[Federal Register Volume 84, Number 240 (Friday, December 13, 2019)]
[Rules and Regulations]
[Pages 68050-68052]
[FR Doc No: 2019-26792]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2018-0734; FRL-10003-02-Region 5]

Air Plan Approval; Indiana; Indiana RACT SIP and Negative
Declaration for the Oil and Natural Gas Industry Control Techniques
Guidelines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is approving a
``Negative Declaration'' for the State of Indiana regarding the Control
Techniques Guideline (CTG) for the Oil and Gas Industry issued by EPA
on October 20, 2016. Indiana has evaluated areas for which the Oil and
Natural Gas Industry CTG must be applied under the 2008 ozone National
Ambient Air Quality Standard (NAAQS). These areas include Lake and
Porter counties, which are part of the Chicago-Naperville, IL-IN-WI
Moderate nonattainment area for the 2008 ozone NAAQS. Therefore,
reasonably available control technology (RACT) requirements would be
applicable for sources covered by the Oil and Natural Gas Industry CTG
in Lake and Porter counties. The Indiana Department of Environmental
Management (IDEM) did not find any covered sources in Lake and Porter
counties. Approval of this Negative Declaration supports EPA's February
13, 2019 approval of Indiana's volatile organic compounds (VOC) RACT
Certification for Lake and Porter Counties. EPA proposed to approve
this ``Negative Declaration'' on June 26, 2019 and received one set of
comments.

DATES: This final rule is effective January 13, 2020.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R05-OAR-2018-0734. All documents in the docket are listed in
the http://www.regulations.gov website.

Although listed in the index, some information is not publicly
available, e.g., Confidential Business Information or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either through http://www.regulations.gov or at
the EPA Region 5 office (please contact the person identified in the
FOR FURTHER INFORMATION CONTACT section for availability information).

FOR FURTHER INFORMATION CONTACT: Jenny Liljegren, Physical Scientist,
Attainment Planning and Maintenance Section, Air Programs Branch (AR-
18J), U.S. Environmental Protection Agency, Region 5, 77 West Jackson
Boulevard, Chicago, Illinois 60604,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This supplementary information
section is arranged as follows:

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

I. What is being addressed in this document?

    In this action, EPA is approving a ``Negative Declaration'' for
Lake and Porter Counties in Indiana regarding the CTG for the Oil and
Gas Industry issued by EPA on October 20, 2016. As discussed more fully
in the June 26, 2019 proposed approval (84 FR 30066), IDEM has
adequately documented that there are no sources in Lake and Porter
Counties to which the Oil and Gas CTG is applicable.

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

    EPA received both supportive and adverse comments from one
commenter. The adverse comments are addressed below.
    (1) Comment--``Looking at Indiana's analysis of all its resources
in Lake and Porter Counties coming directly from the department of Oil
and Natural Gas Industry which is experienced in its analysis and has a
niche in Indiana. However, I also feel that the report that has been
provided may have been biased based on additional cost needed to be
spent on RACT related activities.''
    EPA Response--As stated in the proposal, Indiana searched its own
oil and gas well records and air permits and, therefore, did not rely
exclusively on the Indiana Department of Natural Resources' (IDNR)
Division of Oil and Gas.
    (2) Comment--``The report that the IDNR released mentions that they
did this based on the database and not based on actual research
performed by them. I would like to question how often their data base
is updated and the sample size they have mentioned consisting of just 3
places seems like a small amount in proportion to the 2 counties.''
    EPA Response--The IDNR administers Indiana's oil and gas statutes
and regulates petroleum exploration and production operations in
Indiana. Its analysis should provide a very sound basis for an accurate
database. The sample size did not consist of just three places. Rather,
three facilities were selected for further evaluation based upon their
industry codes and descriptions.
    (3) Comment--``EPA's proposal looks pretty dated and has been based
on ozone rules back from 2016 and currently there have been so many
changes that it is bound to be outdated and not effective, I think the
EPA should release another updated rule to judge the negative
declaration areas.''
    EPA Response--The Oil and Gas CTG is, in fact, EPA's newest CTG and
there is no indication that it is outdated. More importantly, Indiana's
determination that there are no applicable sources is current.
    (4) Comment--``The Bulk petroleum facilities which were
investigated although not part of Lake and Porter County does exist and
the report by the Indiana Department of Natural Resources did not
provide much information as to what their findings were.''
    EPA Response--This comment is not relevant because the negative
declaration is only for Lake and Porter Counties.

III. What action is EPA taking?

    EPA is approving Indiana's Negative Declaration for the Oil and Gas
CTG. Indiana has adequately documented that it has no sources in Lake
and Porter Counties to which the Oil and Gas CTG would be applicable.
Approval of this Negative Declaration also supports EPA's February 13,
2019 approval of Indiana's VOC RACT Certification for Lake and Porter
Counties.

IV. Statutory and Executive Order Reviews

    Under the Clean Air Act (CAA) the Administrator is required to
approve a State Implementation Plan (SIP) submission that complies with
the provisions of the CAA and applicable Federal regulations. 42 U.S.C.
7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's
role is to approve state choices, provided that they meet the criteria
of the CAA. Accordingly, this action merely approves state law as
meeting Federal requirements and does not impose additional
requirements beyond those imposed by state law. For that reason, this
action:
     Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Orders 12866 (58
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where EPA or an Indian tribe has
demonstrated that a tribe has jurisdiction. In those areas of Indian
country, the rule does not have tribal implications and will not impose
substantial direct costs on tribal governments or preempt tribal law as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by February 11, 2020. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action. This action may not be challenged later in proceedings to
enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

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

    Dated: December 2, 2019.
Cathy Stepp,
Regional Administrator, Region 5.

    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

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

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

0
2. In Sec.  52.770, the table in paragraph (e) is amended by revising
the entry for ``Lake and Porter Counties 2008 8-hour Ozone Moderate
Planning Elements'' and adding an entry for ``Lake and Porter Counties
2008 8-hour Ozone Negative Declaration'' immediately following the
entry ``Lake and Porter Counties 2008 8-hour Ozone Moderate Planning
Elements'' to read as follows:

Sec.  52.770  Identification of plan.

