
prevent violations of this section;
    (ii) Prior to or at the time the contribution which resulted in
such prohibition was made, had no actual knowledge of the contribution;
and
    (iii) After learning of the contribution:
    (A) Has taken all available steps to cause the contributor involved
in making the contribution which resulted in such prohibition to obtain
a return of the contribution; and
    (B) Has taken such other remedial or preventive measures as may be
appropriate under the circumstances;
    (3) Whether, at the time of the contribution, the contributor was a
covered associate or otherwise an employee of the security-based swap
dealer, or was seeking such employment;
    (4) The timing and amount of the contribution which resulted in the
prohibition;
    (5) The nature of the election (e.g., state or local); and
    (6) The contributor's apparent intent or motive in making the
contribution that resulted in the prohibition, as evidenced by the
facts and circumstances surrounding the contribution.
    (e) Prohibitions Inapplicable.
    (1) The prohibitions under paragraph (b) of this section shall not
apply to a contribution made by a covered associate of the security-
based swap dealer if:
    (i) The security-based swap dealer discovered the contribution
within 120 calendar days of the date of such contribution;
    (ii) The contribution did not exceed $350; and
    (iii) The covered associate obtained a return of the contribution
within 60 calendar days of the date of discovery of the contribution by
the security-based swap dealer.
    (2) A security-based swap dealer may not rely on paragraph (1) of
this section more than twice in any 12-month period.
    (3) A security-based swap dealer may not rely on paragraph (1) of
this section more than once for any covered associate, regardless of
the time between contributions.
    3. Add Sec.  240.15Fk-1 to read as follows:

Sec.  240.15Fk-1  Designation of Chief Compliance Officer for security-
based swap dealers and major security-based swap participants.

    (a) In General. A security-based swap dealer and major security-
based swap participant shall designate an individual to serve as a
chief compliance officer on its registration form.
    (b) Duties. The chief compliance officer shall:
    (1) Report directly to the board of directors or to the senior
officer of the security-based swap dealer or major security-based swap
participant;
    (2) Review the compliance of the security-based swap dealer or
major security-based swap participant with respect to the security-
based swap dealer and major security-based swap participant
requirements described in Section 15F of the Act, and the rules and
regulations thereunder, where the review shall include establishing,
maintaining, and reviewing written policies and procedures reasonably
designed to achieve compliance with Section 15F of the Act and the
rules and regulations thereunder, by the security-based swap dealer or
major security-based swap participant;
    (3) In consultation with the board of directors or the senior
officer of the security-based swap dealer or major security-based swap
participant, promptly resolve any conflicts of interest that may arise;
    (4) Be responsible for administering each policy and procedure that
is required to be established pursuant to Section 15F of the Act and
the rules and regulations thereunder;
    (5) Establish, maintain and review policies and procedures
reasonably

