[Federal Register Volume 76, Number 95 (Tuesday, May 17, 2011)]
[Proposed Rules]
[Pages 28376-28379]
[FR Doc No: 2011-12016]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2011-0473; Directorate Identifier 2011-NM-019-AD]
RIN 2120-AA64

Airworthiness Directives; Fokker Services B.V. Model F.28 Mark
1000, 2000, 3000, and 4000 Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to adopt a new airworthiness directive (AD) for the
products listed above. This proposed AD results from mandatory
continuing airworthiness information (MCAI) originated by an aviation
authority of another country to identify and correct an unsafe
condition on an aviation product. The MCAI describes the unsafe
condition as:

    * * * [T]he Federal Aviation Administration (FAA) have published
Special Federal Aviation Regulation (SFAR) 88, and the Joint
Aviation Authorities (JAA) have published Interim Policy INT/POL/25/
12. The review conducted by Fokker Services on the Fokker F28 type
design in response to these regulations revealed that, on certain
aeroplanes, an interrupted shield contact may exist or develop
between the housing of an in-tank Fuel Quantity Indication (FQI)
cable plug and the cable shield of the shielded FQI system cables in
the main and collector fuel tanks which can, under certain
conditions, form a spark gap.
    This condition, if not detected and corrected, may create an
ignition source in the tank vapour space, possibly resulting in a
wing fuel tank explosion and consequent loss of the aeroplane.
* * * * *
The proposed AD would require actions that are intended to address the
unsafe condition described in the MCAI.

DATES: We must receive comments on this proposed AD by July 1, 2011.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-40, 1200 New
Jersey

Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Fokker Services B.V., Technical Services Dept., P.O. Box 231, 2150 AE
Nieuw-Vennep, the Netherlands; telephone +31 (0)252-627-350; fax +31
(0)252-627-211; e-mail<EMAIL_ADDRESS>
Internet http://www.myfokkerfleet.com. You may review copies of the
referenced service information at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue, SW., Renton, Washington. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Operations office (telephone:<PHONE_NUMBER>) is
in the ADDRESSES section. Comments will be available in the AD docket
shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Program Manager,
International Branch, ANM-116, Transport Airplane Directorate, FAA 1601
Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425) 227-
1137; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2011-0473;
Directorate Identifier 2011-NM-019-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD based on those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
Airworthiness Directive 2010-0217, dated October 21, 2010 (referred to
after this as ``the MCAI''), to correct an unsafe condition for the
specified products. The MCAI states:

    * * * [T]he Federal Aviation Administration (FAA) have published
Special Federal Aviation Regulation (SFAR) 88, and the Joint
Aviation Authorities (JAA) have published Interim Policy INT/POL/25/
12. The review conducted by Fokker Services on the Fokker F28 type
design in response to these regulations revealed that, on certain
aeroplanes, an interrupted shield contact may exist or develop
between the housing of an in-tank Fuel Quantity Indication (FQI)
cable plug and the cable shield of the shielded FQI system cables in
the main and collector fuel tanks which can, under certain
conditions, form a spark gap.
    This condition, if not detected and corrected, may create an
ignition source in the tank vapour space, possibly resulting in a
wing fuel tank explosion and consequent loss of the aeroplane.
    For the reasons described above, this AD requires, for certain
aeroplanes, a one-time [general visual] inspection to check for the
presence of a by-pass wire between the housing of each in-tank FQI
cable plug and the cable shield and, depending on findings, the
installation of a by-pass wire. In addition, this AD requires the
implementation of a Critical Design Configuration Control
Limitations (CDCCL) task to make certain that the by-pass wire
remains installed.
    On later production aeroplanes, a different plug has been
introduced, Souriau Part Number (P/N) 20P227-2. This plug has an
improved shield connection to the housing of the plug, for which the
installation of a by-pass wire is not necessary. For aeroplanes with
the improved plug installed, this AD only requires the
implementation of a CDCCL task to make certain that this type of
plug remains installed.

You may obtain further information by examining the MCAI in the AD
docket.

    The FAA has examined the underlying safety issues involved in fuel
tank explosions on several large transport airplanes, including the
adequacy of existing regulations, the service history of airplanes
subject to those regulations, and existing maintenance practices for
fuel tank systems. As a result of those findings, we issued a
regulation titled ``Transport Airplane Fuel Tank System Design Review,
Flammability Reduction and Maintenance and Inspection Requirements''
(66 FR 23086, May 7, 2001). In addition to new airworthiness standards
for transport airplanes and new maintenance requirements, this rule
included Special Federal Aviation Regulation No. 88 (``SFAR 88,''
Amendment 21-78, and subsequent Amendments 21-82 and 21-83).
    Among other actions, SFAR 88 requires certain type design (i.e.,
type certificate (TC) and supplemental type certificate (STC)) holders
to substantiate that their fuel tank systems can prevent ignition
sources in the fuel tanks. This requirement applies to type design
holders for large turbine-powered transport airplanes and for
subsequent modifications to those airplanes. It requires them to
perform design reviews and to develop design changes and maintenance
procedures if their designs do not meet the new fuel tank safety
standards. As explained in the preamble to the rule, we intended to
adopt airworthiness directives to mandate any changes found necessary
to address unsafe conditions identified as a result of these reviews.
    In evaluating these design reviews, we have established four
criteria intended to define the unsafe conditions associated with fuel
tank systems that require corrective actions. The percentage of
operating time during which fuel tanks are exposed to flammable
conditions is one of these criteria. The other three criteria address
the failure types under evaluation: Single failures, single failures in
combination with a latent condition(s), and in-service failure
experience. For all four criteria, the evaluations included
consideration of previous actions taken that may mitigate the need for
further action.
    The Joint Aviation Authorities (JAA) has issued a regulation that
is similar to SFAR 88. (The JAA is an associated body of the European
Civil Aviation Conference (ECAC) representing the civil aviation
regulatory authorities of a number of European States who have agreed
to co-operate in developing and implementing common safety regulatory
standards and procedures.) Under this regulation, the JAA stated that
all members of the ECAC that hold type certificates for transport
category airplanes are required to conduct a design review against
explosion risks.
    We have determined that the actions identified in this AD are
necessary to reduce the potential of ignition sources inside fuel
tanks, which, in combination with flammable fuel vapors, could result
in fuel tank explosions and consequent loss of the airplane.

Relevant Service Information

    Fokker Services B.V. has issued Service Bulletin SBF28-28-053,
Revision 1, dated September 20, 2010. The actions described in this
service information are intended to correct the unsafe condition
identified in the MCAI.

FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all pertinent information and determined an unsafe condition
exists and is likely to exist or develop on other products of the same
type design.

Differences Between This AD and the MCAI or Service Information

    We have reviewed the MCAI and related service information and, in
general, agree with their substance. But we might have found it
necessary to use different words from those in the MCAI to ensure the
AD is clear for U.S. operators and is enforceable. In making these
changes, we do not intend to differ substantively from the information
provided in the MCAI and related service information.
    We might also have proposed different actions in this AD from those
in the MCAI in order to follow FAA policies. Any such differences are
highlighted in a Note within the proposed AD.

Costs of Compliance

    Based on the service information, we estimate that this proposed AD
would affect about 2 products of U.S. registry. We also estimate that
it would take about 6 work-hours per product to comply with the basic
requirements of this proposed AD. The average labor rate is $85 per
work-hour. Based on these figures, we estimate the cost of the proposed
AD on U.S. operators to be $1,020, or $510 per product.
    In addition, we estimate that any necessary follow-on actions would
take about 7 work-hours and require parts costing $308, for a cost of
$903 per product. We have no way of determining the number of products
that may need these actions.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more detail the scope of the Agency's
authority.
    We are issuing this rulemaking under the authority described in
``Subtitle VII, Part A, Subpart III, Section 44701: General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this proposed AD and placed it in the AD docket.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Proposed Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

    1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

    2. The FAA amends Sec.  39.13 by adding the following new AD:

Fokker Services B.V.: Docket No. FAA-2011-0473; Directorate
Identifier 2011-NM-019-AD.

Comments Due Date

    (a) We must receive comments by July 1, 2011.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Fokker Services B.V. Model F.28 Mark
1000, 2000, 3000, and 4000 airplanes, certificated in any category,
all serial numbers.