* * * * *
    (e) * * *

                       EPA-Approved Indiana Nonregulatory and Quasi-Regulatory Provisions
----------------------------------------------------------------------------------------------------------------
               Title                      Indiana date            EPA approval               Explanation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Lake and Porter Counties 2008 8-     2/28/2017, 1/9/2018,    12/13/2019, [insert     2011 base year emissions
 hour Ozone Moderate Planning         and 10/25/2018.         Federal Register        inventory, Reasonable
 Elements.                                                    citation].              Further Progress (RFP)
                                                                                plan, RFP contingency
                                                                                measure plan, 2017 VOC and
                                                                                NOX motor vehicle
                                                                                emissions budgets,
                                                                                nonattainment new source
                                                                                review certification, VOC
                                                                                RACT Certification, and
                                                                                enhanced motor vehicle
                                                                                inspection and maintenance
                                                                                program certification.
Lake and Porter Counties 2008 8-     10/25/2018............  12/13/2019, [insert     Includes: Fiberglass Boat
 hour Ozone Negative Declarations.                            Federal Register        Manufacturing Materials
                                                              citation].              CTG and Oil and Gas
                                                                                Industry CTG.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2019-26792 Filed 12-12-19; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 79, Number 201 (Friday, October 17, 2014)]
[Rules and Regulations]
[Pages 62336-62337]
[FR Doc No: 2014-24040]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2014-0263; Airspace Docket No. 13-ASW-27]

Establishment of Class E Airspace; Thomas, OK

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: This action establishes Class E airspace at Thomas, OK.
Controlled airspace is necessary to accommodate

new Area Navigation (RNAV) Standard Instrument Approach Procedures at
Thomas Muni Airport. The FAA is taking this action to enhance the
safety and management of Instrument Flight Rules (IFR) operations at
the airport.

DATES: Effective date: 0901 UTC, January 8, 2015. The Director of the
Federal Register approves this incorporation by reference action under
1 CFR Part 51, subject to the annual revision of FAA Order 7400.9 and
publication of conforming amendments.

ADDRESSES: FAA Order 7400.9Y, Airspace Designations and Reporting
Points and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. The Order is also available for
inspection at the National Archives and Records Administration (NARA).
For information on the availability of this material at NARA, call 202-
741-6030, or go to http://www.archives.gov/federal_register/code_of_federal-regulations/ibr_locations.html.
    FAA Order 7400.9, Airspace Designations and Reporting Points, is
published yearly and effective on September 15. For further
information, you can contact the Airspace Policy and Regulations Group,
Federal Aviation Administration, 800 Independence Avenue SW.,
Washington, DC 20591; telephone:<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Raul Garza, Jr., Central Service
Center, Operations Support Group, Federal Aviation Administration,
Southwest Region, 2601 Meacham Blvd., Fort Worth, TX 76137; telephone
817-321-7654.

SUPPLEMENTARY INFORMATION:

History

    On July 14, 2014, the FAA published in the Federal Register a
notice of proposed rulemaking (NPRM) to establish Class E airspace for
the Thomas, OK, area, creating controlled airspace at Thomas Muni
Airport (79 FR 40690) Docket No. FAA-2014-0263. Interested parties were
invited to participate in this rulemaking effort by submitting written
comments on the proposal to the FAA. No comments were received. Class E
airspace designations are published in paragraph 6005 of FAA Order
7400.9Y dated August 6, 2014, and effective September 15, 2014, which
is incorporated by reference in 14 CFR 71.1. The Class E airspace
designations listed in this document will be published subsequently in
the Order.

The Rule

    This action amends Title 14 Code of Federal Regulations (14 CFR)
Part 71 by establishing Class E airspace extending upward from 700 feet
above the surface within a 6.5-mile radius of Thomas Muni Airport,
Thomas, OK, for new standard instrument approach procedures developed
at the airport. Controlled airspace is needed for the safety and
management of IFR operations at the airport.
    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore, this regulation: (1) Is not a ``significant regulatory
action'' under Executive Order 12866; (2) is not a ``significant rule''
under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a regulatory evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that only affects air traffic procedures and air navigation, it is
certified that this rule, when promulgated, does not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.
    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the U.S. Code. Subtitle 1, Section 106, describes
the authority of the FAA Administrator. Subtitle VII, Aviation
Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the
FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
as it establishes controlled airspace at Thomas Muni Airport, Thomas,
OK.

Environmental Review

    The FAA has determined that this action qualifies for categorical
exclusion under the National Environmental Policy Act in accordance
with FAA Order 1050.1E, ``Environmental Impacts: Policies and
Procedures,'' paragraph 311a. This airspace action is not expected to
cause any potentially significant environmental impacts, and no
extraordinary circumstances exist that warrant preparation of an
environmental assessment.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

Adoption of the Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR Part 71 continues to read as
follows:

    Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E. O. 10854,
24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9Y, Airspace Designations and
Reporting Points, dated August 6, 2014, and effective September 15,
2014, is amended as follows:

Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface.

* * * * *

ASW OK E5 Thomas, OK [New]

Thomas Muni Airport, OK
    (Lat. 35[deg]44'01'' N., long. 98[deg]43'50'' W.)

    That airspace extending upward from 700 feet above the surface
within a 6.5-mile radius of Thomas Muni Airport.

    Issued in Fort Worth, Texas, on September 29, 2014.
Robert W. Beck,
Manager, Operations Support Group, ATO Central Service Center.
[FR Doc. 2014-24040 Filed 10-16-14; 8:45 am]
BILLING CODE 4910-14-P


% Food exposure
% Once daily oral exposure, dose from cpfs SS F13_49 foodonly exp distribution.csv 10th percentile
% Female adult, Body weight set to 72.9 kg
% Cecilia Tan
% August 24, 2015

prepare @clear @all
% Setting model parameters
start @NoCallback
use human_parameters_MRP
use preg_female_parameters
BWSW=1;		% Set to 1 if BWT is provided
BWST=72.9;	% Initial BW in kg
PREG=0;		% Not pregnant
TSTOP= 1008; 	% Exposure duration in hrs

%Single daily exposure
DT = xlsRead("Food.xls", "10p", "A1:A43"); % Dosing Times
DORAL=xlsRead("Food.xls", "10p", "B1:B43"); % Dose in ug/kg
prepare time rbcce cv urinetcpy
start@nocallback

mytable = [_time _rbcce _urinetcpy _cv*350.6]; %conc unit = ug/L
save mytable @file='food_10.txt' @format=ascii