designed to ensure compliance with the Act and the rules and
regulations thereunder relating to its business as a security-based
swap dealer or major security-based swap participant;
    (6) Establish, maintain and review policies and procedures
reasonably designed to remediate promptly non-compliance issues
identified by the chief compliance officer through any:
    (i) Compliance office review;
    (ii) Look-back;
    (iii) Internal or external audit finding;
    (iv) Self-reporting to the Commission and other appropriate
authorities; or
    (v) Complaint that can be validated; and
    (7) Establish and follow procedures reasonably designed for the
prompt handling, management response, remediation, retesting, and
resolution of non-compliance issues.
    (c) Annual Reports.
    (1) In general. The chief compliance officer shall annually prepare
and sign a report that contains a description of:
    (i) The compliance of the security-based swap dealer or major
security-based swap participant with respect to the Act and the rules
and regulations thereunder relating to its business as a security-based
swap dealer or major security-based swap participant; and
    (ii) Each policy and procedure of the security-based swap dealer or
major security-based swap participant described in paragraph (b) of
this section, (including the code of ethics and conflict of interest
policies).
    (2) Requirements.
    (i) Each compliance report shall also contain, at a minimum, a
description of:
    (A) The security-based swap dealer or major security-based swap
participant's enforcement of its policies and procedures relating to
its business as a security-based swap dealer or major security-based
participant;
    (B) Any material changes to the policies and procedures since the
date of the preceding compliance report;
    (C) Any recommendation for material changes to the policies and
procedures as a result of the annual review, the rationale for such
recommendation, and whether such policies and procedures were or will
be modified by the security-based swap dealer or major security-based
swap participant to incorporate such recommendation; and
    (D) Any material compliance matters identified since the date of
the preceding compliance report.
    (ii) A compliance report under paragraph (c)(1) of this section
also shall:
    (A) Accompany each appropriate financial report of the security-
based swap dealer or major security-based swap participant that is
required to be furnished to or filed with the Commission pursuant to
Section 15F of the Act and rules and regulations thereunder;
    (B) Be submitted to the board of directors and audit committee (or
equivalent bodies) and the senior officer of the security-based swap
dealer or major security-based swap participant at the earlier of their
next scheduled meeting or within 45 days of the date of execution of
the required certification;
    (C) Include a written representation that the chief executive
officer(s) (or equivalent officer(s)) has/have conducted one or more
meetings with the chief compliance officer(s) in the preceding 12
months, the subject of which addresses the obligations in this section,
including:
    (1) The matters that are the subject of the compliance report;
    (2) The SBS Entity's compliance efforts as of the date of such a
meeting; and
    (3) Significant compliance problems and plans in emerging business
areas relating to its business as a security-based swap dealer or major
security-based swap participant; and
    (D) Include a certification that, under penalty of law, the
compliance report is accurate and complete.
    (iii) Confidentiality. If compliance reports are separately bound
from the financial statements, the compliance reports shall be accorded
confidential treatment to the extent permitted by law.
    (d) Compensation and Removal. The compensation and removal of the
chief compliance officer shall require the approval of a majority of
the board of directors of the security-based swap dealer or major
security-based swap participant.
    (e) Definitions. For purposes of this rule, references to:
    (1) The board or board of directors shall include a body performing
a function similar to the board of directors.
    (2) The senior officer shall include the chief executive officer or
other equivalent officer.
    (3) Complaint that can be validated shall include any written
complaint by a counterparty involving the security-based swap dealer or
major security-based swap participant or person associated with a
security-based swap dealer or major security-based swap participant
that can be supported upon reasonable investigation.
    (4) A material compliance matter means any compliance matter about
which the board of directors of the security-based swap dealer or major
security-based swap participant would reasonably need to know to
oversee the compliance of the security-based swap dealer or major
security-based swap participant, and that involves, without limitation:
    (i) A violation of the federal securities laws relating to its
business as a security-based swap dealer or major security-based swap
participant, by the firm or its officers, directors, employees or
agents;
    (ii) A violation of the policies and procedures relating to its
business as a security-based swap dealer or major security-based swap
participant by the firm or its officers, directors, employees or
agents; or
    (iii) A weakness in the design or implementation of the policies
and procedures relating to its business as a security-based swap dealer
or major security-based swap participant.

    By the Commission.

    Dated: June 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-16758 Filed 7-15-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 91 (Friday, May 10, 2013)]
[Notices]
[Pages 27374-27375]
[FR Doc No: 2013-11198]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9812-6]

Workshop To Review Initial Draft Materials for the Nitrogen
Oxides (NOX) Integrated Science Assessment (ISA) for Health
Effects

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Workshop.

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

SUMMARY: As part of the review of the air quality criteria for nitrogen
oxides (NOX) and primary (health-based) National Ambient Air
Quality Standards (NAAQS) for nitrogen dioxide (NO2), EPA is
announcing a workshop to evaluate preliminary draft materials that will
inform the development of the NOX Integrated Science
Assessment (ISA) for health effects. The workshop is being organized by
EPA's National Center for Environmental Assessment (NCEA) within the
Office of Research and Development and will be held on June 11, 2013,
in Research Triangle Park, North Carolina and will be open to
attendance by interested public observers on a first-come, first-served
basis up to the limits of available space.

DATES: The workshop will be held on June 11, 2013, beginning at 9:30
a.m. and ending at 5:00 p.m.

ADDRESSES: The workshop will be held in the auditorium of EPA's main
campus, 109 T.W. Alexander Drive, Research Triangle Park, North
Carolina.

FOR FURTHER INFORMATION CONTACT: Questions regarding information,
registration, and logistics for the workshop should be directed to Ms.
Brianna Young, telephone:<PHONE_NUMBER>; facsimile:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>Questions regarding the scientific and technical
aspects of the workshop should be directed to Dr. Molini Patel,
telephone:<PHONE_NUMBER>; facsimile:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Summary of Information About the Workshop

