[Federal Register: January 29, 2010 (Volume 75, Number 19)]
[Notices]
[Page 4884-4887]
[DOCID:fr29ja10-119]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61398; File No. SR-Phlx-2009-116]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1
Thereto, by NASDAQ OMX PHLX, Inc. Relating to Transaction Fees and
Rebates for Options Overlying Standard and Poor's Depositary Receipts
(``SPDRs'')

January 22, 2010.
    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 December 31, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' 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. On
January 5, 2010, the Exchange filed Amendment No. 1 thereto. The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Fee Schedule by
adopting, for a two-month pilot period, per contract transaction fees
for options overlying Standard and Poor's Depositary Receipts/SPDRs
(``SPY'').\3\ The fees would apply to: (i) Transaction sides that
remove liquidity from the Exchange's disseminated market, and (ii) Firm
and broker-dealer quotes and orders that are included in the Exchange's
disseminated market.
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    \3\ SPY options are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.
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    Additionally, the Exchange proposes to offer a transaction rebate
to certain liquidity providers, as described more fully below.
    While changes to the Exchange's fee schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be operative for trades settling on or after January 4,
2010. The proposed changes to the fee schedule will be effective on a
pilot basis, scheduled to expire March 2, 2010.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/
Filings/, at the principal office of the Exchange, at the Commission's
Public Reference Room, and on the Commission's Web site at http://
www.sec.gov.

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 purpose of the proposed rule change is to increase liquidity
and to attract order flow in SPY options on the Exchange. The purpose
of this Amendment No. 1 is to correct a typographical error by stating
that the Exchange proposes to assess a transaction charge of $0.35 per
contract to Firms and $0.45 per contract to broker-dealers for adding
liquidity.
Transaction Charges for Removing Liquidity
    The Exchange proposes to assess a per-contract transaction charge
in SPY options on six different categories of market participants that
submit orders and/or quotes that remove, or ``take,'' liquidity from
the Exchange. The per-contract transaction charge would depend on the
category of market participant submitting an order or quote to the
Exchange that removes liquidity.
    The proposed amendments to the Exchange's Fee Schedule would break
down market participants by the following six categories: (i)
Specialists, Streaming Quote Traders (``SQTs''),\4\ and Remote
Streaming Quote Traders (``RSQTs''),\5\ (ii) customers that submit
orders that are not Directed Orders \6\ (``Non-Directed Customers'');
(iii) customers that submit Directed Orders (``Directed Customers'');
\7\ (iv) specialists, SQTs and RSQTs that receive Directed Orders
(``Directed Participants'' or ``Directed Specialists, RSQTs, or SQTs''
\8\); (v) Firms; and (vi) broker-dealers.
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    \4\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
option quotations electronically through an electronic interface
with AUTOM via an Exchange approved proprietary electronic quoting
device in eligible options to which such SQT is assigned. See
Exchange Rule 1014(b)(ii)(A).
    \5\ An RSQT is an ROT that is a member or member organization
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically through AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such quotations
electronically from off the floor of the Exchange. See Exchange Rule
1014(b)(ii)(B).
    \6\ ``Directed Order'' means any customer order (other than a
stop or stop-limit order as defined in Rule 1066) to buy or sell
which has been directed to a particular specialist, RSQT, or SQT by
an Order Flow Provider, as defined below. To qualify as a Directed
Order, an order must be delivered to the Exchange via AUTOM.
    \7\ For the purposes of this fee, a Directed Customer is an
order from a customer directed to a Directed Participant for
execution. A Directed Participant is a Specialist, SQT, or RSQT that
executes an order directed to it for execution.
    \8\ See Exchange Rule 1080(l), ``* * * The term `Directed
Specialist, RSQT, or SQT' means a specialist, RSQT, or SQT that
receives a Directed Order.'' A Directed Participant has a higher
quoting requirement as compared with a specialist, SQT or RSQT who
is not acting as a Directed Participant. See Exchange Rule 1014.
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    The per-contract transaction charges to be assessed on participants
who submit proprietary quotes and/or orders that remove liquidity in
SPY options from the Exchange in SPY options are, by category:

------------------------------------------------------------------------
                 Category                              Charge
------------------------------------------------------------------------
Specialist, SQT, RSQT.....................  $0.40 per contract.
Non-Directed Customer.....................  $0.40 per contract.
Directed Customer.........................  $0.25 per contract.
Directed Participants.....................  $0.30 per contract.
Firms.....................................  $0.45 per contract.
Broker-Dealers............................  $0.45 per contract.
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Transaction Charges for Adding Liquidity
    The Exchange proposes to assess a transaction charge of $0.35 per
contract to Firms and $0.45 per contract to broker-dealers.
Rebates
    In order to promote and encourage liquidity in SPY options, the
Exchange proposes to amend its fee schedule to include a per-contract
rebates relating to transaction charges for orders or quotations that
add liquidity in SPY options. The amount of the rebate would depend on
the category of participant whose order or quote was executed as part
of the PHLX Best Bid and Offer. Specifically, the per-contract rebates
are, by category:

------------------------------------------------------------------------
                 Category                              Rebate
------------------------------------------------------------------------
Specialist, SQT, RSQT.....................  $0.20 per contract.
Non-Directed Customer.....................  $0.05 per contract.
Directed Customer.........................  $0.20 per contract.
Directed Participants.....................  $0.25 per contract.
Firms.....................................  N/A
Broker-Dealers............................  N/A
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Applicability of Other Fees
     The $900,000 monthly cap that is currently applicable to
ROTs and specialists transacting equity options will not be applicable
to the fees described herein.\9\
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    \9\ See proposed rule change SR-Phlx-2009-104.
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     The $85,000 Firm Related Equity Option Cap will not be
applicable to the fees described herein.\10\
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    \10\ See proposed rule change SR-Phlx-2009-104.
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     The Exchange pays a per-contract Market Access Provider
(``MAP'') Subsidy to any Exchange member organization that qualifies as
an Eligible MAP. The MAP Subsidy will not apply to electronic
transactions in SPY.\11\ \12\
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    \11\ An ``Eligible MAP'' is defined in the Exchange's Fee
Schedule in the Market Access Provider Subsidy.
    \12\ See Securities Exchange Act Release No. 59537 (March 9,
2009), 74 FR 11151 (March 16, 2009) (SR-Phlx-2009-19).
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     Payment for Order Flow fees \13\ will not be collected on
transactions in SPY.
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    \13\ See Securities Exchange Act Release No. 59841 (April 29,
2009), 74 FR 21035 (May 6, 2009) (SR-Phlx-2009-38).
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     All electronic auctions will be free to Non-Directed
Customers, Directed Customers, Directed Participants, Specialists, SQTs
and RSQTs.\14\ Electronic auctions include, without limitation, the
Complex Order Live Auction (``COLA''),\15\ and Quote and Market Exhaust
auctions.\16\ Firms and broker-dealers will be assessed the appropriate
charge for removing liquidity.
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    \14\ With respect to electronic auctions, it is systemically
difficult to determine which participant(s) would qualify for a
rebate, therefore the Exchange has determined not to apply the
rebate to transactions resulting from electronic auctions.
    \15\ COLA is the automated Complex Order Live Auction process. A
COLA may take place upon identification of the existence of a COLA-
eligible order either: (1) Following a COOP, or (2) during normal
trading if the Phlx XL system receives a Complex Order that improves
the cPBBO. See Exchange Rule 1080.
    \16\ Market Exhaust occurs when there are no Phlx XL II
participant (specialist, SQT or RSQT) quotations in the Exchange's
disseminated market for a particular series and an initiating order
in the series is received. In such a circumstance, the Phlx XL II
system, using Market Exhaust, will initiate a Market Exhaust auction
for the initiating order. Under Market Exhaust, any order volume
that is routed to away markets will be marked as an Intermarket
Sweep Order or ``ISO.'' See Exchange Rule 1082.
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     The fees described herein will not apply to contracts
executed during the Exchange's opening process.\17\ Firms and broker-
dealers will be assessed the appropriate charge for removing liquidity.
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    \17\ See Exchange Rule 1017.
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     The Exchange pays an Options Floor Broker Subsidy to
member organizations with Exchange registered floor brokers for
eligible contracts that are entered into the Exchange's Options Floor
Broker Management System. The Options Floor Broker Subsidy will be
applicable to the transactions described herein.\18\
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    \18\ See Securities Exchange Act Release No. 60578 (August 27,
2009), 74 FR 45666 (September 3, 2009) (SR-Phlx-2009-72).
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     The Exchange assesses a Cancellation Fee of $2.10 per
order on member organizations for each