[Federal Register Volume 77, Number 233 (Tuesday, December 4, 2012)]
[Notices]
[Pages 71790-71791]
[FR Doc No: 2012-29198]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings 1

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-2719-010; ER10-2718-010; ER10-2578-012; ER10-
2633-010; ER10-2570-010; ER10-2717-010; ER10-3140-009.
    Applicants: East Coast Power Linden Holding, L.L.C., Cogen
Technologies Linden Venture, L.P., Fox Energy Company LLC, Birchwood
Power Partners, L.P., Shady Hills Power Company, L.L.C., EFS Parlin
Holdings, LLC, Inland Empire Energy Center, LLC.
    Description: Supplement to November 6, 2012 Notice of Non-Material
Change in Status of East Coast Power Linden Holding, L.L.C., et al.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5023.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER12-1914-002.
    Applicants: ISO New England Inc.
    Description: Compliance filing-Rel. Review of Rejected List Bids to
be effective 8/1/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5095.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER12-1928-001.
    Applicants: Midwest Independent Transmission System Operator, Inc.
    Description: Midwest Independent Transmission System Operator, Inc.
submits tariff filing per 35: G551 Compliance Filing to be effective 6/
2/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5096.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-413-001.
    Applicants: USG Oregon LLC.
    Description: USG Oregon Amended Tariff Filing to be effective 1/17/
2013.

    Filed Date: 11/26/12.
    Accession Number: 20121126-5147.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-453-000.
    Applicants: Midwest Independent Transmission System Operator, Inc.
    Description: SA 2492 MSCPA-METC Project 1 to be effective 11/27/
2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5097.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-454-000.
    Applicants: NDR Energy Group, LLC.
    Description: NDR Energy Group, LLC Rate Schedule FERC No. 1
Baseline Filing to be effective 11/26/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5099.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-455-000.
    Applicants: Tucson Electric Power Company.
    Description: TEP Concurrence to Navajo Co-Tenancy Agmt and Navajo
Southern Trans. Op. Agmt to be effective 1/22/2013.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5124.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-456-000.
    Applicants: Tucson Electric Power Company
    Description: RS No. 120, TEP Concurrence to Navajo Western Trans.
Op. Agmt. to be effective 3/20/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5129.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-457-000.
    Applicants: Dominion Energy Kewaunee, Inc.
    Description: New Baseline Refile to be effective 11/27/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5135.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-458-000.
    Applicants: Midwest Independent Transmission System Operator, Inc.
    Description: J183 Amended GIA to be effective 11/27/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5154.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-459-000.
    Applicants: Southwest Power Pool, Inc.
    Description: 1911R2 Kansas City Power & Light Company LGIA to be
effective 10/29/2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5175.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-460-000.
    Applicants: Noble Great Plains Windpark, LLC.
    Description: Request for Category 1 Status to be effective 11/27/
2012.
    Filed Date: 11/26/12.
    Accession Number: 20121126-5192.
    Comments Due: 5 p.m. ET 12/17/12.

    Docket Numbers: ER13-461-000.
    Applicants: Pacific Gas and Electric Company.
    Description: 2nd Amendment of the Kirkwood Meadows PUD Engineering
Agreement to be effective 11/28/2012.
    Filed Date: 11/27/12.
    Accession Number: 20121127-5000.
    Comments Due: 5 p.m. ET 12/18/12.

    Docket Numbers: ER13-462-000.
    Applicants: Duke Energy Carolinas, LLC.
    Description: Joint OATT Attachment C-3 amendment to be effective 1/
1/2013.
    Filed Date: 11/27/12.
    Accession Number: 20121127-5090.
    Comments Due: 5 p.m. ET 12/18/12.

    Docket Numbers: ER13-463-000.
    Applicants: NorthWestern Corporation.
    Description: SA 605--NITSA with Bonneville Power Administration to
be effective 11/28/2012.
    Filed Date: 11/27/12.
    Accession Number: 20121127-5091.
    Comments Due: 5 p.m. ET 12/18/12.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: November 27, 2012.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-29198 Filed 12-3-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 12 (Wednesday, January 20, 2016)]
[Notices]
[Pages 3213-3217]
[FR Doc No: 2016-00901]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76890; File No. SR-NYSEArca-2015-130]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Market
Data Fees for the NYSE Arca Options Product

January 13, 2016.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 31, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the fees for NYSE Arca Options
Product, as set forth on the NYSE Arca Options Proprietary Market Data
Fee Schedule (``Fee Schedule''). The Exchange proposes to establish a
multiple data feed fee effective January 1, 2016. Specifically, the
Exchange proposes to establish a new monthly fee, the ``Multiple Data
Feed Fee,'' that would apply to data recipients that take a data feed
for NYSE Arca Options Product in more than two locations. Data
recipients taking NYSE Arca Options Product in more than two locations
would be charged $200 per additional location per product per month.
The text of the proposed rule change is available on the Exchange's Web
site at www.nyse.com, at the principal office of the Exchange, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the fees for NYSE Arca Options
Product,\4\ as set forth on the NYSE Arca Options Proprietary Market
Data Fee Schedule (``Fee Schedule''). The Exchange proposes to
establish a multiple data feed fee effective January 1, 2016.
Specifically, the Exchange proposes to establish a new monthly fee, the
``Multiple Data Feed Fee,'' that would apply to data recipients that
take a data feed for NYSE Arca Options Product in more than two
locations. Data recipients

taking NYSE Arca Options Product in more than two locations would be
charged $200 per additional location per product per month. No new
reporting would be required.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release Nos. 76023 (Sept. 29,
2015), 80 FR 60208 (Oct. 5, 2015) (SR-NYSEArca-2015-83). The single
fee for the NYSE Arca Options Product set forth on the Fee Schedule
is comprised of three data feeds: Arca Options Top, Arca Options
Deep and Arca Options Complex products.
    \5\ Data vendors currently report a unique Vendor Account Number
for each location at which they provide a data feed to a data
recipient. The Exchange considers each Vendor Account Number a
location. For example, if a data recipient has five Vendor Account
Numbers, representing five locations, for the receipt of the NYSE
Arca Options Product, that data recipient will pay the Multiple Data
Feed fee with respect to three of the five locations, or $600.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of section 6 of the Act,\6\ in general, and
sections 6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it
provides an equitable allocation of reasonable fees among users and
recipients of the data and is not designed to permit unfair
discrimination among customers, issuers, and brokers.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