    Section 109(d) of the Clean Air Act (CAA) requires the U.S. EPA to
conduct periodic reviews of the air quality criteria for each air
pollutant listed under section 108 of the Act. Based on such reviews,
EPA is to retain or revise the NAAQS for a given pollutant as
appropriate. As part of these reviews, NCEA assesses newly available
scientific information and develops ISA documents (formerly known as
Air Quality Criteria Documents) that provide the scientific basis for
the reviews of the NAAQS.
    NCEA-Research Triangle Park is holding this workshop to inform the
Agency's evaluation of the scientific evidence for the review of the
primary NAAQS for NO2. Section 109(b)(1) of the CAA defines
primary NAAQS as standards, ``the attainment and maintenance of which
in the judgment of the Administrator, based on such criteria and
allowing an adequate margin of safety, are requisite to protect the
public health.'' EPA intends to develop a separate ISA, and NAAQS
review, for the secondary (welfare-based) NAAQS for NO2, in
conjunction with a review of the secondary NAAQS for sulfur dioxide.
The purpose of the workshop is to obtain review of the scientific
content of preliminary draft materials that will inform the development
of the draft health effects ISA. Workshop sessions will include review
and discussion of preliminary draft materials on the atmospheric
chemistry of and human exposure to NOX as well as health
effects evidence from in vivo and in vitro animal toxicology, human
clinical, and epidemiology studies. In addition, roundtable discussions
will help identify key studies or concepts within each discipline to
assist EPA in integrating relevant literature within and across
disciplines. These preliminary materials are not being released as an
external draft but will be used to guide workshop discussions and
inform the development of the draft health effects ISA. This workshop
is planned to help ensure that the ISA, once developed, is up-to-date
and focuses on the key evidence to inform the scientific understanding
for the review of the primary NAAQS for NOX. EPA is planning
to release the first external review draft health effects ISA for
NOX for review by the Clean Air Scientific Advisory
Committee and the public in August 2013.

II. Workshop Information

    Members of the public may attend the workshop as observers. Space
is limited, and reservations will be accepted on a first-come, first-
served basis.

    Dated: March 1, 2013.
Debra B. Walsh,
Acting Director, National Center for Environmental Assessment.
[FR Doc. 2013-11198 Filed 5-9-13; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 85, Number 101 (Tuesday, May 26, 2020)]
[Notices]
[Pages 31560-31564]
[FR Doc No: 2020-11135]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88904; File No. SR-NYSEArca-2020-43]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its Rules
To Add New Rule 7.19-E

May 19, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 8, 2020, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its rules to add new Rule 7.19-E
(Pre-Trade Risk Controls). The proposed rule change is available on the
Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    In order to assist ETP Holders' efforts to manage their risk, the
Exchange proposes to amend its rules to add new Rule 7.19-E (Pre-Trade
Risk Controls) to establish a set of pre-trade risk controls by which
Entering Firms and their designated Clearing Firms (as defined below)
may set credit limits and other pre-trade risk controls for an Entering
Firm's trading on the Exchange and authorize the Exchange to take
action if those credit limits or other pre-trade risk controls are
exceeded.
    For purposes of this proposed rule change, the Exchange proposes to
define the term ``Entering Firm'' to mean an ETP Holder that either has
a correspondent relationship with a Clearing Firm whereby it executes
trades and the clearing function is the responsibility of the Clearing
Firm or clears for its own account \3\ and to define the term
``Clearing Firm'' to mean an ETP Holder that acts as principal for
clearing and settling a trade, whether for its own account or for an
Entering Firm.\4\
---------------------------------------------------------------------------

    \3\ See proposed Rule 7.19-E(a)(1).
    \4\ See proposed Rule 7.19-E(a)(2). As required by Rule 7.14-E,
an ETP Holder is required to give up the name of the clearing firm
through which each transaction on the Exchange will be cleared.
---------------------------------------------------------------------------

1. Overview
    In order to help firms manage their risk, the Exchange proposes to
offer optional pre-trade risk controls that would authorize the
Exchange to take automated actions if a designated credit limit or
other pre-trade risk control for a firm is breached. Because Clearing
Firms bear the risk on behalf of their correspondent Entering Firms,
the Exchange proposes to make the proposed pre-trade risk controls
available not only to Entering Firms, but also to their Clearing Firms,
if so authorized by the Entering Firm. These pre-trade risk controls
would provide Entering Firms and their Clearing Firms with enhanced
abilities to manage their risk with respect to orders on the Exchange.
    As proposed, these optional controls would allow Entering Firms and
their Clearing Firms (if designated by the Entering Firm) to each
define different pre-set risk thresholds and to choose the automated
action the Exchange would take if those thresholds are breached, which
would range from notifying the Entering Firm and Clearing Firm that a
limit has been breached, blocking new orders, or canceling orders until
the Entering Firm has been reinstated to trade on the Exchange.
    Although use of the proposed Exchange-provided pre-trade risk
controls are optional, all orders on the Exchange will pass through
risk checks. As such, an Entering Firm that does not choose to set
limits or permit its Clearing Firm to set limits on its behalf will not
achieve any latency advantage with respect to its trading activity on
the Exchange. In addition, the Exchange expects that any latency added
by the pre-trade risk controls will be de minimis.
    The proposed pre-trade risk controls described are meant to
supplement, and not replace, the ETP Holders' own internal systems,
monitoring and procedures related to risk management. The Exchange does
not guarantee that these controls will be sufficiently comprehensive to
meet all of an ETP Holder's needs, the controls are not designed to be
the sole means of risk management, and using these controls will not
necessarily meet an ETP Holder's obligations required by Exchange or
federal rules (including, without limitation, the Rule 15c3-5

under the Act \5\ (``Rule 15c3-5'')). Use of the Exchange's pre-trade
risk controls will not automatically constitute compliance with
Exchange or federal rules and responsibility for compliance with all
Exchange and Commission rules remains with the ETP Holder.\6\
---------------------------------------------------------------------------