    Note 1: This AD requires revisions to certain operator
maintenance documents to include new actions (e.g., inspections)
and/or Critical Design Configuration Control Limitations (CDCCLs).
Compliance with these actions and/or CDCCLs is required by 14 CFR
91.403(c). For airplanes that have been previously modified,
altered, or repaired in the areas addressed by this AD, the operator
may not be able to accomplish the actions described in the
revisions. In this situation, to comply with 14 CFR 91.403(c), the
operator must request approval for an alternative method of
compliance (AMOC) according to paragraph (l) of this AD. The request
should include a description of changes to the required inspections
that will ensure the continued operational safety of the airplane.

Subject

    (d) Air Transport Association (ATA) of America Code 28: Fuel.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:

    * * * [T]he Federal Aviation Administration (FAA) have published
Special Federal Aviation Regulation (SFAR) 88, and the Joint
Aviation Authorities (JAA) have published Interim Policy INT/POL/25/
12. The review conducted by Fokker Services on the Fokker F28 type
design in response to these regulations revealed that, on certain
aeroplanes, an interrupted shield contact may exist or develop
between the housing of an in-tank Fuel Quantity Indication (FQI)
cable plug and the cable shield of the shielded FQI system cables in
the main and collector fuel tanks which can, under certain
conditions, form a spark gap.
    This condition, if not detected and corrected, may create an
ignition source in the tank vapour space, possibly resulting in a
wing fuel tank explosion and consequent loss of the aeroplane.
* * * * *

Compliance

    (f) You are responsible for having the actions required by this
AD performed within the compliance times specified, unless the
actions have already been done.

Inspection and Installation for Model F.28 Airplanes Serial Numbers
11003 Through 11041 and 11991 Through 11994

    (g) For airplanes having serial numbers 11003 through 11041
inclusive and 11991 through 11994 inclusive: At a scheduled opening
of the fuel tanks, but not later than 84 months after the effective
date of this AD, do a general visual inspection for the presence of
a by-pass wire between the housing of each in-tank fuel quantity
indication (FQI) cable plug and the cable

shield, in accordance with Part 1 of the Accomplishment Instructions
of Fokker Service Bulletin SBF28-28-053, Revision 1, dated September
20, 2010.
    (h) If during the general visual inspection required by
paragraph (g) of this AD, it is found that a by-pass wire is not
installed, before the next flight: Install the by-pass wire between
the housing of the in-tank FQI cable plug and the cable shield, in
accordance with Part 2 of the Accomplishment Instructions of Fokker
Service Bulletin SBF28-28-053, Revision 1, dated September 20, 2010.

Maintenance Program Revision To Add Fuel Airworthiness Limitation for
Model F.28 Airplanes Serial Numbers 11003 Through 11041 and 11991
Through 11994

    (i) For airplanes having serial numbers 11003 through 11041
inclusive and 11991 through 11994 inclusive: Concurrently with
paragraph (g) of this AD, revise the airplane maintenance program by
incorporating CDCCL-1 specified in paragraph 1.L.(1)(c) of Fokker
Service Bulletin SBF28-28-053 Revision 1, dated September 20, 2010.

Maintenance Program Revision To Add Fuel Airworthiness Limitation for
Model F.28 Airplanes Serial Numbers 11042 Through 11241

    (j) For airplanes having serial numbers 11042 through 11241
inclusive: Within 3 months after the effective date of this AD,
revise the airplane maintenance program by incorporating CDCCL-2
specified in paragraph 1.L.(1)(c) of Fokker Service Bulletin SBF28-
28-053, Revision 1, dated September 20, 2010.

No Alternative Actions, Intervals, and/or CDCCLs

    (k) After accomplishing the revisions required by paragraphs (i)
and (j) of this AD, no alternative actions (e.g., inspection,
interval) and/or CDCCLs may be used unless the actions, intervals,
and/or CDCCLs are approved as an AMOC in accordance with the
procedures specified in paragraph (m) of this AD.

FAA AD Differences

    Note 2: This AD differs from the MCAI and/or service information
as follows:
    Although European Aviation Safety Agency (EASA) Airworthiness
Directive 2010-0217, dated October 21, 2010, specifies both revising
the maintenance program to include airworthiness limitations, and
doing certain repetitive actions (e.g., inspections) and/or
maintaining CDCCLs, this AD only requires the revision. Requiring a
revision of the maintenance program, rather than requiring
individual repetitive actions and/or maintaining CDCCLs, requires
operators to record AD compliance only at the time the revision is
made. Repetitive actions and/or maintaining CDCCLs specified in the
airworthiness limitations must be complied with in accordance with
14 CFR 91.403(c).

Other FAA AD Provisions

    (l) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
has the authority to approve AMOCs for this AD, if requested using
the procedures found in 14 CFR 39.19. In accordance with 14 CFR
39.19, send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the International Branch, send it to ATTN: Tom
Rodriguez, Program Manager, International Branch, ANM-116, Transport
Airplane Directorate, FAA 1601 Lind Avenue, SW., Renton, Washington
98057-3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.
Information may be e-mailed to<EMAIL_ADDRESS>
Before using any approved AMOC, notify your appropriate principal
inspector, or lacking a principal inspector, the manager of the
local flight standards district office/certificate holding district
office.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.

Related Information

    (m) Refer to MCAI EASA Airworthiness Directive 2010-0217, dated
October 21, 2010; and Fokker Service Bulletin SBF28-28-053, Revision
1, dated September 20, 2010; for related information.

    Issued in Renton, Washington, on May 6, 2011.
Kalene C. Yanamura,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2011-12016 Filed 5-16-11; 8:45 am]
BILLING CODE 4910-13-P


as specified in Sec.  721.80(f), (g) and (q). It is a significant new
use to modify the manufacture, process or use activities if it results
in inhalation exposure to vapor, dust, mist or aerosols to the
substance.
    (iv) Release to water. Requirements as specified in Sec.
721.90(a)(1), (b)(1), and (c)(1).
    (b) Specific requirements. The provisions of subpart A of this part
apply to this section except as modified by this paragraph.
    (1) Recordkeeping. Recordkeeping requirements as specified in Sec.
721.125(a) through (i) and (k) are applicable to manufacturers and
processors of this substance.
    (2) Limitations or revocation of certain notification requirements.
The provisions of Sec.  721.185 apply to this section.
    (3) Determining whether a specific use is subject to this section.
The provisions of Sec.  721.1725(b)(1) apply to paragraph (a)(2)(iii)
of this section.

0
22. Add Sec.  [emsp14]721.11115 to subpart E to read as follows:

Sec.  [emsp14]721.11115  Alkoxy silane modified butadiene styrene
copolymer (generic).

    (a) Chemical substance and significant new uses subject to
reporting. (1) The chemical substance identified generically as alkoxy
silane modified

butadiene styrene copolymer (PMN P-17-260) is subject to reporting
under this section for the significant new uses described in paragraph
(a)(2) of this section. The requirements of this section do not apply
to quantities of the substance after they have been reacted (cured).
    (2) The significant new uses are:
    (i) Industrial, commercial, and consumer activities. Requirements
as specified in Sec.  721.80(k). It is a significant new use to modify
the manufacture, process or use activities if it results in inhalation
exposure to vapor, dust, mist or aerosols to the substance.
    (ii) [Reserved]
    (b) Specific requirements. The provisions of subpart A of this part
apply to this section except as modified by this paragraph.
    (1) Recordkeeping. Recordkeeping requirements as specified in Sec.
721.125(a), (b), (c), and (i) are applicable to manufacturers and
processors of this substance.
    (2) Limitations or revocation of certain notification requirements.
The provisions of Sec.  721.185 apply to this section.
    (3) Determining whether a specific use is subject to this section.
The provisions of Sec.  721.1725(b)(1) apply to paragraph (a)(2)(i) of
this section.