    The fees are also equitable and not unfairly discriminatory because
they will apply to all data recipients that choose to subscribe to NYSE
Arca Options Product.
    The Exchange believes that it is reasonable to require data
recipients to pay a modest additional fee taking a data feed for a
market data product in more than two locations, because such data
recipients can derive substantial value from being able to consume the
product in as many locations as they want. In addition, there are
administrative burdens associated with tracking each location at which
a data recipient receives the product. The Multiple Data Feed Fee is
designed to encourage data recipients to better manage their requests
for additional data feeds and to monitor their usage of data feeds. The
proposed fee is designed to apply to data feeds received in more than
two locations so that each data recipient can have one primary and one
backup data location before having to pay a multiple data feed fee. The
Exchange notes that this pricing is consistent with similar pricing
adopted in 2013 by the Consolidated Tape Association (``CTA'').\8\ The
Exchange also notes that the OPRA Plan imposes a similar charge of $100
per connection for circuit connections in addition to the primary and
backup connections.\9\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 70010 (July 19,
2013), 78 FR 44984 (July 25, 2013) (SR-CTA/CQ-2013-04).
    \9\ See ``Direct Access Fee,'' Options Price Reporting Authority
Fee Schedule Fee Schedule PRA Plan at http://www.opradata.com/pdf/fee_schedule.pdf.
---------------------------------------------------------------------------

    The Exchange notes that NYSE Arca Options Product is entirely
optional. The Exchange is not required to make NYSE Arca Options
Product available or to offer any specific pricing alternatives to any
customers, nor is any firm required to purchase NYSE Arca Options
Product. Firms that do purchase NYSE Arca Options Product do so for the
primary goals of using it to increase revenues, reduce expenses, and in
some instances compete directly with the Exchange (including for order
flow); those firms are able to determine for themselves whether NYSE
Arca Options Product or any other similar products are attractively
priced or not.
    Firms that do not wish to purchase NYSE Arca Options Product have a
variety of alternative market data products from which to choose,\10\
or if NYSE Arca Options Product does not provide sufficient value to
firms as offered based on the uses those firms have or planned to make
of it, such firms may simply choose to conduct their business
operations in ways that do not use NYSE Arca Options Product or use it
at different levels or in different configurations. The Exchange notes
that broker-dealers are not required to purchase proprietary market
data to comply with their best execution obligations.\11\
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    \10\ For example, Chicago Board Options Exchange (``CBOE'')
charges, for its ``Complex Order Book Feed,'' a Distributor Fee of
$3,000 per month, a Professional User Fee of $25 per month and a
Non-Professional User Fee of $1 per month. See the CBOE ``Complex
Order Book Feed'' product and pricing information, available at
https://www.cboe.org/MDX/CSM/OBOOKMain.aspx. NASDAQ OMX PHLX LLC
(``PHLX'') also offers a market data product entitled ``PHLX
Orders,'' which includes order and last sale information for complex
strategies and other market data, and charges a $3,000 internal
monthly fee ($3,500 for external), $2,000 per Distributor and $500
per subscriber. See PHLX ``PHLX Orders'' market data product and
pricing information, available at http://www.nasdaqtrader.com/Micro.aspx?id=PHLXOrders and http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX, respectively.
    \11\ See FINRA Regulatory Notice 15-46, ``Best Execution,''
November 2015.
---------------------------------------------------------------------------

    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010), upheld reliance by the Securities and Exchange Commission
(``Commission'') upon the existence of competitive market mechanisms to
set reasonable and equitably allocated fees for proprietary market
data:

    In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.'

Id. at 535 (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in
1975 U.S.C.C.A.N. 323). The court agreed with the Commission's
conclusion that ``Congress intended that `competitive forces should
dictate the services and practices that constitute the U.S. national
market system for trading equity securities.' '' \12\
---------------------------------------------------------------------------

    \12\ NetCoalition, 615 F.3d at 535.
---------------------------------------------------------------------------

    As explained below in the Exchange's Statement on Burden on
Competition, the Exchange believes that there is substantial evidence
of competition in the marketplace for proprietary market data and that
the Commission can rely upon such evidence in concluding that the fees
established in this filing are the product of competition and therefore
satisfy the relevant statutory standards.\13\ In addition, the
existence of alternatives to these data products, such as options data
from other sources, as described below, further ensures that the
Exchange cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and subscribers can select such
alternatives.
---------------------------------------------------------------------------

    \13\ Section 916 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the ``Dodd-Frank Act'') amended
paragraph (A) of Section 19(b)(3) of the Act, 15 U.S.C. 78s(b)(3),
to make clear that all exchange fees for market data may be filed by
exchanges on an immediately effective basis.
---------------------------------------------------------------------------

    As the NetCoalition decision noted, the Commission is not required
to undertake a cost-of-service or ratemaking approach. The Exchange
believes that, even if it were possible as a matter of economic theory,
cost-based pricing for proprietary market data would be so complicated
that it could not be done practically or offer any significant
benefits.\14\
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    \14\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties and the Commission to cost-regulate a large number
of participants and standardize and analyze extraordinary amounts of
information, accounts, and reports. In addition, and as described
below, it is impossible to regulate market data prices in isolation
from prices charged by markets for other services that are joint
products. Cost-based rate regulation would also lead to litigation
and may distort incentives, including those to minimize costs and to
innovate, leading to further waste. Under cost-based pricing, the
Commission would be burdened with determining a fair rate of return,
and the industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm.