cancelled electronically delivered customer order in excess of the
number of customer orders executed on the Exchange by that member
organization in a given month.\19\ The Cancellation Fee will continue
to apply.
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    \19\ See Securities Exchange Act Release No. 60188 (June 29,
2009), 74 FR 32986 (July 9, 2009) (SR-Phlx-2009-48).
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     Transaction fees for Linkage ``P'' and ``P/A'' Orders
would be applicable to the transaction listed herein.\20\
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    \20\ See Securities Exchange Act Release No. 60210 (July 1,
2009), 74 FR 32989 (July 9, 2009) (SR-Phlx-2009-53). This pilot is
scheduled to expire on July 31, 2010. The Exchange understands that
certain exchanges continue to utilize Linkage to send P/A Orders.
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     Regular Equity Option transaction fees will apply to
Complex Orders that are electronically executed against a contra-side
order with the same Complex Order Strategy.
     Single contra-side orders that are executed against the
individual components of Complex Orders will be charged under the
proposed Fee Schedule. The individual components of such a Complex
Order will not be charged.
     SPY transactions executed via open outcry will be subject
to the standard equity options fee schedule. However, if one side of
the transaction is executed using the Options Floor Broker Management
System \21\ and any other side of the trade was the result of an
electronically submitted order or a quote, then the fees proposed
herein will apply to the FBMS contracts and contracts that are executed
electronically all sides of the transaction.
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    \21\ The Options Floor Broker Management System (``FBMS'') is a
component of the Exchange's system designed to enable Floor Brokers
and/or their employees to enter, route and report transactions
stemming from options orders received on the Exchange. The Options
Floor Broker Management System also is designed to establish an
electronic audit trail for options orders represented and executed
by Floor Brokers on the Exchange, such that the audit trial provides
an accurate, time-sequenced record of electronic and other orders,
quotations and transactions on the Exchange, beginning with the
receipt of an order by the Exchange, and further documenting the
life of the order through the process of execution, partial
execution, or cancellation of that order. AUTOM is the Exchange's
electronic order delivery and reporting system, which provides for
the automatic entry and routing of Exchange-listed equity options,
index options and U.S. dollar-settled foreign currency options
orders to the Exchange trading floor. See Exchange Rule 1080,
Commentary .06.
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    The proposed changes to the fee schedule will be effective for
transactions settling on or after January 4, 2010, and will be
effective for a pilot period scheduled to expire March 2, 2010.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \22\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \23\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The impact of the amendments
upon the net fees paid by a particular market participant will depend
on a number of variables, including its monthly volumes, the order
types it uses, and the prices of its quotes and orders (i.e., its
propensity to add or remove liquidity).
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    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(4).
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    Specifically, the Exchange believes that its proposal to charge a
different fee and to pay a different rebate for Non-Directed Customers
relative to Directed Customers is an equitable allocation of reasonable
fees and other charges among Exchange members, and is consistent with
the current fee schedule and industry fee assessments of member firms
that allow for different rates to be charged for different order types
originated by dissimilarly classified market participants.\24\
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    \24\ NYSE Amex currently charges different rates to different
market participants in assessing its firm facilitation fee. See
Securities Exchange Act Release No. 60378 (July 23, 2009), 74 FR
38245 (July 31, 2009) (SR-NYSEAmex 2009-38).
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    The Exchange notes that the vast majority of order flow that is
routed to the Exchange from away markets disseminating inferior prices
is customer order flow that is not directed to a particular specialist,
SQT or RSQT. The Exchange believes that this Non-Directed Customer
order flow represents orders that were previously routed to the
Exchange as Principal Acting as Agent Orders (``P/A Orders'') \25\ via
the Intermarket Option Linkage (``Linkage'') under the Plan for the
Purpose of Creating and Operating an Intermarket Option Linkage (the
``Plan''). The participating U.S. options exchanges determined to
withdraw from the Plan and, on June 17, 2008, the Exchange filed an
executed copy of the Options Order Protection and Locked/Crossed Market
Plan (``New Plan''), joining all other approved options markets in
adopting the New Plan. The concept of P/A orders routed through a
central Linkage ``hub'' does not exist under the New Plan. P/A Orders
were routed to remove liquidity from the Exchange under the Plan;
orders routed from away markets to remove liquidity are now routed
directly to the Exchange, in large part as Non-Directed Customer
orders.
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    \25\ A P/A order is an order for the principal account of a
specialist (or equivalent entity on another participant exchange
that is authorized to represent public customer orders), reflecting
the terms of a related unexecuted Public Customer order for which
the specialist is acting as agent.
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    The Exchange assessed transaction fees applicable to the execution
of P/A Orders, but did not assess transaction fees on customer orders
sent to the Exchange outside the Linkage. The Exchange also charged
different per-contract transaction fees for P/A Orders and Principal
Orders (``P Orders'') \26\ sent to remove liquidity from the Exchange
The Exchange charged $0.45 per option contract for P Orders sent to the
Exchange and $.30 per contract for P/A Orders.\27\ The Exchange
believes that Non-Directed Customers now ``stand in the shoes'' of what
were previously P/A Orders, and the proposed transaction charges
applicable to Non-Directed Customers are not unfairly discriminatory
relative to the proposed fees for Directed Customers, based upon the
precedent of charging for P/A Orders but not for customer orders sent
outside the Linkage.
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    \26\ A Principal Order is an order for the principal account of
an Eligible Market Maker and is not a P/A Order.
    \27\ See Securities Exchange Act Release No. 60210 (July 1,
2009), 74 FR 32989 (July 9, 2009) (SR-Phlx-2009-53).
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    Order flow providers that control customer order flow and route
customer orders to exchanges are responsible to obtain the best pricing
available for their customers. An order flow provider has the ability
to enter into arrangements whereby they may receive consideration for
directing the customer order to a specific market maker (specialists,
SQTs and/or RSQTs). Under the proposal, a Directed Customer would be
charged a lower per-contract transaction fee, and would receive a
higher rebate, based on such an arrangement.
    The Exchange operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive. The
Exchange believes that the fees it charges for options overlying SPYs
remain competitive with fees charged by other venues and therefore
continue to be reasonable and equitably allocated to those members that
opt to direct orders to the Exchange rather than competing venues.