[FR Doc. 2018-18403 Filed 8-24-18; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 106 (Monday, June 5, 2017)]
[Notices]
[Pages 25820-25827]
[FR Doc No: 2017-11507]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80813; File No. SR-NASDAQ-2017-055]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Eliminate Requirements That
Will Be Duplicative of CAT

May 30, 2017.
    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 26, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 the Rule 7000A series relating to
the Order Audit Trail System, Rule 8211 and Chapter IX, Section IV
relating to Electronic Blue Sheets, Chapter VII, Section VII relating
to account identification, and Chapter V, Section VII relating to the
Consolidated Options Audit Trail System to reflect changes to these
rules once members are effectively reporting to the Consolidated Audit
Trail (``CAT'') and the CAT's accuracy and reliability meets certain
standards as described below.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Rule 7000A series relating to
the Order Audit Trail System (``OATS''), Rule 8211 and Chapter IX,
Section IV relating to Electronic Blue Sheets (``EBS''), Chapter VII,
Section VII relating to account identification, and Chapter V, Section
VII relating to the Consolidated Options Audit Trail System (``COATS'')
to reflect changes to these rules once members are effectively
reporting to the CAT, and the CAT's accuracy and reliability meets
certain standards as described below.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed rule change on May
15, 2017 (SR-NASDAQ-2017-050). On May 26, 2017, the Exchange
withdrew that filing and submitted this filing.
---------------------------------------------------------------------------

Background
    Bats BYX Exchange, Inc.; Bats BZX Exchange, Inc.; Bats EDGA
Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; C2
Options Exchange, Incorporated; Chicago Board Options Exchange,
Incorporated; Chicago Stock Exchange, Inc.; FINRA; International
Securities Exchange, LLC; Investors' Exchange LLC; ISE Gemini, LLC; ISE
Mercury, LLC; Miami International Securities Exchange LLC; MIAX PEARL,
LLC; NASDAQ BX, Inc.; NASDAQ PHLX LLC; The NASDAQ Stock Market LLC;
National Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT
LLC; and NYSE Arca, Inc. (collectively, the ``Participants'') filed
with the Commission, pursuant to Section 11A of the Exchange Act \4\
and Rule 608 of

Regulation NMS thereunder,\5\ the National Market System Plan Governing
the Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\6\ The
Participants filed the Plan to comply with Rule 613 of Regulation NMS
under the Exchange Act.\7\ The Plan was published for comment in the
Federal Register on May 17, 2016,\8\ and approved by the Commission, as
modified, on November 15, 2016.\9\ On March 15, 2017, the Commission
approved the new Nasdaq Rule 6800 Series and Chapter IX, Section 8 to
implement provisions of the CAT NMS Plan that are applicable to Nasdaq
members.\10\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78k-1.
    \5\ 17 CFR 242.608.
    \6\ See Letter from the Participants to Brent J. Fields,
Secretary, Commission, dated September 30, 2014; and Letter from
Participants to Brent J. Fields, Secretary, Commission, dated
February 27, 2015. On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter from Participants to
Brent J. Fields, Secretary, Commission, dated December 23, 2015.
     ISE Gemini, LLC, ISE Mercury, LLC and International Securities
Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
and Nasdaq ISE, LLC, respectively. See Securities Exchange Act
Release No. 80248 (March 15, 2017), 82 FR 14547 (March 21, 2017);
Securities Exchange Act Release No. 80326 (March 29, 2017), 82 FR
16460 (April 4, 2017); and Securities Exchange Act Release No. 80325
(March 29, 2017), 82 FR 16445 (April 4, 2017).
     National Stock Exchange, Inc. has been renamed NYSE National,
Inc. See Securities Exchange Act Release No. 79902 (Jan. 30, 2017),
82 FR 9258 (February 3, 2017).
    \7\ 17 CFR 242.613.
    \8\ Securities Exchange Act Release No. 77724 (April 27, 2016),
81 FR 30614 (May 17, 2016).
    \9\ Securities Exchange Act Release No. 79318 (November 15,
2016), 81 FR 84696 (November 23, 2016) (``Approval Order'').
    \10\ See Securities Exchange Act Release No. 80256 (March 15,
2017), 82 FR 14526 (March 21, 2017) (SR-NASDAQ-2017-008).
---------------------------------------------------------------------------

    The CAT NMS Plan is designed to create, implement, and maintain a
consolidated audit trail that will capture in a single consolidated
data source customer and order event information for orders in NMS
Securities and OTC Equity Securities, across all markets, from the time
of order inception through routing, cancellation, modification, or
execution. Among other things, Section C.9. of Appendix C to the Plan,
as modified by the Commission, requires each Participant to ``file with
the SEC the relevant rule change filing to eliminate or modify its
duplicative rules within six (6) months of the SEC's approval of the
CAT NMS Plan.'' \11\ The Plan notes that ``the elimination of such
rules and the retirement of such systems [will] be effective at such
time as CAT Data meets minimum standards of accuracy and reliability.''
\12\ Finally, the Plan requires the rule filing to discuss the
following:
---------------------------------------------------------------------------

    \11\ CAT NMS Plan, Appendix C, Section C.9.
    \12\ See id.
---------------------------------------------------------------------------

    (i) Specific accuracy and reliability standards that will determine
when duplicative systems will be retired, including, but not limited
to, whether the attainment of a certain Error Rate should determine
when a system duplicative of the CAT can be retired;
    (ii) whether the availability of certain data from Small Industry
Members two years after the Effective Date would facilitate a more
expeditious retirement of duplicative systems; and
    (iii) whether individual Industry Members can be exempted from
reporting to duplicative systems once their CAT reporting meets
specified accuracy and reliability standards, including, but not
limited to, ways in which establishing cross-system regulatory
functionality or integrating data from existing systems and the CAT
would facilitate such Individual Industry Member exemptions.\13\
---------------------------------------------------------------------------

    \13\ See id.
---------------------------------------------------------------------------

Changes to OATS
    In response to these requirements, Nasdaq is proposing to delete
the Rule 7000A Series (the ``OATS Rules'') from the Nasdaq rulebook
once the CAT achieves the specific accuracy and reliability standards
described below, and Nasdaq has determined that its usage of the CAT
Data has not revealed material issues that have not been corrected,
confirmed that the CAT includes all data necessary to allow Nasdaq to
continue to meet its surveillance obligations,\14\ and confirmed that
the Plan Processor is sufficiently meeting all of its obligations under
the CAT NMS Plan.\15\
---------------------------------------------------------------------------

    \14\ As noted in the Participants' September 23, 2016 response
to comment letters on the Plan, the Participants ``worked to keep
[the CAT] gap analyses up-to-date by including newly-added data
fields in these duplicative systems, such as the new OATS data
fields related to the tick size pilot and ATS order book changes, in
the gap analyses.'' See Letter from Participants to Brent J. Fields,
Secretary, Commission, dated September 23, 2016, at 21. The
Participants noted that they ``will work with the Plan Processor and
the industry to develop detailed Technical Specifications to ensure
that by the time Industry Members are required to report to the CAT,
the CAT will include all data elements necessary to facilitate the
rapid retirement of duplicative systems.'' Id.
    \15\ Nasdaq notes that the OATS Rules were originally proposed
to fulfill one of the undertakings contained in an order issued by
the Commission relating to the settlement of an enforcement action
against the National Association of Securities Dealers, Inc. for
failure to adequately enforce its rules. See Securities Exchange Act
Release No. 39729 (March 6, 1998), 63 FR 12559 (March 13, 1998). In
approving the OATS Rules, the Commission concluded that OATS
satisfied the conditions of the SEC's order and was consistent with
the Exchange Act. See id. at 12566-67.
---------------------------------------------------------------------------

Specific Accuracy and Reliability Standards
    The first issue the Plan requires the proposed rule change to
discuss is ``specific accuracy and reliability standards that will
determine when duplicative systems will be retired, including, but not
limited to, whether the attainment of a certain Error Rate should
determine when a system duplicative of the CAT can be retired.'' \16\
Nasdaq believes that relevant error rates are the primary, but not the
sole, metric by which to determine the CAT's accuracy and reliability
and will serve as the baseline requirement needed before OATS can be
retired to account for information being available in the CAT.
---------------------------------------------------------------------------

    \16\ See id. [sic]
---------------------------------------------------------------------------

    As discussed in Section A.3.(b) of Appendix C to the CAT NMS Plan,
the Participants established an initial Error Rate, as defined in the
Plan, of 5% on initially submitted data (i.e., data as submitted by a
CAT Reporter before any required corrections are performed). The
Participants noted in the Plan that their expectation was that ``error
rates after reprocessing of error corrections will be de minimis.''
\17\ The Participants based this Error Rate on their consideration of
``current and historical OATS Error Rates, the magnitude of new
reporting requirements on the CAT Reporters and the fact that many CAT
Reporters may have never been obligated to report data to an audit
trail.'' \18\
---------------------------------------------------------------------------

    \17\ See CAT NMS Plan, Appendix C, Section A.3(b), at n.102.
    \18\ Id.
---------------------------------------------------------------------------