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    For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. An exchange's ability to
price its proprietary market data feed products is constrained by
actual competition for the sale of proprietary market data products,
the joint product nature of exchange platforms, and the existence of
alternatives to the Exchange's proprietary data.
The Existence of Actual Competition
    The market for proprietary data products is currently competitive
and inherently contestable because there is fierce competition for the
inputs necessary for the creation of proprietary data and strict
pricing discipline for the proprietary products themselves. Numerous
exchanges compete with each other for options trades and sales of
market data itself, providing ample opportunities for entrepreneurs who
wish to compete in any or all of those areas, including producing and
distributing their own options market data. Proprietary options data
products are produced and distributed by each individual exchange, as
well as other entities, in a vigorously competitive market. Indeed, the
U.S. Department of Justice (``DOJ'') (the primary antitrust regulator)
has expressly acknowledged the aggressive actual competition among
exchanges, including for the sale of proprietary market data. In 2011,
the DOJ stated that exchanges ``compete head to head to offer real-time
equity data products. These data products include the best bid and
offer of every exchange and information on each equity trade, including
the last sale.'' \15\ Similarly, the options markets vigorously compete
with respect to options data products.\16\
---------------------------------------------------------------------------

    \15\ Press Release, U.S. Department of Justice, Assistant
Attorney General Christine Varney Holds Conference Call Regarding
NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. Abandoning
Their Bid for NYSE Euronext (May 16, 2011), available at http://www.justice.gov/iso/opa/atr/speeches/2011/at-speech-110516.html; see
also Complaint in U.S. v. Deutsche Borse AG and NYSE Euronext, Case
No. 11-cv-2280 (D.C. Dist.) ] 24 (``NYSE and Direct Edge compete
head-to-head . . . in the provision of real-time proprietary equity
data products.'').
    \16\ See, e.g., Securities Exchange Act Release No. 67466 (July
19, 2012), 77 FR 43629 (July 25, 2012) (SR-Phlx-2012-93), which
describes a variety of options market data products and their
pricing.
---------------------------------------------------------------------------

    Moreover, competitive markets for order flow, executions, and
transaction reports provide pricing discipline for the inputs of
proprietary options data products and therefore constrain markets from
overpricing proprietary options market data. Broker-dealers send their
order flow to multiple venues, rather than providing them all to a
single venue, which in turn reinforces this competitive constraint.
Options markets, similar to the equities markets, are highly
fragmented.\17\
---------------------------------------------------------------------------

    \17\ See, e.g., Press Release, TABB Says US Equity Options
Market Makers Need Scalable Technology to Compete in Today's Complex
Market Structure (February 25, 2013), available at http://www.tabbgroup.com/PageDetail.aspx?PageID=16&ItemID=1231;
Fragmentation Vexes Options Markets (April 21, 2014), available at
http://marketsmedia.com/fragmentation-vexes-options-market/.
---------------------------------------------------------------------------

    If an exchange succeeds in competing for quotations, order flow,
and trade executions, then it earns trading revenues and increases the
value of its proprietary options market data products because they will
contain greater quote and trade information. Conversely, if an exchange
is less successful in attracting quotes, order flow, and trade
executions, then its options market data products may be less desirable
to customers using them in support of order routing and trading
decisions in light of the diminished content; options data products
offered by competing venues may become correspondingly more attractive.
Thus, competition for quotations, order flow, and trade executions puts
significant pressure on an exchange to maintain both execution and data
fees at reasonable levels.
    In addition, in the case of products that are also redistributed
through market data vendors, such as Bloomberg and Thompson Reuters,
the vendors themselves provide additional price discipline for
proprietary data products because they control the primary means of
access to certain end users. These vendors impose price discipline
based upon their business models. For example, vendors that assess a
surcharge on data they sell are able to refuse to offer proprietary
products that their end users do not or will not purchase in sufficient
numbers. Vendors will not elect to make available NYSE Arca Options
Product unless their customers request it, and customers will not elect
to pay the proposed fees unless NYSE Arca Options Product can provide
value by sufficiently increasing revenues or reducing costs in the
customer's business in a manner that will offset the fees. All of these
factors operate as constraints on pricing proprietary data products.
Joint Product Nature of Exchange Platform
    Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, proprietary market data and trade
executions are a paradigmatic example of joint products with joint
costs. The decision of whether and on which platform to post an order
will depend on the attributes of the platforms where the order can be
posted, including the execution fees, data availability and quality,
and price and distribution of data products. Without a platform to post
quotations, receive orders, and execute trades, exchange data products
would not exist.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's platform for posting quotes,
accepting orders, and executing transactions and the cost of regulating
the exchange to ensure its fair operation and maintain investor
confidence. The total return that a trading platform earns reflects the
revenues it receives from both products and the joint costs it incurs.
    Moreover, an exchange's broker-dealer customers generally view the
costs of transaction executions and market data as a unified cost of
doing business with the exchange. A broker-dealer will only choose to
direct orders to an exchange if the revenue from the transaction
exceeds its cost, including the cost of any market data that the
broker-dealer chooses to buy in support of its order routing and
trading decisions. If the costs of the transaction are not offset by
its value, then the broker-dealer may choose instead not to purchase
the product and trade away from that exchange. There is substantial
evidence of the strong correlation between order flow and market data
purchases. For example, in September 2015, more than 80% of the
transaction volume on each of NYSE Arca and NYSE Arca's affiliates New
York Stock Exchange LLC (``NYSE'') and NYSE MKT LLC (``NYSE MKT'') was
executed by market participants that purchased one or more proprietary
market data products (the 20 firms were not the

same for each market). A supra-competitive increase in the fees for
either executions or market data would create a risk of reducing an
exchange's revenues from both products.
    Other market participants have noted that proprietary market data
and trade executions are joint products of a joint platform and have
common costs.\18\ The Exchange agrees with and adopts those discussions
and the arguments therein. The Exchange also notes that the economics
literature confirms that there is no way to allocate common costs
between joint products that would shed any light on competitive or
efficient pricing.\19\
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 72153 (May 12,
2014), 79 FR 28575, 28578 n.15 (May 16, 2014) (SR-NASDAQ-2014-045)
(``[A]ll of the exchange's costs are incurred for the unified
purposes of attracting order flow, executing and/or routing orders,
and generating and selling data about market activity. The total
return that an exchange earns reflects the revenues it receives from
the joint products and the total costs of the joint products.'').
See also Securities Exchange Act Release No. 62907 (Sept. 14, 2010),
75 FR 57314, 57317 (Sept. 20, 2010) (SR-NASDAQ-2010-110), and
Securities Exchange Act Release No. 62908 (Sept. 14, 2010), 75 FR
57321, 57324 (Sept. 20, 2010) (SR-NASDAQ-2010-111).
    \19\ See generally Mark Hirschey, Fundamentals of Managerial
Economics, at 600 (2009) (``It is important to note, however, that
although it is possible to determine the separate marginal costs of
goods produced in variable proportions, it is impossible to
determine their individual average costs. This is because common
costs are expenses necessary for manufacture of a joint product.
Common costs of production--raw material and equipment costs,
management expenses, and other overhead--cannot be allocated to each
individual by-product on any economically sound basis. . . . Any
allocation of common costs is wrong and arbitrary.''). This is not
new economic theory. See, e.g., F. W. Taussig, ``A Contribution to
the Theory of Railway Rates,'' Quarterly Journal of Economics V(4)
438, 465 (July 1891) (``Yet, surely, the division is purely
arbitrary. These items of cost, in fact, are jointly incurred for
both sorts of traffic; and I cannot share the hope entertained by
the statistician of the Commission, Professor Henry C. Adams, that
we shall ever reach a mode of apportionment that will lead to
trustworthy results.'').
---------------------------------------------------------------------------