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 not necessary or appropriate in
furtherance of the purposes of the Act.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \28\ and paragraph (f)(2) of Rule 19b-4 \29\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission may summarily abrogate 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.
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    \28\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \29\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2009-116 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2009-116. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 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-Phlx-2009-116 and should be
submitted on or before February 19, 2010.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1843 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 209 (Tuesday, October 29, 2013)]
[Notices]
[Pages 64591-64592]
[FR Doc No: 2013-25585]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Notice of Intent To Rule on Change in Use of Aeronautical
Property at Bowman Field Airport, Louisville, KY

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Request for public comment.

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SUMMARY: The Federal Aviation Administration is requesting public
comment on request by the Louisville Regional Airport Authority to
temporarily change a portion of airport property from aeronautical to
non-aeronautical use at the Bowman Field Airport, Louisville, Kentucky.
The request consists approximately of 0.41 acres of temporary use. This
action is taken under the provisions of Section 125 of the Wendell H.
Ford Aviation Investment Reform Act for the 21st Century (AIR 21).

DATES: Comments must be received on or before November 29, 2013.

ADDRESSES: Documents are available for review at the Louisville
Regional Airport Authority, 700 Administration Drive, Louisville, KY
40209; and the FAA Memphis Airports District Office, 2600 Thousand Oaks
Boulevard, Suite 2250, Memphis, TN 38118-2482. Written comments on the
Sponsor's request must be delivered or mailed to: Mr. Phillip J.
Braden, Manager, Memphis Airports District Office, 2600

Thousand Oaks Boulevard, Suite 2250, Memphis, TN 38118-2482.
    In addition, a copy of any comments submitted to the FAA must be
mailed or delivered to Mr. Charles T. Miller, Executive Director,
Louisville Regional Airport Authority, P.O. Box 9129, Louisville, KY
40209.

FOR FURTHER INFORMATION CONTACT: Mr. Tommy L. Dupree, Team Lead/Civil
Engineer, Federal Aviation Administration, Memphis Airports District
Office, 2600, Thousand Oaks Boulevard, Suite 2250, Memphis, TN 38118-
2482. The application may be reviewed in person at this same location,
by appointment.

SUPPLEMENTARY INFORMATION: The FAA proposes to rule and invites public
comment on the request to lease property for non-aeronautical purposes
at Bowman Field Airport, Louisville, KY 42103. Under the provisions of
AIR 21 (49 U.S.C. 47107(h)(2)).
    On September 30, 2013, the FAA determined that the request to lease
property for non-aeronautical purposes at Bowman Field Airport meets
the procedural requirements of the Federal Aviation Administration. The
FAA may approve the request, in whole or in part, no later than
November 29, 2013.
    The following is a brief overview of the request:
    The Louisville Regional Airport Authority is proposing the lease of
approximately 0.41 acres, a partial of Parcel 48, bounded by Roger E.
Schupp Street to the north, Dutchman's Lane to the south, Tucker
Boulevard to the east, and Gast Boulevard to the west. The non-
aeronautical lease is for a period of 5 (five) years, with an option of
5 (five) years that can be exercised by the airport authority. The non-
aeronautical lease is for the purpose of leasing said property to an
adjacent land owner, The Jewish Family & Career Services of Louisville,
Inc., to be used as a parking lot.
    Any person may inspect, by appointment, the request in person at
the FAA office listed above under FOR FURTHER INFORMATION CONTACT.

    Issued in Memphis, TN on September 30, 2013.
Phillip J. Braden,
Manager, Memphis Airports District Office, Southern Region.
[FR Doc. 2013-25585 Filed 10-28-13; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Rules and Regulations]
[Pages 82236-82241]
[FR Doc No: 2010-33077]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 275

[Release No. IA-3128; File No. S7-23-07]
RIN 3235-AJ96

Principal Trades with Certain Advisory Clients

AGENCY: Securities and Exchange Commission.

ACTION: Temporary final rule.

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SUMMARY: The Securities and Exchange Commission is amending rule
206(3)-3T under the Investment Advisers Act of 1940, a temporary rule
that establishes an alternative means for investment advisers who are
registered with the Commission as broker-dealers to meet the
requirements of section 206(3) of the Investment Advisers Act when they
act in a principal capacity in transactions with certain of their
advisory clients. The amendment extends the date on which rule 206(3)-
3T will sunset from December 31, 2010 to December 31, 2012.

DATES: The amendments in this document are effective December 30, 2010,
and the expiration date for 17 CFR 275.206(3)-3T is extended to
December 31, 2012.

FOR FURTHER INFORMATION CONTACT: Brian M. Johnson, Attorney-Adviser,
Devin F. Sullivan, Senior Counsel, Matthew N. Goldin, Branch Chief, or
Sarah A. Bessin, Assistant Director, at<PHONE_NUMBER> or
<EMAIL_ADDRESS>Office of Investment Adviser Regulation, Division of
Investment Management, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-5041.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission is
adopting an amendment to temporary rule 206(3)-3T [17 CFR 275.206(3)-
3T] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] that
extends the date on which the rule will sunset from December 31, 2010
to December 31, 2012.