    Nasdaq agrees with the Participants' conclusion that a 5% pre-
correction threshold ``strikes the balance of adapting to a new
reporting regime, while ensuring that the data provided to regulators
will be capable of being used to conduct surveillance and market
reconstruction, as well as having a sufficient level of accuracy to
facilitate the retirement of existing regulatory reports and systems
where possible.'' \19\ However, Nasdaq believes that, when assessing
the accuracy and reliability of the data for the purposes of retiring
OATS, the error thresholds should be measured in more granular ways and
should also include minimum error rates of post-correction data, which
represents the data most likely to be used by Nasdaq to conduct
surveillance. Although Nasdaq is proposing to measure the appropriate
error rates in the aggregate, rather than firm-by-firm, Nasdaq believes
that the error rates for equity securities should be measured
separately from options since options

orders are not currently reported regularly or included in OATS.
---------------------------------------------------------------------------

    \19\ Id.
---------------------------------------------------------------------------

    To ensure the CAT's accuracy and reliability, Nasdaq is proposing
that, before OATS could be retired, the CAT would generally need to
achieve a sustained error rate for Industry Member reporting in each of
the categories below for a period of at least 180 days of 5% or lower,
measured on a pre-correction or as-submitted basis and 2% or lower on a
post-correction basis (measured at T+5).\20\ Nasdaq is proposing to
measure the 5% pre-correction and 2% post-correction thresholds by
averaging the error rate across the period, not require a 5% pre-
correction and 2% post-correction maximum each day for 180 consecutive
days. Nasdaq believes that measuring each of the thresholds over the
course of 180 days will ensure that the CAT consistently meets minimum
accuracy and reliability thresholds for Industry Member reporting while
also ensuring that single-day measurements do not unduly affect the
overall measurements.
---------------------------------------------------------------------------

    \20\ The Plan requires that the Plan Processor must ensure that
regulators have access to corrected and linked order and Customer
data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, Appendix C,
Section A.2(a).
---------------------------------------------------------------------------

    Nasdaq is proposing to use error rates in each the following
categories, measured separately for options and for equities, to assess
whether the threshold pre- and post-correction error rates are being
met:
     Rejection Rates and Data Validations. Data validations for
the CAT, while not expected to be designed the same as OATS, must be
functionally equivalent to OATS in accordance with the CAT NMS Plan
(i.e., the same types of basic data validations must be performed by
the Plan Processor to comply with the CAT NMS Plan requirements).
Appendix D of the Plan, for example, requires that certain file
validations \21\ and syntax and context checks be performed on all
submitted records.\22\ If a record does not pass these basic data
validations, it must be rejected and returned to the CAT Reporter to be
corrected and resubmitted.\23\ The specific validations can be
determined only after the Plan Processor has finalized the Industry
Member Technical Specifications; however, the Plan also requires the
Plan Processor to provide daily statistics on rejection rates after the
data has been processed, including the number of files rejected and
accepted, the number of order events accepted and rejected, and the
number of each type of report rejected.\24\ Nasdaq is proposing that,
over the 180-day period, aggregate rejection rates (measured separately
for equities and options) must be no more than 5% pre-correction or 2%
post-correction across all CAT Reporters.
---------------------------------------------------------------------------

    \21\ See CAT NMS Plan, Appendix D, Section 7.2. The Plan
requires the Plan Processor to confirm that file transmission and
receipt are in the correct formats, including validation of header
and trailers on the submitted report, confirmation of a valid
Exchange[sic]-Assigned Market Participant Identifier, and
verification of the number of records in the file. Id.
    \22\ See id. The Plan notes that syntax and context checks would
include format checks (i.e., that data is entered in the specified
format); data type checks (i.e., that the data type of each
attribute conforms to the specifications); consistency checks (i.e.,
that all attributes for a record of a specified type are
consistent); range/logic checks (i.e., that each attribute for every
record has a value within specified limits and the values provided
are associated with the event type they represent); data validity
checks (i.e., that each attribute for every record has an acceptable
value); completeness checks (i.e., that each mandatory attribute for
every record is not null); and timeliness checks (i.e., that the
records were submitted within the submission timelines). Id.
    \23\ See id.
    \24\ See id.
---------------------------------------------------------------------------

     Intra-Firm Linkages. The Plan requires that ``the Plan
Processor must be able to link all related order events from all CAT
Reporters involved in the lifecycle of an order.'' \25\ At a minimum,
this requirement includes the creation of an order lifecycle between
``[a]ll order events handled within an individual CAT Reporter,
including orders routed to internal desks or departments with different
functions (e.g., an internal ATS).'' \26\ Nasdaq is proposing that
aggregate intra-firm linkage rates across all Industry Member Reporters
must be at least 95% pre-correction and 98% post-correction.
---------------------------------------------------------------------------

    \25\ CAT NMS Plan, Appendix D, Section 3.
    \26\ Id.
---------------------------------------------------------------------------

     Inter-Firm Linkages. The order linkage requirements in the
Plan also require that the Plan Processor be able to create the
lifecycle between orders routed between broker-dealers.\27\ Nasdaq is
proposing that at least a 95% pre-correction and 98% post-correction
aggregate match rate be achieved for orders routed between two Industry
Member Reporters.\28\
---------------------------------------------------------------------------

    \27\ Id.
    \28\ This assumes linkage statistics will include both unlinked
route reports and new orders where no related route report could be
found.
---------------------------------------------------------------------------

     Order Linkage Rates. In addition to creating linkages
within and between broker-dealers, the Plan also includes requirements
that the Plan Processor be able to create lifecycles to link various
pieces of related orders.\29\ For example, the Plan requires linkages
between customer orders and ``representative'' orders created in firm
accounts for the purpose of facilitating a customer order, various legs
of option/equity complex orders, riskless principal orders, and orders
worked through average price accounts.\30\ Nasdaq is proposing that
there be at least a 95% pre-correction and 98% post-correction linkage
rate for multi-legged orders (e.g., related equity/options orders, VWAP
orders, riskless principal transactions).
---------------------------------------------------------------------------

    \29\ See CAT NMS Plan, Appendix D, Section 3.
    \30\ See id.
---------------------------------------------------------------------------

     Exchange and TRF/ORF Match Rates. The Plan requires that
an order lifecycle be created to link ``[o]rders routed from broker-
dealers to exchanges'' and ``[e]xecuted orders and trade reports.''
\31\ Nasdaq is proposing at least a 95% pre-correction and 98% post-
correction aggregate match rate to each equity exchange for orders
routed from Industry Members to an exchange and, for over-the-counter
executions, the same match rate for orders linked to trade reports.
---------------------------------------------------------------------------

    \31\ Id.
---------------------------------------------------------------------------

    In addition to these minimum error rates and matching thresholds
that generally must be met before OATS can be retired, Nasdaq believes
that during the minimum 180-day period during which the thresholds are
calculated, Nasdaq's use of the data in the CAT must confirm that (i)
usage over that time period has not revealed material issues that have
not been corrected, (ii) the CAT includes all data necessary to allow
Nasdaq to continue to meet its surveillance obligations, and (iii) the
Plan Processor is sufficiently meeting all of its obligations under the
CAT NMS Plan. Nasdaq believes this time period to use the CAT Data is
necessary to reveal any errors that may manifest themselves only after
surveillance patterns and other queries have been run and to confirm
that the Plan Processor is meeting its obligations and performing its
functions adequately.
Small Industry Member Data Availability
    The second issue the Plan requires the proposed rule change to
address is ``whether the availability of certain data from Small
Industry Members two years after the Effective Date would facilitate a
more expeditious retirement of duplicative systems.''
    Nasdaq believes that there is no effective way to retire OATS until
all current OATS reporters are reporting to the CAT. Although Technical
Specifications for Industry Members are not yet available, Nasdaq
believes it would be inefficient, less reliable, and more costly to
attempt to marry the OATS and CAT databases for a temporary period to
allow some Nasdaq members to report to CAT while others

continue to report to OATS. Consequently, Nasdaq has concluded at this
time that having data from those Small Industry Members currently
reporting to OATS available two years after the Effective Date would
substantially facilitate a more expeditious retirement of OATS. For
this reason, Nasdaq supports an amendment to the Plan that would
require current OATS Reporters that are ``Small Industry Members'' to
report two years after the Effective Date (instead of three). Nasdaq
intends to work with the other Participants to submit a proposed
amendment to the Plan to require Small Industry Members that are OATS
Reporters to report two years after the Effective Date.
    Nasdaq has identified approximately 300 member firms that currently
report to OATS and meet the definition of ``Small Industry Member;''
however, only ten of these firms submit information to OATS on their
own behalf, and eight of the ten firms report very few orders to
OATS.\32\ The vast majority of these 300 firms use third parties to
fulfill their reporting obligations, and many of these third parties
will begin reporting to CAT in November 2018. Consequently, Nasdaq
believes that the burden on current OATS Reporters that are ``Small
Industry Members'' would not be significant if those firms are required
to report to CAT beginning in November 2018 rather than November 2019.
The burdens, however, are significantly greater for those firms that
are not reporting to OATS currently; therefore, Nasdaq does not believe
it would be necessary or appropriate to accelerate CAT reporting for
``Small Industry Members'' that are not currently reporting to OATS,
and Nasdaq would not support an amendment to the Plan to accelerate CAT
reporting for ``Small Industry Members'' that are not currently OATS
Reporters.
---------------------------------------------------------------------------