    Analyzing the cost of market data product production and
distribution in isolation from the cost of all of the inputs supporting
the creation of market data and market data products will inevitably
underestimate the cost of the data and data products because it is
impossible to obtain the data inputs to create market data products
without a fast, technologically robust, and well-regulated execution
system, and system and regulatory costs affect the price of both
obtaining the market data itself and creating and distributing market
data products. It would be equally misleading, however, to attribute
all of an exchange's costs to the market data portion of an exchange's
joint products. Rather, all of an exchange's costs are incurred for the
unified purposes of attracting order flow, executing and/or routing
orders, and generating and selling data about market activity. The
total return that an exchange earns reflects the revenues it receives
from the joint products and the total costs of the joint products.
    As noted above, the level of competition and contestability in the
market is evident in the numerous alternative venues that compete for
order flow, including 13 options self-regulatory organization (``SRO'')
markets. Three of the 13 have launched operations since December
2012.\20\ The Exchange believes that these new entrants demonstrate
that competition is robust.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release Nos. 70050 (July 26,
2013), 78 FR 46622 (August 1, 2013) (approving exchange registration
for Topaz Exchange, LLC) (known as ISE Gemini); 68341 (December 3,
2012), 77 FR 73065 (December 7, 2012) (approving exchange
registration for Miami International Securities Exchange LLC
(``Miami Exchange'')); and 75650 (August 7, 2015), 80 FR 48600
(August 13, 2015) (establishing rules governing the trading of
options on the EDGX options market).
---------------------------------------------------------------------------

    Competition among trading platforms can be expected to constrain
the aggregate return that each platform earns from the sale of its
joint products, but different trading platforms may choose from a range
of possible, and equally reasonable, pricing strategies as the means of
recovering total costs. For example, some platforms may choose to pay
rebates to attract orders, charge relatively low prices for market data
products (or provide market data products free of charge), and charge
relatively high prices for accessing posted liquidity. Other platforms
may choose a strategy of paying lower rebates (or no rebates) to
attract orders, setting relatively high prices for market data
products, and setting relatively low prices for accessing posted
liquidity. For example, BATS Global Markets (``BATS'') and Direct Edge,
which previously operated as ATSs and obtained exchange status in 2008
and 2010, respectively, provided certain market data at no charge on
their Web sites in order to attract more order flow, and used revenue
rebates from resulting additional executions to maintain low execution
charges for their users.\21\ In this environment, there is no economic
basis for regulating maximum prices for one of the joint products in an
industry in which suppliers face competitive constraints with regard to
the joint offering.
---------------------------------------------------------------------------

    \21\ This is simply a securities market-specific example of the
well-established principle that in certain circumstances more sales
at lower margins can be more profitable than fewer sales at higher
margins; this example is additional evidence that market data is an
inherent part of a market's joint platform.
---------------------------------------------------------------------------

Existence of Alternatives
    The large number of SROs that currently produce proprietary data or
are currently capable of producing it provides further pricing
discipline for proprietary data products. Each SRO is currently
permitted to produce and sell proprietary data products, and many
currently do, including but not limited to the Exchange, NYSE MKT,
CBOE, C2 Options Exchange, Inc., ISE, ISE Gemini, NASDAQ, PHLX, BX,
BATS and Miami Exchange.
    The fact that proprietary data from vendors can bypass SROs is
significant in two respects. First, non-SROs can compete directly with
SROs for the production and sale of proprietary data products. By way
of example, BATS and NYSE Arca both published proprietary data on the
Internet before registering as exchanges. Second, because a single
order or transaction report can appear in an SRO proprietary product, a
non-SRO proprietary product, or both, the amount of data available via
proprietary products is greater in size than the actual number of
orders and transaction reports that exist in the marketplace. Because
market data users can find suitable substitutes for most proprietary
market data products, a market that overprices its market data products
stands a high risk that users may substitute another source of market
data information for its own.
    In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid and inexpensive. The history
of electronic trading is replete with examples of entrants that swiftly
grew into some of the largest electronic trading platforms and
proprietary data producers: Archipelago, Bloomberg Tradebook, Island,
RediBook, Attain, TrackECN, BATS and Direct Edge. As noted above, BATS
launched as an ATS in 2006 and became an exchange in 2008, while Direct
Edge began operations in 2007 and obtained exchange status in 2010. As
noted above, three new options exchanges have launched operations since
December 2012.\22\
---------------------------------------------------------------------------

    \22\ See supra note 20.
---------------------------------------------------------------------------

    In determining the proposed fees, the Exchange considered the
competitiveness of the market for proprietary options data and all of
the implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to

establish fair, reasonable, and not unreasonably discriminatory fees
and an equitable allocation of fees among all users. The existence of
numerous alternatives to the Exchange's products, including proprietary
data from other sources, ensures that the Exchange cannot set
unreasonable fees, or fees that are unreasonably discriminatory, when
vendors and subscribers can elect these alternatives or choose not to
purchase a specific proprietary data product if the attendant fees are
not justified by the returns that any particular vendor or data
recipient would achieve through the purchase.