I. Background

    On September 24, 2007, we adopted, on an interim final basis, rule
206(3)-3T, a temporary rule under the Investment Advisers Act of 1940
(the ``Advisers Act'') that provides an alternative means for
investment advisers who are also registered as broker-dealers to meet
the requirements of section 206(3) of the Advisers Act when they act in
a principal capacity in transactions with certain of their advisory
clients.\1\ In December 2009, we extended the rule's sunset period by
one year to December 31, 2010.\2\
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    \1\ Rule 206(3)-3T [17 CFR 275.206(3)-3T]. All references to
rule 206(3)-3T and the various sections thereof in this release are
to 17 CFR 275.206(3)-3T and its corresponding sections. See also
Temporary Rule Regarding Principal Trades with Certain Advisory
Clients, Investment Advisers Act Release No. 2653 (Sep. 24, 2007)
[72 FR 55022 (Sep. 28, 2007)] (``2007 Principal Trade Rule
Release'').
    \2\ See Temporary Rule Regarding Principal Trades with Certain
Advisory Clients, Investment Advisers Act Release No. 2965 (Dec. 23,
2009) [74 FR 69009 (Dec. 30, 2009)] (``2009 Extension Release'') and
Temporary Rule Regarding Principal Trades with Certain Advisory
Clients, Investment Advisers Act Release No. 2965A (Dec. 31, 2009)
[75 FR 742 (Jan. 6, 2010)] (making a technical correction to the
2009 Extension Release).
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    On July 21, 2010, President Obama signed into law the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank
Act'').\3\ Under section 913 of the Dodd-Frank Act, we are required to
conduct a study, and provide a report to Congress, concerning the
obligations of broker-dealers and investment advisers, including the
standards of care applicable to those intermediaries and their
associated persons.\4\ We intend to deliver the report concerning this
study, as required by the Dodd-Frank Act, no later than January 21,
2011.\5\
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    \3\ Pub. L. 111-203, 124 Stat. 1376 (2010).
    \4\ See generally section 913 of the Dodd-Frank Act and Study
Regarding Obligations of Brokers, Dealers, and Investment Advisers,
Investment Advisers Act Release No. 3058 (July 27, 2010) [75 FR
44996 (July 30, 2010)].
    \5\ See section 913(d)(1) of the Dodd-Frank Act (requiring us to
submit the study to Congress no later than six months after the date
of enactment of the Dodd-Frank Act).
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    Section 913 of the Dodd-Frank Act also authorizes us to promulgate
rules concerning, among other things, the legal or regulatory standards
of care for broker-dealers, investment advisers, and persons associated
with these intermediaries for providing personalized investment advice
about securities to retail customers. In enacting any rules pursuant to
this authority, we are required to consider the findings, conclusions,
and recommendations of the mandated study. The study and our
consideration of the need for further rulemaking pursuant to this
authority are part of our broader consideration of the regulatory
requirements applicable to broker-dealers and investment advisers in
connection with the Dodd-Frank Act.\6\
---------------------------------------------------------------------------

    \6\ The study mandated by section 913 of the Dodd-Frank Act is
one of several studies and other actions relevant to the regulation
of broker-dealers and investment advisers mandated by that Act. See,
e.g., section 914 of the Dodd-Frank Act (requiring the Commission to
review and analyze the need for enhanced examination and enforcement
resources for investment advisers); section 919 of the Dodd-Frank
Act (authorizing the Commission to issue rules designating documents
or information that shall be provided by a broker or dealer to a
retail investor before the purchase of an investment product or
service by the retail investor).
---------------------------------------------------------------------------

    In light of these legislative developments, we proposed on December
1, 2010 to extend the date on which rule 206(3)-3T will sunset for a
limited amount of time, from December 31, 2010 to December 31, 2012.\7\
We received 10 comment letters addressing our proposal prior to the
expiration of the comment period.\8\ Six of these commenters generally
supported

extending rule 206(3)-3T,\9\ and two commenters opposed an
extension.\10\ Two other commenters did not address the extension
directly.\11\ The comments we received on our proposal are discussed
below. After considering each of the comments, we are extending the
rule's sunset period by two years to December 31, 2012, as proposed.
---------------------------------------------------------------------------