    \5\ See 17 CFR 240.15c3-5.
    \6\ The Exchange proposes Commentary .01 to Rule 7.19-E to
provide that ``[t]he pre-trade risk controls described in this Rule
are meant to supplement, and not replace, the ETP Holder's own
internal systems, monitoring and procedures related to risk
management and are not designed for compliance with Rule 15c3-5
under the Exchange Act. Responsibility for compliance with all
Exchange and SEC rules remains with the ETP Holder.''
---------------------------------------------------------------------------

2. Proposed Rule Change
    Proposed Rule 7.19-E(a) would set forth the definitions that would
be used for purposes of the Rule. In addition to the defined terms of
``Entering Firm'' and ``Clearing Firm,'' as described above, the
Exchange proposes the following definitions:
     The term ``Single Order Maximum Notional Value Risk
Limit'' would mean a pre-established maximum dollar amount for a single
order before it can be traded.
     The term ``Single Order Maximum Quantity Risk Limit''
would mean a pre-established maximum number of shares that may be
included in a single order before it can be traded.
     The term ``Gross Credit Risk Limit'' would mean a pre-
established maximum daily dollar amount for purchases and sales across
all symbols, where both buy and sell orders are counted as positive
values. For purposes of calculating the Gross Credit Risk Limit,
unexecuted orders in the NYSE Arca Book,\7\ orders routed on arrival
pursuant to Rule 7.37-E(a)(1), and executed orders are included.
---------------------------------------------------------------------------

    \7\ The term ``NYSE Arca Book'' is defined in Rule 1.1-E(jj) to
refer to the Exchange's electronic file of orders, which contains
all orders entered on the Exchange.
---------------------------------------------------------------------------

    Proposed Rule 7.19-E(b) would set forth the Pre-Trade Risk Controls
that would be available to Entering Firms and Clearing Firms. Under
proposed Rule 7.19-E(b)(1), an Entering Firm may select one or more of
the following optional pre-trade risk controls with respect to its
trading activity on the Exchange: (i) Gross Credit Risk Limits; (ii)
Single Order Maximum Notional Value Risk Limits; and (iii) Single Order
Maximum Quantity Risk Limits, which would collectively be referred to
as the ``Pre-Trade Risk Controls.''
    In addition, under proposed Rule 7.19-E(b)(2)(A), an Entering Firm
that does not self-clear may designate its Clearing Firm to (i) view
any Pre-Trade Risk Controls set by the Entering Firm, or (ii) set one
or more Pre-Trade Risk Controls on the Entering Firm's behalf, or both.
Proposed Rule 7.19-E(b)(2)(B) provides that an Entering Firm would be
able to view any Pre-Trade Risk Controls that its Clearing Firm sets
with respect to the Entering Firm's trading activity on the Exchange.
Because both an Entering Firm and Clearing Firm (if so designated by
the Entering Firm) would be able to access information about Pre-Trade
Risk Controls, this mechanism would foster transparency between an
Entering Firm and its Clearing Firm regarding which Pre-Trade Risk
Control limits may have been set. For example, if an Entering Firm
designates its Clearing Firm to view the Pre-Trade Risk Controls set by
that Entering Firm, its Clearing Firm may determine that it does not
need to separately set Pre-Trade Risk Controls on behalf of such
Entering Firm.
    Because the Entering Firm is the ETP Holder that is entering orders
on the Exchange, the Exchange will not take action based on a Clearing
Firm's instructions about the Entering Firm's trading activities on the
Exchange without first receiving consent from the Entering Firm.
Accordingly, proposed Rule 7.19-E(b)(2)(C) would provide that if an
Entering Firm designates a Clearing Firm to set Pre-Trade Risk Controls
for the Entering Firm, the Entering Firm would be consenting to the
Exchange taking certain prescribed actions (discussed further below)
with respect to the Entering Firm's trading activity as provided for in
proposed Rules 7.19-E(c) and (d), described below. The Exchange would
consider an Entering Firm to provide such consent by authorizing a
Clearing Firm to enter Pre-Trade Risk Controls via the risk management
tool that will be provided to Entering Firms in connection with this
proposed rule change. Once such authorization is provided by the
Entering Firm, the Clearing Firm would have access to the Pre-Trade
Risk Controls that the Entering Firm designates. The proposed Rule
makes clear that by designating a Clearing Firm to set limits on its
trading activities, the Entering Firm will have authorized the Exchange
to act pursuant to the Clearing Firm's instructions if the limits set
by the Clearing Firm are breached.
    Proposed Rule 7.19-E(b)(3) would set forth how the Pre-Trade Risk
Controls could be set or adjusted. Proposed Rule 7.19-E(b)(3)(A) would
provide that Pre-Trade Risk Controls may be set before the beginning of
a trading day and may be adjusted during the trading day. Proposed Rule
7.19-E(b)(3)(B) would provide that Entering Firms or Clearing Firms may
set Pre-Trade Risk Controls at the MPID level or at one or more sub-IDs
associated with that MPID.\8\ The Exchange believes that supporting
Pre-Trade Risk Controls at both an MPID and sub-ID level would provide
both Entering Firms, and if designated, their Clearing Firms, more
granular control over how such risk controls are determined and
monitored.
---------------------------------------------------------------------------