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

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

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

    The foregoing rule change is effective upon filing pursuant to
section 19(b)(3)(A) \23\ of the Act and subparagraph (f)(2) of Rule
19b-4 \24\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
section 19(b)(2)(B) \25\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-NYSEArca-2015-130 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 No. SR-NYSEArca-2015-130. 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 such 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 No. SR-NYSEArca-2015-130, and should
be submitted on or before February 10, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00901 Filed 1-19-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 18 (Tuesday, January 28, 2020)]
[Notices]
[Pages 5058-5060]
[FR Doc No: 2020-01367]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88013; File No. SR-ICEEU-2019-027]

Self-Regulatory Organizations; ICE Clear Europe Limited; Order
Approving Proposed Rule Change, as Modified by Partial Amendment No. 1,
Relating to Amendments to the ICE Clear Europe CDS Procedures

January 22, 2020.

I. Introduction

    On December 2, 2019, ICE Clear Europe Limited (``ICE Clear
Europe''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend its CDS Procedures to implement the 2019
Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit
Derivatives Definitions (the ``NTCE Supplement''). On December 10,
2019, ICE Clear Europe filed Partial Amendment No. 1 to the proposed
rule change.\3\ The proposed rule change, as modified by Partial
Amendment No. 1, was published for comment in the Federal Register on
December 18, 2019.\4\ The Commission did not receive comments on the
proposed rule change, as modified by Partial Amendment No. 1. For the
reasons discussed below, the Commission is approving the proposed rule
change, as modified by Partial Amendment No. 1 (hereinafter, ``proposed
rule change'').
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Partial Amendment No. 1 amended the filing to remove from
the filed Exhibit 5 certain dates in brackets and replace them with
new dates and remove other language left in brackets; update page
numbering in the filed Exhibit 2 so that the page numbering in the
filed Exhibit 2 states ``of 59'' instead of ``of 60''; and update a
reference to paragraph 8(c) of the CDS Procedures in the original
filing so that it instead refers to paragraph 8.1(c) of the CDS
Procedures.
    \4\ Securities Exchange Act Release No. 87722 (Dec. 12, 2019),
84 FR 69421 (Dec. 18, 2019) (SR-ICEEU-2019-027) (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

A. Background

    Following certain events in the credit default swap (``CDS'') \5\
market, the International Swaps and Derivatives Association, Inc.
(``ISDA''), in consultation with market participants, developed and
published the NTCE Supplement.\6\ The NTCE Supplement reflects an
effort by ISDA to address so-called narrowly-tailored credit events.
According to ISDA, a narrowly-tailored credit event is an arrangement
between a participant in the CDS marketplace and a corporation, through
which the corporation triggers a credit event on CDS covering the
corporation, thereby increasing payment to the buyers of CDS protection
on the corporation while minimizing the impact on the corporation.\7\
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    \5\ The following description is substantially excerpted from
the Notice. See Notice, 84 FR at 69421. Capitalized terms not
otherwise defined herein have the meanings assigned to them in the
ICE Clear Europe Rules or CDS Procedures.
    \6\ See ISDA Board Statement on Narrowly Tailored Credit Events,
available at https://www.isda.org/2018/04/11/isda-board-statement-on-narrowly-tailored-credit-events/; see also Joint Statement on
Opportunistic Strategies in the Credit Derivatives Market (``The
continued pursuit of various opportunistic strategies in the credit
derivatives markets, including but not limited to those that have
been referred to as `manufactured credit events,' may adversely
affect the integrity, confidence and reputation of the credit
derivatives markets, as well as markets more generally.'') available
at https://www.sec.gov/news/press-release/2019-106.
    \7\ See ISDA Board Statement on Narrowly Tailored Credit Events,
available at https://www.isda.org/2018/04/11/isda-board-statement-on-narrowly-tailored-credit-events/.
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    The NTCE Supplement, if applied to a CDS transaction, would make
two principal changes to the 2014 ISDA Credit Derivatives Definitions
to address narrowly-tailored credit events.\8\ First, the NTCE
Supplement would change the definition of the ``Failure to Pay'' credit
event to exclude certain narrowly-tailored credit events through a new
Credit Deterioration Requirement. The Credit Deterioration Requirement
would provide that a failure of a corporation to make a payment on an
obligation would not constitute a Failure to Pay Credit Event
triggering CDS on that corporation if the failure does not directly or
indirectly result from, or result in, a deterioration in the
creditworthiness or financial condition of the corporation.\9\ Thus, a
narrowly-tailored or manufactured failure to pay that does not reflect
or result in a credit deterioration by a corporation would not
constitute a Credit Event for CDS Contracts that incorporate the NTCE
Supplement and thus would not necessarily trigger payment to buyers of
CDS protection. The NTCE Supplement would also provide guidance related
to the factors that would be relevant to determining whether a Failure
to Pay Credit Event satisfies the Credit Deterioration Requirement. As
would be the case with other Failure to Pay Credit Events under CDS
contracts, the relevant Credit Derivatives Determinations Committee
would, in the normal course, make the determination as to whether a
Failure to Pay Credit Event satisfies the Credit Deterioration
Requirement.
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    \8\ See ISDA 2019 NTCE Protocol FAQ, available at https://www.isda.org/protocol/isda-2019-ntce-protocol.
    \9\ See ISDA 2019 Narrowly Tailored Credit Event Supplement to
the 2014 ISDA Credit Derivatives Definitions (Published on July 15,
2019), available at https://www.isda.org/a/KDqME/Final-NTCE-Supplement.pdf.
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    Second, the NTCE Supplement would reduce the amount of payout a CDS
protection buyer could claim in certain circumstances by imposing a new
provision for Fallback Discounting. Fallback Discounting would discount
a CDS protection buyer's claim for payout under a CDS contract where
that claim for payout is based on an obligation issued by a corporation
at a discount.\10\ This would address the potential scenario where a
corporation issues a bond at a substantial discount to its principal
amount and the bond is delivered in settlement of a CDS at its full
principal amount. In this scenario, Fallback Discounting would prevent
a buyer of CDS protection from using the full principal amount of the
bond issued at a discount as a basis for payout under the CDS contract.
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    \10\ Id.
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B. Changes to CDS Procedures