    \7\ See Temporary Rule Regarding Principal Trades with Certain
Advisory Clients, Investment Advisers Act Release No. 3118 (Dec. 1,
2010), [75 FR 75650 (Dec. 6, 2010)] (``Proposing Release'').
    \8\ See Comment Letter of the Consumer Federation of America
(Dec. 20, 2010) (``CFA Letter''); Comment Letter of Bank of America
Corporation (Dec. 20, 2010) (``Bank of America Letter''); Comment
Letter of Fiduciary360 (Dec. 20, 2010) (``Fiduciary360 Letter'');
Comment Letter of Tamar Frankel, Professor of Law, Boston University
School of Law (Dec. 14, 2010) (``Frankel Letter''); Comment Letter
of the National Association of Personal Financial Advisors (Dec. 20,
2010) (``NAPFA Letter''); Comment Letter of Pickard and Djinis LLP
(Dec. 10, 2010) (``Pickard and Djinis Letter''); Comment Letter of
Public Investors Arbitration Bar Association (Dec. 20, 2010)
(``PIABA Letter''); Comment Letter of Ron A. Rhoades, JD, CFP (Dec.
20, 2010) (``Rhoades Letter''); Comment Letter of the Securities
Industry and Financial Markets Association (Dec. 20, 2010) (``SIFMA
Letter''); Comment Letter of Winslow, Evans & Crocker (Dec. 8, 2009)
(``Winslow, Evans & Crocker Letter''). The comment letters are
available at http://www.sec.gov/comments/s7-23-07/s72307.shtml.
    \9\ See Bank of America Letter; CFA Letter; PIABA Letter;
Pickard and Djinis Letter; SIFMA Letter; Winslow, Evans & Crocker
Letter. We note that PIABA supported a one-year extension.
    \10\ See Fiduciary360 Letter; NAPFA Letter.
    \11\ See Frankel Letter; Rhoades Letter.
---------------------------------------------------------------------------

II. Discussion

    We are amending rule 206(3)-3T only to extend the rule's expiration
date by two years. Absent further action by the Commission, the rule
will expire on December 31, 2012. We are adopting this extension
because, as we discussed in the Proposing Release, we believe that
firms' compliance with the substantive provisions of rule 206(3)-3T
provides sufficient protection to advisory clients to warrant the
rule's continued operation for the additional two years while we
conduct the study mandated by section 913 of the Dodd-Frank Act and
consider more broadly the regulatory requirements applicable to broker-
dealers and investment advisers.\12\ As part of our broader
consideration of the regulatory requirements applicable to broker-
dealers and investment advisers, we intend to carefully consider
principal trading by advisers, including whether rule 206(3)-3T should
be substantively modified, supplanted, or permitted to expire.
---------------------------------------------------------------------------

    \12\ See Proposing Release, Section II.
---------------------------------------------------------------------------

    If we permit rule 206(3)-3T to expire on December 31, 2010, after
that date investment advisers also registered as broker-dealers who
currently rely on rule 206(3)-3T would be required to comply with
section 206(3)'s transaction-by-transaction written disclosure and
consent requirements without the benefit of the alternative means of
complying with these requirements currently provided by rule 206(3)-3T.
This could limit the access of non-discretionary advisory clients of
advisory firms that are also registered as broker-dealers to certain
securities. In addition, certain of these firms have informed us that,
if rule 206(3)-3T were to expire on December 31, 2010, it would be
disruptive to their clients, and the firms would be required to make
substantial changes to their disclosure documents, client agreements,
procedures, and systems.
    We expect to revisit the relief provided in rule 206(3)-3T soon
after the completion of our study in January 2011. Although we
anticipate that will occur prior to the amended expiration date for the
temporary rule, we want to ensure that we have sufficient time to
engage in any potential rulemaking or other process that may emerge
from either the study or any broader consideration of the regulatory
requirements applicable to broker-dealers and investment advisers prior
to the rule's expiration.
    As discussed above, six commenters generally supported our proposal
to amend rule 206(3)-3T to extend it,\13\ and two commenters opposed
it.\14\ Commenters who supported the extension cited the disruption to
investors that would occur if the rule expired at this time, asserting
that investors would be forced to change their accounts and would lose
access to a wider range of securities.\15\ Commenters who supported the
extension of the rule also asserted that allowing the rule to sunset
would prove disruptive to advisory firms that are registered as broker
dealers: they explained that expiration of the rule would act as an
operational barrier to their ability to engage in principal trades with
their customers.\16\ These and other commenters further explained that,
if the rule were allowed to expire, firms relying on the rule would be
required to make considerable changes to their disclosure documents,
client agreements, procedures, and technical systems at substantial
expense.\17\ These commenters agreed that extending the rule while the
Commission conducted its review of the obligations of broker-dealers
and investment advisers, as mandated by the Dodd-Frank Act, would be
the least disruptive option.
---------------------------------------------------------------------------

    \13\ See Bank of America Letter; CFA Letter; PIABA Letter;
Pickard and Djinis Letter; SIFMA Letter; Winslow, Evans & Crocker
Letter.
    \14\ See Fiduciary360 Letter; NAPFA Letter.
    \15\ See Bank of America Letter; CFA Letter; SIFMA Letter.
    \16\ See Bank of America Letter; SIFMA Letter.
    \17\ See Bank of America Letter; SIFMA Letter; Winslow, Evans &
Crocker Letter.
---------------------------------------------------------------------------