    \32\ For example, in one recent month, eight of the ten firms
submitted fewer than 100 reports during the month, with four firms
submitting fewer than 50.
---------------------------------------------------------------------------

Individual Industry Member Exemptions
    The final issue the Plan requires the proposed rule change to
address is ``whether individual Industry Members can be exempted from
reporting to duplicative systems once their CAT reporting meets
specified accuracy and reliability standards, including, but not
limited to, ways in which establishing cross-system regulatory
functionality or integrating data from existing systems and the CAT
would facilitate such Individual Industry Member exemptions.''
    As described above, Nasdaq believes that a single cut-over from
OATS to CAT is highly preferable to a firm-by-firm approach and is not
proposing to exempt members from the OATS requirements on a firm-by-
firm basis. The primary benefit to a firm-by-firm exemptive approach
would be to reduce the amount of time an individual firm is required to
report to a legacy system (e.g., OATS) if it is also accurately and
reliably reporting to the CAT. Nasdaq believes that the overall
accuracy and reliability thresholds for the CAT described above would
need to be met under any conditions before firms could stop reporting
to OATS. Moreover, as discussed above, Nasdaq supports amending the
Plan to accelerate the reporting requirements for Small Industry
Members that are OATS Reporters to report on the same timeframe as all
other OATS Reporters. If such an amendment were approved by the
Commission, there would be no need to exempt members from OATS
requirements on a firm-by-firm basis.
Changes to EBS and Account Identification Rules
    The EBS rule is Nasdaq's rule regarding the automated submission of
specific trading data to Nasdaq upon request using the Electronic Blue
Sheet system. Rule 8211 applies to EBS reporting for equity securities,
while Chapter IX, Section 4 applies EBS reporting to options. Rule 8211
and Chapter IX, Section 4 require members to submit certain trade
information as prescribed by Nasdaq Regulation, including, for
proprietary transactions, the clearing house number or alpha symbol of
the member submitting the data, the identifying symbol assigned to the
security, and the date the transaction was executed.
    Chapter VII, Section VII imposes certain account identification
requirements on Market Makers. Specifically, Chapter VII, Section VII
requires, among other things, that each Market Maker shall file with
Nasdaq Regulation and keep current a list identifying all accounts for
stock, options and related securities trading in which the Market Maker
may, directly or indirectly, engage in trading activities or over which
it exercises investment discretion. The rule also prohibits a Market
Maker from engaging in stock, options or related securities trading in
an account which has not been reported pursuant to this rule.
    Once broker-dealer reporting to the CAT has begun, the CAT will
contain the data the Participants would otherwise have requested via
the EBS system for purposes of NMS Securities and OTC Equity
Securities. Consequently, Nasdaq will not need to use the EBS system or
request information pursuant to these rules for NMS Securities or OTC
Equity Securities for time periods after CAT reporting has begun if the
appropriate accuracy and reliability thresholds are achieved, including
an acceptable accuracy rate for customer and account information.
However, these rules cannot be completely eliminated immediately upon
the CAT achieving the appropriate thresholds because Nasdaq Regulation
staff may still need to request information pursuant to these rules for
trading activity occurring before a member was reporting to the
CAT.\33\ In addition, these rules apply to information regarding
transactions involving securities that will not be reportable to the
CAT, such as fixed-income securities; thus, these rules must remain in
effect with respect to those transactions indefinitely or until those
transactions are captured in the CAT.
---------------------------------------------------------------------------

    \33\ Firms are required to maintain the trade information for
pre-CAT transactions in equities and options pursuant to applicable
rules, such as books and records retention requirements, for the
relevant time period, which is generally three or six years
depending upon the record. See 17 CFR 240.17a-3(a), 240.17a-4.
---------------------------------------------------------------------------

    The proposed rule change proposes to add new Supplementary Material
to Rule 8211, Chapter VII, Section VII and Chapter IX, Section 4 to
clarify how Nasdaq will request data under these rules after members
are reporting to the CAT. Specifically, the proposed Supplementary
Material to these rules will note that Nasdaq Regulation will request
information under these rules only if the information is not available
in the CAT because, for example, the transactions in question occurred
before the firm was reporting information to the CAT or involved
securities that are not reportable to the CAT. In essence, under the
new Supplementary Material, Nasdaq Regulation will make requests under
these rules if and only if the information is not otherwise available
through the CAT.
    The CAT NMS Plan states, however, that the elimination of rules
that are duplicative of the requirements of the CAT and the retirement
of the related systems should be effective at such time as CAT Data
meets minimum standards of accuracy and reliability.\34\ Accordingly,
as discussed in more detail below, Nasdaq believes that the EBS data
may be replaced by CAT Data at a date after all Industry Members are
reporting to the CAT when the proposed

error rate thresholds have been met, and Nasdaq has determined that its
usage of the CAT Data has not revealed material issues that have not
been corrected, confirmed that the CAT includes all data necessary to
allow Nasdaq to continue to meet its surveillance obligations, and
confirmed that the Plan Processor is sufficiently meeting all of its
obligations under the CAT NMS Plan.
---------------------------------------------------------------------------

    \34\ Id. [sic]
---------------------------------------------------------------------------

    Nasdaq believes CAT Data should not be used in place of EBS data
until all Participants and Industry Members are reporting data to CAT.
In this way, Nasdaq will continue to have access to the necessary data
to perform its regulatory duties.
    The CAT NMS Plan requires that a rule filing to eliminate a
duplicative rule address whether ``the availability of certain data
from Small Industry Members two years after the Effective Date would
facilitate a more expeditious retirement of duplicative systems.'' \35\
Nasdaq believes that the submission of data to the CAT by Small
Industry Members a year earlier than is required in the CAT NMS Plan,
at the same time as the other Industry Members, would expedite the
replacement of EBS data with CAT Data, as Nasdaq believes that the CAT
would then have all necessary data from the Industry Members for Nasdaq
to perform the regulatory surveillance that currently is performed via
EBS. For this reason, Nasdaq supports amending the CAT NMS Plan to
require Small Industry Members to report data to the CAT two years
after the Effective Date (instead of three), and intends to work with
other Participants toward that end.
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    The CAT NMS Plan requires that this rule filing address ``whether
individual Industry Members can be exempted from reporting to
duplicative systems once their CAT reporting meets specified accuracy
and reliability standards, including, but not limited to, ways in which
establishing cross-system regulatory functionality or integrating data
from existing systems and the CAT would facilitate such Individual
Industry Member exemptions.'' \36\ Nasdaq believes that a single cut-
over from EBS to CAT is highly preferable to a firm-by-firm approach
and is not proposing to exempt members from the EBS requirements on a
firm-by-firm basis. Nasdaq believes that providing such individual
exemptions to Industry Members would be inefficient, more costly, and
less reliable than the single cut-over. Providing individual exemptions
would require the exchanges to create, for a brief temporary period, a
cross-system regulatory function and to integrate data from EBS and the
CAT to avoid creating any regulatory gaps as a result of such
exemptions. Such a function would be costly to create and would give
rise to a greater likelihood of data errors or other issues. Given the
limited time in which such exemptions would be necessary, Nasdaq does
not believe that such exemptions would be an appropriate use of limited
resources. Moreover, the primary benefit to a firm-by-firm exemptive
approach would be to reduce the amount of time an individual firm is
required to comply with EBS if it is also accurately and reliably
reporting to the CAT. Nasdaq believes that the overall accuracy and
reliability thresholds for the CAT described above would need to be met
under any conditions before firms could stop reporting to EBS, and as
discussed above, by accelerating Small Industry Members to report on
the same timeframe as all other Industry Members, there is no need to
exempt members from EBS requirements on a firm-by-firm basis.
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    The CAT NMS Plan also requires that a rule filing to eliminate a
duplicative rule to provide ``specific accuracy and reliability
standards that will determine when duplicative systems will be retired,
including, but not limited to, whether the attainment of a certain
Error Rate should determine when a system duplicative of the CAT can be
retired.'' \37\ Nasdaq believes that it is critical that the CAT Data
be sufficiently accurate and reliable for Nasdaq to perform the
regulatory functions that it now performs via EBS. Accordingly, Nasdaq
believes that the CAT Data should meet specific quantitative error
rates, as well as certain qualitative requirements.
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