    As described below, the proposed rule change would apply the NTCE
Supplement to any non-sovereign single-name and index CDS contract that
incorporates the 2014 ISDA definitions (a ``2014-type CDS Contract'')
and that is open on, or entered into after, January 27, 2020 (or such
later date as designated by ICE Clear Europe by Circular).
    The proposed rule change would add new defined terms to the CDS
Procedures to include new definitions related to the NTCE Supplement.
The proposed rule change would further define the effective date of the
changes, the ``NTCE Protocol Effective Date,'' as January 27, 2020, or
such later date as designated by ICE Clear Europe by Circular.
    The proposed rule change would next incorporate these new
definitions into the defined terms associated with non-

sovereign single-name and index CDS contracts by amending the CDS
Procedures to specify that the applicable contract definitions shall
include the NTCE Supplement. This change would apply to any 2014-type
CDS Contract that is part of an Open Contract Position on the NTCE
Protocol Effective Date or is entered into on or after the NTCE
Protocol Effective Date.
    In addition to this change, the proposed rule change would make
specific changes to the terms associated with single-name CDS and index
CDS to update those terms in light of the NTCE Supplement. With respect
to single-name CDS, the proposed rule change would update certain
single-name CDS contracts that are open on the NTCE Protocol Effective
Date to reference the new physical settlement matrix that will apply to
new single-name CDS entered into after the NTCE Protocol Effective
Date. This change would apply to CDS with non-sovereign reference
entities that are 2014-type CDS Contracts.
    With respect to index CDS, the proposed rule change would amend the
terms associated with index CDS contracts to include the new standard
terms supplement and confirmations issued in response to the NTCE
Supplement. Such new standard terms supplement and confirmations would
incorporate the NTCE Supplement. For new index CDS, the proposed rule
change would apply the new standard terms supplement and confirmations
incorporating the NTCE Supplement to any index CDS submitted for
clearing on or after the NTCE Protocol Effective Date. For open index
CDS, the proposed rule change would apply the NTCE Supplement to 2014-
type CDS Contracts and those that include a 2014-type CDS Contract as a
component position on the NTCE Protocol Effective Date. The proposed
rule change therefore would convert existing index CDS contracts to
reference the new standard terms incorporating the NTCE Supplement,
thereby ensuring that those existing contracts would be fungible with
new index CDS contracts after the NTCE Protocol Effective Date.

III. Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
the proposed rule change is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to the
organization.\11\ For the reasons given below, the Commission finds
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \12\ and Rule 17Ad-22(e)(1) thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(2)(C).
    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 17 CFR 240.17Ad-22(e)(1).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of ICE Clear Europe be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions, to assure the safeguarding of securities and funds which
are in the custody or control of ICE Clear Europe or for which it is
responsible, and, in general, to protect investors and the public
interest.\14\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    As described above, the NTCE Supplement would amend the underlying
legal terms applicable to CDS contracts to which it applies by, among
other things, limiting Credit Events to those that reflect a
deterioration in the creditworthiness or financial condition of the
relevant company. It also would reduce the amount of payout a CDS
protection buyer could claim in certain circumstances where the claim
for payout is based on an obligation issued by a company at a discount.
Further, because ISDA has determined that the Protocol Effectiveness
Condition is satisfied and set an implementation date of January 27,
2020, the NTCE Supplement will apply to all single-name CDS contracts
and components of index CDS contracts that incorporate the 2014 ISDA
Credit Derivatives Definitions currently in place or entered into on or
after that date.
    As noted above, because ICE Clear Europe will clear and settle CDS
contracts that are subject to the changes being made by the NTCE
Supplement, the proposed rule change would amend the CDS Procedures to
incorporate the amendments resulting from the NTCE Supplement, thereby
ensuring that ICE Clear Europe's CDS Procedures accurately reflect and
appropriately apply the legal terms and conditions applicable to such
CDS contracts.
    In the Commission's view, a lack of clarity in the underlying legal
terms and conditions applicable to the transactions that ICE Clear
Europe clears and settles could hinder ICE Clear Europe's ability to
promptly and accurately clear and settle such transactions. Likewise,
disputes regarding the applicable legal terms and conditions of such
transactions could lead to disputes or confusion regarding the
necessary and appropriate margin submitted in connection with such
transactions, thereby threatening ICE Clear Europe's ability to
safeguard such margin. Accordingly, by making the changes described
above, and in particular by ensuring ICE Clear Europe's CDS Procedures
accurately reflect and appropriately apply the legal terms and
conditions applicable to the CDS contracts that are cleared and settled
by ICE Clear Europe, the Commission believes that the proposed rule
change would help ensure that ICE Clear Europe's CDS Procedures
continue to promote the prompt and accurate clearance and settlement of
such CDS contracts and assure the safeguarding of securities and funds
in ICE Clear Europe's custody and control. For these same reasons the
Commission also finds that the proposed rule change would, in general,
protect investors and the public interest.
    Therefore, the Commission finds that the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act.\15\
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    \15\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(1)

    Rule 17Ad-22(e)(1) requires that ICE Clear Europe establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to provide for a well-founded, clear, transparent,
and enforceable legal basis for each aspect of its activities in all
relevant jurisdictions.\16\ As discussed above, the proposed rule
change would help to clarify and ensure that ICE Clear Europe's CDS
Procedures accurately reflect and appropriately apply the legal terms
and conditions applicable to the CDS contracts that are cleared and
settled by ICE Clear Europe. The Commission believes that this, in
turn, would help ensure that the ICE Clear Europe CDS Procedures
provide a consistent and enforceable legal basis for clearing and
settling CDS contracts to which the NTCE Supplement applies in light of
the amendments made by the NTCE Supplement.
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    \16\ 17 CFR 240.17Ad-22(e)(1).
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    Therefore, the Commission finds that the proposed rule change is
consistent with Rule 17Ad-22(e)(1).\17\
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    \17\ Id.
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of

Section 17A(b)(3)(F) of the Act \18\ and Rule 17Ad-22(e)(1)
thereunder.\19\
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    \18\ 15 U.S.C. 78q-1(b)(3)(F).
    \19\ 17 CFR 240.17Ad-22(e)(1).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\20\ that the proposed rule change, as modified by Partial Amendment
No. 1 (SR-ICEEU-2019-027), be, and hereby is, approved.\21\
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    \20\ 15 U.S.C. 78s(b)(2).
    \21\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-01367 Filed 1-27-20; 8:45 am]
 BILLING CODE 8011-01-P