    \8\ Entering Firms may request that the Exchange create sub-IDs
associated with their MPIDs.
---------------------------------------------------------------------------

    Proposed Rule 7.19-E(b)(4) would provide that with respect to Gross
Credit Risk Limits, an Entering Firm and, if so designated, its
Clearing Firm, will receive notifications when the Entering Firm is
approaching or has breached a limit set by itself or by the Clearing
Firm. The Exchange believes that by providing such notifications, the
Entering Firm, and if designated, its Clearing Firm, would have advance
notice that the Entering Firm is approaching a designated limit and
could take steps to mitigate the potential that an automated breach
action would be triggered.
    Proposed Rule 7.19-E(c) would set forth the actions the Exchange
would be authorized to take when a Pre-Trade Risk Control set by an
Entering Firm or a Clearing Firm is breached, which would be referred
to as ``Automated Breach Actions.'' These proposed actions would be
automated; if a Pre-Trade Risk Control is breached, the Exchange would
automatically take the designated action and would not need further
direction from either the Entering Firm or Clearing Firm to take such
action.
    At the outset, proposed Rule 7.19-E(c)(1) would provide that if
both an Entering Firm and its Clearing Firm set the same type of Pre-
Trade Risk Control for the Entering Firm but have set different limits,
the Exchange would enforce the more restrictive limit. For example, if
an Entering Firm sets a Single Order Maximum Notional Value Risk Limit
of $20 million and its Clearing Firm sets the same risk limit at $15
million, the Exchange will take action when the more restrictive limit
is breached--i.e., $15 million.
    Proposed Rule 7.19-E(c)(2) would set forth the Automated Breach
Action the Exchange would take if an order would breach the designated
limit of either a Single Order Maximum Notional Value Risk Limit or
Single Order Maximum Quantity Risk Limit. As proposed, the Exchange
would reject the incoming order that would have breached the applicable
limit.
    Proposed Rule 7.19-E(c)(3)(A) would set forth the Automated Breach
Actions the Exchange would take if a designated