    Nasdaq believes that, before CAT Data may be used in place of EBS
data, the CAT would need to achieve a sustained error rate for a period
of at least 180 days of 5% or lower measured on a pre-correction or as-
submitted basis, and 2% or lower on a post-correction basis (measured
at T+5).\38\ Nasdaq proposes to measure the 5% pre-correction and 2%
post-correction thresholds by averaging the error rate across the
period, not require a 5% pre-correction and 2% post-correction maximum
each day for 180 consecutive days. Nasdaq believes that measuring each
of the thresholds over the course of 180 days will ensure that the CAT
consistently meets minimum accuracy and reliability thresholds while
also ensuring that single-day measurements do not unduly affect the
overall measurements. Nasdaq proposes to measure the appropriate error
rates in the aggregate, rather than firm-by-firm. The 2% and 5% error
rates are in line with the proposed retirement threshold for other
systems, such as OATS and COATS.
---------------------------------------------------------------------------

    \38\ The Plan requires that the Plan Processor must ensure that
regulators have access to corrected and linked order and Customer
data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, at C-15.
---------------------------------------------------------------------------

    In addition to these minimum error rates before using CAT Data
instead of EBS data, Nasdaq believes that during the minimum 180-day
period during which the thresholds are calculated, Nasdaq's use of the
data in the CAT must confirm that (i) usage over that time period has
not revealed material issues that have not been corrected, (ii) the CAT
includes all data necessary to allow Nasdaq to continue to meet its
surveillance obligations, and (iii) the Plan Processor is sufficiently
meeting all of its obligations under the CAT NMS Plan. Nasdaq believes
this time period to use the CAT Data is necessary to reveal any errors
that may manifest themselves only after surveillance patterns and other
queries have been run and to confirm that the Plan Processor is meeting
its obligations and performing its functions adequately.
Changes to COATS
    The options exchanges utilize COATS to collect and review data
regarding options orders, quotes and transactions. The Participants
have provided COATS technical specifications to the Plan Processor for
the CAT for use in developing the Technical Specifications for the CAT,
and the Participants are working with the Plan Processor to include the
necessary COATS data elements in the CAT Technical Specifications.
Accordingly, although the Technical Specifications for the CAT have not
yet been finalized, Nasdaq and the other options exchanges propose to
eliminate COATS in accordance with the proposed timeline discussed
below.
    Nasdaq adopted Chapter V, Section 7 to implement certain reporting
requirements related to COATS, and therefore proposes to eliminate the
information reporting requirements of that rule and replacing those
requirements with a requirement that members report information
pursuant to this rule as required by the Exchange's CAT compliance
rule, Chapter IX, Section 8.\39\ Among other things,

Chapter V, Section 7 requires an Options Participant to ensure that
each options order received from a Customer for execution on the Nasdaq
Options Market is recorded and time-stamped immediately, and also at
the time of any modification or cancellation of the order. The rule
also specifies the information that must be contained at a minimum,
including a unique order identification, the underlying security,
opening/closing designation, the identity of the Clearing Participant,
and the Options Participant identification.
---------------------------------------------------------------------------

    \39\ COATS was developed to comply with an order of the
Commission requiring the then-options exchanges to ``design and
implement'' a consolidated audit trail to ``enable the options
exchanges to reconstruct markets promptly, effectively surveil them
and enforce order handling, firm quote, trade reporting and other
rules.'' See Section IV.B.e.(v) of the Commission's Order
Instituting Public Administrative Proceedings Pursuant to Sections
19(h)(1) of the Securities Exchange Act of 1934, Making Findings and
Imposing Remedial Sanctions (the ``Order''). See Securities Exchange
Act Release No. 43268 (September 11, 2000) and Administrative
Proceeding File No. 3-10282. As noted, the Plan is designed to
create, implement and maintain a CAT that would capture customer and
order event information for orders in NMS Securities and OTC Equity
Securities, across all markets, from the time of order inception
through routing, cancellation, modification, or execution in a
single consolidated data source. Nasdaq has already adopted rules to
enforce compliance by its Industry Members, as applicable, with the
provisions of the Plan. Once the CAT is fully operational, it will
be appropriate to delete Nasdaq's rules implemented to comply with
the Order as duplicative of the CAT. Accordingly, Nasdaq believes
that it would continue to be in compliance with the requirements of
the Order once the CAT is fully operational and the COATS rules are
deleted.
---------------------------------------------------------------------------

    The CAT NMS Plan states that the elimination of rules that are
duplicative of the requirements of the CAT and the retirement of the
related systems should be effective at such time as CAT Data meets
minimum standards of accuracy and reliability.\40\ As discussed in more
detail below, Nasdaq and the other options exchanges believe that COATS
may be retired at a date after all Industry Members are reporting to
the CAT when the proposed error rate thresholds have been met, and
Nasdaq has determined that its usage of the CAT Data has not revealed
material issues that have not been corrected, confirmed that the CAT
includes all data necessary to allow Nasdaq to continue to meet its
surveillance obligations, and confirmed that the Plan Processor is
sufficiently meeting all of its obligations under the CAT NMS Plan.
---------------------------------------------------------------------------

    \40\ Id. [sic]
---------------------------------------------------------------------------

    Nasdaq believes COATS should not be retired until all Participants
and Industry Members that report data to COATS are reporting comparable
data to the CAT. In this way, Nasdaq will continue to have access to
the necessary data to perform its regulatory duties.
    The CAT NMS Plan requires that a rule filing to eliminate a
duplicative rule address whether ``the availability of certain data
from Small Industry Members two years after the Effective Date would
facilitate a more expeditious retirement of duplicative systems.'' \41\
The Exchange believes COATS should not be retired until all
Participants and Industry Members that report data to COATS are
reporting comparable data to the CAT. While the early submission of
options data to the CAT by Small Industry Members could expedite the
retirement of COATS, the Exchange believes that it premature to
consider such a change and that additional analysis would be necessary
to determine whether such early reporting by Small Industry Members
would be feasible.
---------------------------------------------------------------------------

    \41\ Id.
---------------------------------------------------------------------------

    The CAT NMS Plan requires that this rule filing address ``whether
individual Industry Members can be exempted from reporting to
duplicative systems once their CAT reporting meets specified accuracy
and reliability standards, including, but not limited to, ways in which
establishing cross-system regulatory functionality or integrating data
from existing systems and the CAT would facilitate such Individual
Industry Member exemptions.'' \42\ Nasdaq believes that a single cut-
over from COATS to CAT is highly preferable to a firm-by-firm approach
and is not proposing to exempt members from the COATS requirements on a
firm-by-firm basis. Nasdaq and the other options exchanges believe that
providing such individual exemptions to Industry Members would be
inefficient, more costly, and less reliable than the single cut-over.
Providing individual exemptions would require the options exchanges to
create, for a brief temporary period, a cross-system regulatory
function and to integrate data from COATS and the CAT to avoid creating
any regulatory gaps as a result of such exemptions. Such a function
would be costly to create and would give rise to a greater likelihood
of data errors or other issues. Given the limited time in which such
exemptions would be necessary, Nasdaq and the other options exchanges
do not believe that such exemptions would be an appropriate use of
limited resources.
---------------------------------------------------------------------------

    \42\ Id.
---------------------------------------------------------------------------