    Conversely, two commenters questioned whether the rule benefits
clients and asserted that the Commission should not further extend the
rule in light of what they view as risks posed by the compliance issues
that the staff identified.\18\ One commenter, while opposing the
extension, encouraged the Commission to take additional measures to
protect clients from the conflicts of interest raised by principal
trading if we chose to extend the rule.\19\ Another commenter
challenged the proposition that firms and investors would face
disruptions if the rule sunsets, asserting that few firms and investors
rely on the rule.\20\
---------------------------------------------------------------------------

    \18\ See Fiduciary360 Letter; NAPFA Letter. We also note that
one commenter who supported the extension, CFA, also expressed
concern about these compliance issues. See CFA Letter.
    \19\ See NAPFA Letter. We also note that CFA, while supporting
the extension, stated that the Commission should address
``weaknesses identified in the current approach and [back] that rule
with tough enforcement focused on the larger issue of the
appropriateness of recommendations.'' CFA Letter.
    \20\ See Fiduciary360 Letter.
---------------------------------------------------------------------------

    On balance, and after careful consideration of these comments, we
conclude that the benefits from extending this rule outweigh the
potential costs of an extension. First, we believe that permitting the
rule to sunset just before we commence a comprehensive review of the
obligations of broker-dealers and investment advisers could produce
substantial disruption for investors with accounts serviced by firms
relying on the rule. These investors might lose access to securities
available through principal transactions and be forced to convert their
accounts in the interim, only to face the possibility of future change
-- and the costs and uncertainty such additional change may entail.\21\
This disruption will be avoided if we maintain the status quo while we
engage in our broader consideration of the regulatory requirements
applicable to broker-dealers and investment advisers.\22\ We continue
to believe that the rule benefits investors because it provides
investors with access to a wider range of securities and protects
investors who hold billions of dollars in advisory accounts.
---------------------------------------------------------------------------

    \21\ As discussed in the 2007 Principal Trading Release and
again in the 2009 Extension Release, firms have explained that they
may refrain from engaging in principal trading with their advisory
clients in the absence of the rule given the practical difficulties
of complying with Section 206(3), and thus may not offer principal
trading through advisory accounts. See 2007 Principal Trading
Release, Section I.B; 2009 Release, Section I.
    \22\ See CFA Letter (``Although CFA has been critical of the
temporary rule and has in the past urged the Commission to act
expeditiously to replace it, we believe that, at this point,
revision of the rule is best achieved in conjunction with the
Commission's broader consideration of the regulatory requirements
applicable to broker-dealers and investment advisers.'').
---------------------------------------------------------------------------

    In reaching this conclusion, we have paid particular attention to
our staff's observations about firms' compliance with the rule. We
emphasize that we share the commenters' concerns about the compliance
issues that the staff identified, the critical aspects of which we
summarized in the Proposing Release.\23\ Having carefully considered

the staff's observations, we conclude that the requirements of rule
206(3)-3T, coupled with regulatory oversight informed by those
observations, will adequately protect advisory clients during the
extension. Throughout the period of the extension, the staff will
examine firms with higher risk characteristics, including firms that
engage in principal transactions in reliance on rule 206(3)-3T,\24\ and
continue to take appropriate action to help ensure that firms are
complying with the rule's conditions, including referring firms to the
Division of Enforcement for possible enforcement action if warranted.
One commenter asserted that the burdens placed on firms by rule 206(3)-
3T are too stringent.\25\ As this commenter noted, the staff did not
identify instances of ``dumping,'' a harm that section 206(3) is
designed to redress, and we believe that the conditions and limitations
in the rule serve as appropriate safeguards during the pendency of the
extension.
---------------------------------------------------------------------------

    \23\ Although some of the commenters suggested that the
discussion of the staff's observations in the Proposing Release was
not robust enough, we believe the summary contained in the release
outlined the critical aspects of the issues observed by the staff
with respect to compliance with the rule. See NAPFA Letter;
Fiduciary360 Letter; CFA Letter.
    \24\ One commenter suggested that the Commission's Office of
Compliance Inspections and Examinations should conduct additional
examinations to determine if firms are complying with rule 206(3)-
3T, among other requirements. See NAPFA Letter.
    \25\ See Pickard and Djinis Letter.
---------------------------------------------------------------------------

    We note that one commenter asserted that even if principal trading
relief may have been appropriate when we originally adopted rule
206(3)-3T in 2007, it no longer is.\26\ In particular, the commenter
contended that the valuation of certain securities--such as municipal
bonds--has become much more difficult, such that ``a much greater
amount of due diligence is required of the investment adviser who
engages in advising clients on purchases of individual municipal
bonds.'' But extension of the rule does not have any bearing on an
adviser's due diligence obligations. The standard of care to which
advisers are subject and the duties they owe clients are in no way
diminished by their reliance on rule 206(3)-3T.\27\
---------------------------------------------------------------------------

    \26\ See NAPFA Letter.
    \27\ See rule 206(3)-3T(b) (``This section shall not be
construed as relieving in any way an investment adviser from acting
in the best interests of an advisory client, including fulfilling
the duty with respect to the best price and execution for the
particular transaction for the advisory client; nor shall it relieve
such person or persons from any obligation that may be imposed by
section 206(1) or (2) of the Advisers Act or by other applicable
provisions of the federal securities laws.'').
---------------------------------------------------------------------------