Gross Credit Risk Limit is breached. The Exchange proposes to provide
options of which Automated Breach Action the Exchange would be
authorized to take if a Gross Credit Risk Limit is breached. Such
Automated Breach Actions would be taken at the MPID or sub-ID level
that is associated with the designated Gross Credit Risk Limit. As
proposed, when setting Gross Credit Risk Limits, the Entering Firm or
Clearing Firm setting the limit would be required to indicate one of
the following actions that the Exchange would take if such limit is
breached:
     ``Notification Only.'' As set forth in proposed Rule 7.19-
E(c)(3)(A)(i), if this option is selected, the Exchange would continue
to accept new orders and order instructions and would not cancel any
unexecuted orders in the NYSE Arca Book. Proposed Rule 7.19-E(b)(4),
described above, sets forth the notifications that would be provided to
an Entering Firm, and if designated, a Clearing Firm regarding the Pre-
Trade Risk Controls that have been set. With the ``Notification Only''
action, the Exchange would provide such notifications, but would not
take any other automated actions with respect to new or unexecuted
orders.
     ``Block Only.'' As set forth in proposed Rule 7.19-
E(c)(3)(A)(ii), if this option is selected, the Exchange would reject
new orders and order instructions but would not cancel any unexecuted
orders in the NYSE Arca Book. The Exchange would continue to accept
instructions from the Entering Firm to cancel one or more orders in
full (including Auction-Only Orders) or any instructions specified in
proposed Rule 7.19-E(e) (described below), but would not take any
automated action to cancel orders.
     ``Cancel and Block.'' As set forth in proposed Rule 7.19-
E(c)(3)(A)(iii), if this option is selected, in addition to the Block
actions described above, the Exchange would also cancel all unexecuted
orders in the NYSE Arca Book other than Auction-Only Orders.
    If an Entering Firm and its Clearing Firm each set different limits
for a Gross Credit Risk Limit for the Entering Firm's activities on the
Exchange, proposed Rule 7.19-E(c)(3)(B) would provide that the Exchange
would enforce the action that was chosen by the party that set the
limit that was breached. For example, if a Clearing Firm sets a lower
limit and designates the ``Cancel and Block'' Automated Breach Action,
if that limit is breached, the Exchange will implement that ``Cancel
and Block'' action even if the Entering Firm designated a different
Automated Breach Action.
    Proposed Rule 7.19-E(c)(3)(C) would provide that if both the
Entering Firm and Clearing Firm set the same Gross Credit Risk Limit
and that limit is breached, the Exchange would enforce the most
restrictive Automated Breach Action. As further proposed, for purposes
of this Rule, the ``Cancel and Block'' action would be more restrictive
than ``Block Only,'' which would be more restrictive than
``Notification Only.'' For example, if the Entering Firm selects the
``Block Only'' action for a Gross Credit Risk Limit and its Clearing
Firm selects the ``Cancel and Block'' action for the same Gross Credit
Risk Limit, if the limit is breached, the Exchange would take the
``Cancel and Block'' action for the Entering Firm's orders.
    Proposed Rule 7.19-E(c)(4) would provide that if a Pre-Trade Risk
Control set at the MPID level is breached, the Automated Breach Action
specified at the MPID level would be applied to all sub-IDs associated
with that MPID. For instance, if a Clearing Firm sets a Gross Credit
Risk Limit for an MPID at $500 million and the Entering Firm sets Gross
Credit Risk Limits for each of three sub-IDs associated with that MPID
at $500 million each, if two of the sub-IDs reach a $250 million limit,
which combined is the Gross Credit Risk Limit at the MPID level, the
Automated Breach Action associated with the limit at the MPID level
would be triggered and would apply also to the associated sub-IDs, even
though none of the sub-IDs have breached their separate $500 million
limits. This functionality ensures that an Entering Firm cannot
effectively override a Pre-Trade Risk Control set at the MPID level by
setting risk limits for each of the MPID's associated sub-IDs that
cumulatively equal more than the MPID's total Gross Credit Risk Limit.
    Proposed Rule 7.19-E(d) concerns how an Entering Firm's ability to
enter orders and order instructions would be reinstated after a ``Block
Only'' or ``Cancel and Block'' Automated Breach Action has been
triggered. In such case, proposed Rule 7.19-E(d) provides that the
Exchange would not reinstate the Entering Firm's ability to enter
orders and order instructions on the Exchange (other than instructions
to cancel one or more orders (including Auction-Only Orders) in full)
without the consent of (1) the Entering Firm, and (2) the Clearing
Firm, if the Entering Firm has designated that the Clearing Firm's
consent is required. The Exchange proposes to include this
functionality because the Clearing Firm bears the risk of any exposure
of its correspondent Entering Firms.
    Finally, proposed Rule 7.19-E(e) would set forth ``kill switch''
functionality, which would allow an Entering Firm or its designated
Clearing Firm to direct the Exchange to take certain bulk Kill Switch
Actions with respect to orders. In contrast to the Automated Breach
Actions described above, which the Exchange would take automatically
after the breach of a credit limit, the Exchange would not take any of
the Kill Switch Actions without express direction from the Entering
Firm or its designated Clearing Firm.
    Specifically, Proposed Rule 7.19-E(e) would specify that an
Entering Firm, or if authorized pursuant to proposed Rule 7.19-
E(b)(2)(A), its Clearing Firm, could direct the Exchange to take one or
more of the following actions with respect to orders at either an MPID,
or if designated, sub-ID Level: (1) Cancel all Auction-Only Orders; (2)
Cancel all unexecuted orders in the NYSE Arca Book other than Auction-
Only Orders; or (3) Block the entry of any new orders and order
instructions, provided that the Exchange would continue to accept
instructions from Entering Firms to cancel one or more orders
(including Auction-Only Orders) in full, and later, reverse that block.
    The Exchange proposes that the Kill Switch functionality proposed
in Rule 7.19-E(e) would supersede and replace the Exchange's previously
filed proposed rule change,\9\ which provided certain post-trade risk
management tools to ETP Holders, but not to their Clearing Firms.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 71166 (December 20,
2013), 78 FR 79046 (December 27, 2013) (SR-NYSEArca-2013-142)
(Notice of filing and immediate effectiveness of proposed rule
change) (the ``2013 Risk Control Filing'').
---------------------------------------------------------------------------

    The Exchange proposes to provide these post-trade Kill Switch
Actions in addition to the pre-trade Automated Breach Actions described
above in order to give Entering Firms and their Clearing Firms more
flexibility in setting risk controls. An Entering Firm that wants more
control over when and which actions are taken with respect to its
orders may choose to use these Kill Switch Actions instead of the
``Block'' or ``Cancel and Block'' Automated Breach Actions described
above. For example, for an Entering Firm that selects the
``Notification Only'' Automated Breach Action, if it receives
notification of a credit breach, it could choose to direct the Exchange
to take a Kill Switch Action described in proposed Rule 7.19-E(e).
3. Proposed Rule Commentary
    The Exchange proposes Commentary .01 to Rule 7.19-E to specify that
the