    The CAT NMS Plan also requires that a rule filing to eliminate a
duplicative rule to provide ``specific accuracy and reliability
standards that will determine when duplicative systems will be retired,
including, but not limited to, whether the attainment of a certain
Error Rate should determine when a system duplicative of the CAT can be
retired.'' \43\ Nasdaq believes that it is critical that the CAT Data
be sufficiently accurate and reliable for the Exchange to perform the
regulatory functions that it now performs via COATS. Accordingly,
Nasdaq believes that the CAT Data should meet specific quantitative
error rates, as well as certain qualitative requirements.
---------------------------------------------------------------------------

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

    Nasdaq and the other options exchanges believe that, before COATS
may be retired, the CAT would need to achieve a sustained error rate
for a period of at least 180 days of 5% or lower measured on a pre-
correction or as-submitted basis, and 2% or lower on a post-correction
basis (measured at T+5).\44\ Nasdaq proposes to measure the 5% pre-
correction and 2% post-correction thresholds by averaging the error
rate across the period, not require a 5% pre-correction and 2% post-
correction maximum each day for 180 consecutive days. Nasdaq believes
that measuring each of the thresholds over the course of 180 days will
ensure that the CAT consistently meets minimum accuracy and reliability
thresholds while also ensuring that single-day measurements do not
unduly affect the overall measurements. Nasdaq proposes to measure the
appropriate error rates in the aggregate, rather than firm-by-firm. In
addition, Nasdaq proposes to measure the error rates for options only,
not equity securities, as only options are subject to COATS. The 2% and
5% error rates are in line with the proposed retirement threshold for
OATS.
---------------------------------------------------------------------------

    \44\ The Plan requires that the Plan Processor must ensure that
regulators have access to corrected and linked order and Customer
data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, at C-15.
---------------------------------------------------------------------------

    In addition to these minimum error rates before COATS can be
retired, Nasdaq believes that during the minimum 180-day period during
which the thresholds are calculated, Nasdaq's use of the data in the
CAT must confirm that (i) usage over that time period has not revealed
material issues that have not been corrected, (ii) the CAT includes all
data necessary to allow Nasdaq to continue to meet its surveillance
obligations, and (iii) the Plan Processor is sufficiently meeting all
of its obligations under the CAT NMS Plan. Nasdaq believes this time
period to use the CAT Data is necessary to reveal any errors that may
manifest themselves only after surveillance patterns and other queries
have been run and to confirm that the Plan Processor is meeting its
obligations and performing its functions adequately.
    If the Commission approves the proposed rule change, Nasdaq will

announce the implementation date of the proposed rule change in a
Regulatory Notice that will be published once Nasdaq concludes the
thresholds for accuracy and reliability described above have been met
and that the Plan Processor is sufficiently meeting all of its
obligations under the CAT NMS Plan.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\45\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\46\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78f(b).
    \46\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Nasdaq believes that the proposed rule change fulfills the
obligation in the CAT NMS Plan for Nasdaq to submit a proposed rule
change to eliminate or modify duplicative rules. In approving the Plan,
the SEC noted that the Plan ``is necessary and appropriate in the
public interest, for the protection of investors and the maintenance of
fair and orderly markets, to remove impediments to, and perfect the
mechanism of a national market system, or is otherwise in furtherance
of the purposes of the Act.'' \47\ As this proposal implements the
Plan, Nasdaq believes that this proposal furthers the objectives of the
Plan, as identified by the SEC, and is therefore consistent with the
Exchange Act.
---------------------------------------------------------------------------

    \47\ Approval Order at 84697.
---------------------------------------------------------------------------

    Moreover, the purpose of the proposed rule change is to eliminate
rules that require the submission of duplicative data to the exchange.
The elimination of such duplicative requirements will reduce
unnecessary costs and other compliance burdens for Nasdaq and its
members, and therefore, will enhance the efficiency of the securities
markets. Furthermore, Nasdaq believes that the approach set forth in
the proposed rule change strikes the appropriate balance between
ensuring that Nasdaq is able to continue to fulfill its statutory
obligation to protect investors and the public interest by ensuring its
surveillance of market activity remains accurate and effective while
also establishing a reasonable timeframe for elimination or
modification of its rules that will be rendered duplicative after
implementation of the CAT.

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

    Section 6(b)(8) of the Exchange Act \48\ requires that the
Exchange's rules not impose any burden on competition that is not
necessary or appropriate. Nasdaq does not believe that the proposed
rule change will result in any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. Nasdaq notes that the proposed rule change implements the
requirements of the CAT NMS Plan approved by the Commission regarding
the elimination of rules and systems that are duplicative the CAT, and
is designed to assist Nasdaq in meeting its regulatory obligations
pursuant to the Plan. Similarly, all exchanges and FINRA are proposing
the elimination of their rules related to OATS, EBS and COATS to
implement the requirements of the CAT NMS Plan. Therefore, this is not
a competitive rule filing and, therefore, it does not raise competition
issues between and among the self-regulatory organizations and/or their
members.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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

    Although written comments on the proposed rule change were not
solicited, two commenters, the Financial Information Forum (``FIF'')
and the Securities Industry and Financial Markets Association
(``SIFMA''), submitted letters to the Participants regarding the
retirement of systems related to the CAT.\49\ In its comment letter,
with regard to the retirement of duplicative systems more generally,
FIF recommends that the Participants continue the effort to incorporate
current reporting obligations into the CAT in order to replace existing
reportable systems with the CAT. In addition, FIF further recommends
that, once a CAT Reporter achieves satisfactory reporting data quality,
the CAT Reporter should be exempt from reporting to any duplicative
reporting systems. FIF believes that these recommendations ``would
serve both an underlying regulatory objective of more immediate and
accurate access to data as well as an industry objective of reduced
costs and burdens of regulatory oversight.'' \50\ In its comments about
EBS specifically, FIF states that the retirement of the EBS
requirements should be a high priority, and that the CAT should be
designed to include the requisite data elements to permit the rapid
retirement of the EBS system.\51\ Similarly, SIFMA states that ``the
establishment of the CAT must be accompanied by the prompt elimination
of duplicative systems,'' and ``recommend[ed] that the initial
technical specifications be designed to facilitate the immediate
retirement of . . . duplicative reporting systems.'' \52\
---------------------------------------------------------------------------

    \49\ Letter from William H. Hebert, FIF, to Participants re:
Milestone for Participants' rule change filings to eliminate/modify
duplicative rules, dated April 12, 2017 (``FIF Letter''); Letter
from Kenneth E. Bentsen, Jr., SIFMA, to Participants re: Selection
of Thesys as CAT Processor, dated April 4, 2017 (``SIFMA Letter''),
at 2.
    \50\ FIF Letter at 2.
    \51\ Id.
    \52\ SIFMA Letter at 2.
---------------------------------------------------------------------------

    As discussed above, Nasdaq agrees with the commenters that the
OATS, EBS and COATS reporting requirements should be replaced by the
CAT reporting requirements as soon as accurate and reliable CAT Data is
available. To this end, Nasdaq anticipates that the CAT will be
designed to collect the data necessary to permit the retirement of
OATS, EBS and COATS. As discussed above, Nasdaq disagrees with the
recommendation to provide individual exemptions to those CAT Reporters
who obtain satisfactory data reporting quality; however, Nasdaq
supports amendments to the CAT NMS Plan that would accelerate reporting
for Small Industry Members that are currently reporting to OATS to
facilitate the retirement of that system.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

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-NASDAQ-2017-055 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-NASDAQ-2017-055. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2017-055 and should
be submitted on or before June 26, 2017.
---------------------------------------------------------------------------

    \53\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11507 Filed 6-2-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 48 (Tuesday, March 12, 2019)]
[Notices]
[Pages 8946-8947]
[FR Doc No: 2019-04438]

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

DEPARTMENT OF TRANSPORTATION

National Advisory Committee on Travel and Tourism Infrastructure;
Notice of Public Meeting

AGENCY: Office of the Secretary of Transportation (OST), Department of
Transportation (DOT).

ACTION: Notice of public meeting.

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

SUMMARY: This notice announces a meeting of the National Advisory
Committee on Travel and Tourism Infrastructure (NACTTI).

DATES: The meeting will be held on March 27, 2019, from 9:30 a.m. to
2:00 p.m., EDT.

RESCHEDULE DATE: In the event that Federal Offices are closed due to
weather on this March 27, the meeting will be rescheduled for April 12,
2019, from 9:30 a.m. to 2:00 p.m., EDT. Please visit www.opm.gov for
federal operating status.