Pre-Trade Risk Controls described in this Rule are meant to supplement,
and not replace, the ETP Holder's own internal systems, monitoring and
procedures related to risk management and are not designed for
compliance with Rule 15c3-5 under the Act.\10\ This proposed Commentary
specifies that use of the Exchange's pre-trade risk controls would not
automatically constitute compliance with Exchange or federal rules and
responsibility for compliance with all Exchange and SEC rules remains
with the ETP Holder. The Exchange does not guarantee that these
controls will be sufficiently comprehensive to meet all of an ETP
Holder's needs, the controls are not designed to be the sole means of
risk management, and using these controls will not necessarily meet an
ETP Holder's obligations required by Exchange or federal rules
(including, without limitation, the Rule 15c3-5).
---------------------------------------------------------------------------

    \10\ See 17 CFR 240.15c3-5.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\12\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest,
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed rule will
remove impediments to and perfect the mechanism of a free and open
market and a national market system because the proposed optional Pre-
Trade Risk Controls would provide both Entering Firms, and if
designated, Clearing Firms, with the ability to manage risk, while also
providing an alert system that would help to ensure that such firms are
aware of developing issues. In addition, the Pre-Trade Risk Controls
would provide Clearing Firms, who have assumed certain risks of the
Entering Firms, greater control and flexibility over setting risk
tolerance and exposure on behalf of their correspondent Entering Firms.
As such, the Exchange believes that the Pre-Trade Risk Controls would
provide a means to address potentially market-impacting events, helping
to ensure the proper functioning of the market.
    In addition, the Exchange believes that the proposed rule change is
designed to protect investors and the public interest because the Pre-
Trade Risk Controls are a form of impact mitigation that will aid
Entering Firms and Clearing Firms in minimizing their risk exposure and
reduce the potential for disruptive, market-wide events. The Exchange
understands that ETP Holders implement a number of different risk-based
controls, including those required by Rule 15c3-5. The proposed
controls will serve as an additional tool for Entering Firms and
Clearing Firms to assist them in identifying any risk exposure. The
Exchange believes the Pre-Trade Risk Controls will assist Entering
Firms and Clearing Firms in managing their financial exposure which, in
turn, could enhance the integrity of trading on the securities markets
and help to assure the stability of the financial system.
    Further, the Exchange believes that the proposed rule will foster
cooperation and coordination with persons facilitating transactions in
securities because the Exchange will provide alerts to Entering Firms
and their Clearing Firms when the Entering Firm's trading reaches
certain thresholds. As such, the Exchange will help Clearing Firms
monitor the risk levels of their correspondent Entering Firms and
provide tools for Clearing Firms, if designated, to take action.
    The Exchange believes that proposed Commentary .01 to Rule 7.19 is
designed to prevent fraudulent and manipulative acts and practices and
promote just and equitable principles of trade because it provides
clarity in Exchange rules that the proposed Pre-Trade Risk Controls are
intended to supplement, and not replace, an ETP Holder's own internal
systems, monitoring, and procedures related to compliance with Rule
15c3-5.
    Finally, the Exchange believes that the proposed rule change does
not unfairly discriminate among the Exchange's ETP Holders because use
of the Pre-Trade Risk Controls is optional and is not a prerequisite
for participation on the Exchange. In addition, because all orders on
the Exchange would pass through the risk checks, there would be no
difference in the latency experienced by ETP Holders who have opted to
use the Pre-Trade Risk Controls versus those who have not opted to use
them.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In fact, the Exchange
believes that the proposal will have a positive effect on competition
because, by providing Entering Firms and their Clearing Firms
additional means to monitor and control risk, the proposed rule will
increase confidence in the proper functioning of the markets. The
Exchange believes the proposed Pre-Trade Risk Controls will assist
Entering Firms and Clearing Firms in managing their financial exposure
which, in turn, could enhance the integrity of trading on the
securities markets and help to assure the stability of the financial
system. As a result, the level of competition should increase as public
confidence in the markets is solidified.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings

under Section 19(b)(2)(B) \15\ of the Act to determine whether the
proposed rule change should be approved or disapproved.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2020-43 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2020-43. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2020-43, and should be
submitted on or before June 16, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11135 Filed 5-22-20; 8:45 am]
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[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Rules and Regulations]
[Pages 46520-46521]
[FR Doc No: 2013-18417]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2008-0402; FRL-9834-4]

Approval and Promulgation of Air Quality Implementation Plans;
Wisconsin; Permit Exemption Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is approving revisions to the Wisconsin State
Implementation Plan (SIP) submitted by the Wisconsin Department of
Natural Resources (WDNR) on April 23, 2008. WDNR submitted revisions
exempting certain sources of air pollution from construction permit
requirements. EPA is approving these revisions because they are
consistent with Federal regulations governing state permit programs.