ADDRESSES: The meeting will be held at the U.S. Department of
Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590.
Individuals wishing for audio participation and any person requiring
accessibility accommodations should contact the Official listed in the
next section.

FOR FURTHER INFORMATION CONTACT: David Short, Designated Federal
Officer, U.S. Department of Transportation, at<EMAIL_ADDRESS>or (202)
366-8822. Also visit the NACTTI internet website at http://www.transportation.gov/NACTTI.

SUPPLEMENTARY INFORMATION:

I. Background

    NACTTI was created in accordance with Section 1431 of the Fixing
America's Surface Transportation

(FAST) Act (Pub. L. 114-94: Dec. 4, 2015; 129 Stat. 1312) to provide
information, advice, and recommendations to the Secretary of
Transportation on matters related to the role of intermodal
transportation in facilitating mobility related to travel and tourism
activities.

II. Agenda

    At the March 27, 2019, meeting, the agenda will cover the following
topics:

 Recap of December 2018 meeting
 Subcommittee Discussion of Activities and Draft
Recommendations
 Public Participation
 Full Committee Deliberation and Vote on Subcommittee
Recommendations
 Presentation of NACTTI Recommendations

A final agenda will be posted on the NACTTI internet website at http://www.transportation.gov/NACTTI at least one week in advance of the
meeting.

III. Public Participation

    The meeting will be open to the public on a first-come, first
served basis, as space is limited. Members of the public who wish to
attend in-person are asked to register, including name and affiliation,
to<EMAIL_ADDRESS>by March 20, 2019. Individuals requesting
accessibility accommodations, such as sign language, interpretation, or
other ancillary aids, may do so via email at<EMAIL_ADDRESS>by March
20, 2019.
    There will be 30 minutes allotted for oral comments from members of
the public joining the meeting. To accommodate as many speakers as
possible, the time for public comments may be limited to five minutes
per person. Individuals wishing to reserve speaking time during the
meeting must submit a request at the time of registration, as well as
the name, address, and organizational affiliation of the proposed
speaker. If the number of registrants requesting to make statements is
greater than can be reasonably accommodated during the meeting, the
Office of the Secretary may conduct a lottery to determine the
speakers. Speakers are requested to submit a written copy of their
prepared remarks by 5:00 p.m. EDT on March 20, 2019, for inclusion in
the meeting records and for circulation to NACTTI members. Written
comments timely submitted from those not selected to speak will
nonetheless be accepted and considered as part of the record.
    Persons who wish to submit written comments for consideration by
NACTTI during the meeting must submit them no later than 5:00 p.m. EDT
on March 20, 2019, to ensure transmission to NACTTI prior to the
meeting. Comments received after that date and time will be distributed
to the members but may not be reviewed prior to the meeting.
    Copies of the meeting minutes will be available on the NACTTI
internet website at http://www.transportation.gov/NACTTI.

    Dated: March 7, 2019.
Joel Szabat,
Assistant Secretary, Aviation and International Affairs.
[FR Doc. 2019-04438 Filed 3-11-19; 8:45 am]
 BILLING CODE P


[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Notices]
[Pages 6915-6916]
[FR Doc No: 2016-02437]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77042; File No. SR-OCC-2015-018]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving the Adoption of a Charter of a New Committee of The
Options Clearing Corporation's Board of Directors, the Technology
Committee

February 3, 2016.
    On December 8, 2015, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2015-018 pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ On December 24, 2015, the proposed rule change was
published for comment in the Federal Register.\3\ The Commission did
not receive any comments on the proposed rule change. This order
approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 76686 (December 18,
2015), 80 FR 80422 (December 24, 2015) (SR-OCC-2015-018).
---------------------------------------------------------------------------

I. Description

    OCC is adopting a Charter for a new committee of OCC's Board of
Directors (``Board''), the Technology Committee (``TC''). Additionally,
OCC is adding a description of the TC into Article III, Section 9 of
OCC's By-Laws. The Board formed the TC in order to enhance the Board's
understanding and oversight of key technology, information security,
and cyber-security risk issues at OCC. Consistent with OCC's other
Board-level committee charters, the TC Charter sets forth: (i) The
purpose, functions, and responsibilities of the TC; and (ii) the
composition and organization of the TC.
    As set forth in the TC Charter, the TC will be responsible for: (i)
Overseeing major information technology (``IT'') related strategies,
projects, and technology architecture decisions; (ii) monitoring
whether OCC's IT programs effectively support OCC's business objectives
and strategies; (iii) monitoring OCC's IT risk management efforts as
well as the security of OCC's information systems and physical security
of information system assets; and (iv) conferring with OCC's senior IT
management team and informing the Board on IT-related matters.
    Further, and with respect to the TC Charter's role in the oversight
of OCC's IT strategy and projects, the TC Charter provides that the TC
will be specifically tasked with: (i) Evaluating OCC's IT strategy,
including the financial, tactical, and strategic benefits of IT
projects and technology architecture initiatives; (ii) critically
reviewing IT projects and technology architecture decisions, including
review of the process related to approval of capital expenditures as
they relate to IT projects; and (iii) making recommendations to the
Board with respect to IT-related projects and investments that require
Board approval. In addition, the TC Charter will require that the TC:
(i) Monitor the quality and effectiveness of OCC's IT and physical
security, including periodically reviewing and appraising OCC's
disaster recovery capabilities and crisis management plans; (ii) in
coordination and cooperation with the Audit Committee of the Board,
monitor the quality and effectiveness of OCC's IT systems and processes
that relate to or affect OCC's internal controls and assess OCC's
management of IT-related compliance risks; (iii) report to the Board
and the Audit Committee about IT risks and controls; and (iv) serve in
an advisory role with respect to IT decisions at OCC. In connection
with carrying out its responsibilities, the TC will also, in general,
inform and make recommendations to the Board and other Board-level
committees with respect to IT-related matters.
    The TC Charter will provide that the TC be comprised of three or
more directors, and meet at least four times per year.\4\ The TC will
function in a manner similar to the other Board-level committees in
that it will have the ability to hire specialists and meet in executive
session as well as be required to report to the Board on an annual
basis. The TC will also have to annually confirm to the Board that its
responsibilities, as set forth in the TC Charter, have been carried out
and evaluate its and its members' performance on a regular basis.
---------------------------------------------------------------------------

    \4\ Members of the TC will not need to be technology experts.
---------------------------------------------------------------------------

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that the rule change, as proposed, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such organization.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2)(C).
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent
with Section 17A(b)(3)(F) of the Act. This section requires, among
other things, that the rules of a clearing agency promote the prompt
and accurate clearance and settlement of securities transactions.\6\
The rule change should enhance the effectiveness of the Board's
oversight on OCC's business and operational processes. Specifically, it
should enhance technology-related processes (such as disaster recovery
and crisis management plans), as well as IT systems that relate to
internal controls and compliance risks, through a dedicated Board-level
committee's oversight of such processes. Accordingly, the proposed rule
change will increase the likelihood that OCC's technology processes
work as expected, including those processes tied to the clearance and
settlement of securities transactions.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Additionally, the Commission finds that the proposed rule change is
consistent with Rule 17Ad-22(d)(8). This rule requires a clearing
agency's the written policies and procedures to: (i) Have governance
arrangements that are clear and transparent to fulfill the public
interest requirements in Section 17A of the Act; (ii) support the
objectives of OCC's owners and participants; and (iii) promote the
effectiveness of OCC's risk management procedures.\7\ First, the TC
Charter delineates a clear and transparent governance arrangement
designed to increase the likelihood that OCC's technology processes
work as expected (including those processes tied to the clearance and
settlement of securities transactions). By increasing the likelihood
that OCC's technology processes work as expected, the TC Charter also
supports the objective of OCC's owners and participants to promote the
prompt and accurate clearance and settlement of securities

transactions. Finally, the TC Charter promotes the effectiveness of
OCC's risk management procedures by establishing a Board-level
committee focused on reducing IT-related risk at OCC.
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17Ad-22(d)(8).
---------------------------------------------------------------------------

III. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act, and in
particular, with the requirements of Section 17A of the Act \8\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------

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

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-OCC-2015-018) be, and it
hereby is, approved.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

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

[FR Doc. 2016-02437 Filed 2-8-16; 8:45 am]
 BILLING CODE 8011-01-P