DATES: This final rule is effective on September 3, 2013.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R05-OAR-2008-0402. All documents in the docket are listed on
the www.regulations.gov Web site. Although listed in the index, some
information is not publicly available, i.e., Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, is
not placed on the Internet and will be publicly available only in hard
copy form. Publicly available docket materials are available either
electronically through www.regulations.gov or in hard copy at the
Environmental Protection Agency, Region 5, Air and Radiation Division,
77 West Jackson Boulevard, Chicago, Illinois 60604. This facility is
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
Federal holidays. We recommend that you telephone Andrea Morgan,
Environmental Engineer, at<PHONE_NUMBER> before visiting the Region 5
office.

FOR FURTHER INFORMATION CONTACT: Andrea Morgan, Environmental Engineer,
Air Permits Section, Air Programs Branch (AR-18J), Environmental
Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago,
Illinois 60604,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This supplementary information
section is arranged as follows:

I. What is being addressed in this document?
II. What comments did we receive on the proposed rule?
III. What action is EPA taking?
IV. Statutory and executive order reviews.

I. What is being addressed in this document?

    On May 15, 2013, at 78 FR 28547, EPA proposed to approve a SIP
revision from Wisconsin exempting certain sources of air pollution from
the requirement to obtain a construction permit. Sources with actual
emissions of under 10 tons per year (tpy) of each criteria pollutant,
particulate matter of 10 micrometers or less, sulfur dioxide, nitrogen
oxides, carbon monoxide and volatile organic compounds, and less than
0.5 tpy of lead, and that are not subject to Federal air pollution
requirements for hazardous air pollutants under section 111 or 112 of
the Clean Air Act (Act) will be eligible for the exemption. The
revisions will also exempt construction or modification projects that
emit less than 1,666 pounds of criteria pollutants per month, averaged
over a 12 consecutive month period, and less than 10 pounds of lead per
month, averaged over a 12 consecutive month period from construction
permitting requirements. EPA believes that the revisions to Wisconsin's
SIP meet Federal requirements and will not interfere with attainment or
reasonable further progress. As set forth in the proposed rule, this
SIP revision satisfies the anti-backsliding provisions of section
110(l) of the Act.

II. What comments did we receive on the proposed rule?

    EPA provided a 30-day review and comment period. The comment period
closed on June 14, 2013. EPA received one comment supporting EPA's
approval of these revisions. EPA received no adverse comments.

III. What action is EPA taking?

    EPA is approving Wisconsin's April 23, 2008, SIP submittal and
March 25, 2013 supplement to the submittal. Specifically, EPA is
approving the following revisions to WDNR's SIP: (1) Renumber and
create NR 406.02(1) and 406.04(4)(h); (2) create NR 406.04(1)(zh), NR
406.04(1q), NR 406.04(4)(i), NR 407.03(1m), and NR 410.03(1)(f); and
(3) amend NR 410.03(1)(d). Wisconsin's submittal originally contained
revisions to NR 407, which pertain to operation permit requirements.
However, in the March 25, 2013, supplement to the submittal, Wisconsin
withdrew the NR 407 revisions from the submittal.

IV. Statutory and Executive Order Reviews

    Under the Act, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the Act. Accordingly, this
action merely approves state law as meeting Federal requirements and
does not impose additional requirements beyond those imposed by state
law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Act; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the state, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the Act, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by September 30, 2013. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action. This action may not be challenged later in proceedings to
enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: July 2, 2013.
Susan Hedman,
Regional Administrator, Region 5.

    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

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

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

0
2. Section 52.2570 is amended by adding paragraph (c)(127) to read as
follows:

Sec.  52.2570  Identification of plan.

* * * * *
    (c) * * *
    (127) On April 23, 2008 and March 25, 2013, the Wisconsin
Department of Natural Resources submitted a request to revise
Wisconsin's air permitting program to exempt certain small sources of
air pollution from construction permitting requirements.
    (i) Incorporation by reference.
    (A) Wisconsin Administrative Code, NR 406.02 Definitions. NR
406.02(1) ``Clean fuel'', and NR 406.02(1m) ``Facility'', as published
in the Wisconsin Administrative Register May 2007, No. 617, effective
June 01, 2007.
    (B) Wisconsin Administrative Code, NR 406.04 Direct sources exempt
from construction permit requirements. NR 406.04(1)(zh), NR 406.04(1q),
NR 406.04(4)(h), NR 406.04(4)(i), and NR 406.04(4)(j), as published in
the Wisconsin Administrative Register May 2007, No. 617, effective June
01, 2007.
    (C) Wisconsin Administrative Code, NR 410.03 Application fee. NR
410.03(1)(d), and NR 410.03(1)(f), as published in the Wisconsin
Administrative Register May 2007, No. 617, effective June 1, 2007.
[FR Doc. 2013-18417 Filed 7-31-13; 8:45 am]
BILLING CODE 6560-50-P