    Second, we further conclude that the extension of the rule's sunset
date is warranted to avoid the disruption to firms relying on the rule
that will occur if the rule expires. The letters submitted by three
commenters demonstrated that some firms in fact do rely on the rule,
and that those firms will be faced with uncertainty and disruption of
operations should the rule expire just as the Commission is about to
begin a comprehensive review process that may ultimately produce a
different regulatory standard.\28\ One commenter that represents
securities firms described that large and small firms have relied upon
the rule, and provided data showing that a substantial number of
accounts and volume of trades would be affected by a change in the
rule.\29\
---------------------------------------------------------------------------

    \28\ See Bank of America Letter; SIFMA Letter; Winslow, Evans &
Crocker Letter.
    \29\ See SIFMA Letter.
---------------------------------------------------------------------------

    We received four comment letters specifically addressing the
duration of our proposed extension of rule 206(3)-3T.\30\ Three
expressed support for extending the rule for an additional two years,
but argued that the rule should be made permanent.\31\ One of these
commenters cited uncertainty and its attendant costs as a reason to
make the rule permanent.\32\ Other commenters supported a shorter
extension of the rule. For example, one commenter supported a one-year
extension.\33\ This commenter stated that a one-year extension of the
rule strikes the proper balance between the concerns of investor
protection and the burden of potential revised regulations applying to
investment advisers and broker-dealers.\34\ Two commenters generally
opposed the extension and supported allowing the rule to expire: One
commenter stated alternatively that the Commission should adopt a one-
year extension with the imposition of other measures to ensure firms'
compliance with the rule and with their fiduciary obligations
generally, and the other indicated that it would support an extension
of six months if the Commission provided ``further explanation and
supporting evidence.'' \35\
---------------------------------------------------------------------------

    \30\ See Bank of America Letter; Fiduciary360 Letter; Winslow,
Evans & Crocker Letter; PIABA Letter.
    \31\ See Bank of America Letter; Winslow, Evans & Crocker
Letter; Pickard and Djinis Letter.
    \32\ See Winslow, Evans & Crocker Letter.
    \33\ See PIABA Letter.
    \34\ See id.
    \35\ See NAPFA Letter; Fiduciary360 Letter.
---------------------------------------------------------------------------

    As we noted in the Proposing Release, we believe that the rule
should be extended only for a limited amount of time.\36\ That period
of time, however, must be long enough to permit the Commission to
engage in any rulemaking prompted by our study under section 913 of the
Dodd-Frank Act and our broader review of regulatory requirements
applicable to investment advisers and broker-dealers. Having considered
the comments regarding the duration of the extension, and taking into
account the importance of the issues that this process will address,
the Commission believes on balance that a two-year extension is
necessary to give the Commission adequate time to complete any such
rulemaking. Because that process cannot begin until the completion of
the study required by the Dodd-Frank Act, adopting a six-month or one-
year extension, as certain commenters recommended, most likely would
not provide sufficient time for such rulemaking, and thus could result
in greater uncertainty (along with its attendant costs) for investors
and firms that rely on the rule. We believe that certainty in this area
is important, and we will complete any relevant rulemaking as soon as
is feasible consistent with administrative procedure.
---------------------------------------------------------------------------

    \36\ See Proposing Release, Section II. The statements in the
Proposing Release should not be read as limiting the scope of the
alternatives we will consider in conducting the study mandated by
section 913 of the Dodd-Frank Act and considering more broadly the
regulatory requirements applicable to broker-dealers and investment
advisers.
---------------------------------------------------------------------------

    A number of commenters also raised issues that were beyond the
scope of our proposal to extend rule 206(3)-3T, including the broader
legal and policy questions related to the meaning, scope, and
application of a fiduciary standard and the appropriate considerations
related to principal trading.\37\ These comments pertain to our broader
consideration of the regulatory requirements applicable to broker-
dealers and investment advisers, and we will consider these comments in
conducting this broader review.
---------------------------------------------------------------------------

    \37\ See CFA Letter; Fiduciary360 Letter; Frankel Letter; NAPFA
Letter; Pickard and Djinis Letter; Rhoades Letter; SIFMA Letter.
---------------------------------------------------------------------------

III. Certain Administrative Law Matters

    The amendment to rule 206(3)-3T is effective on December 30, 2010.
The Administrative Procedure Act generally requires that an agency
publish a final rule in the Federal Register not less than 30 days
before its effective date.\38\ However, this requirement does not apply
if the rule is a substantive rule which grants or recognizes an
exemption or relieves a restriction, or if the rule is
interpretive.\39\ Rule 206(3)-3T is a rule that recognizes an

exemption and relieves a restriction and in part has interpretive
aspects.
---------------------------------------------------------------------------

    \38\ 5 U.S.C. 553(d).
    \39\ Id.
---------------------------------------------------------------------------

IV. Paperwork Reduction Act

    Rule 206(3)-3T contains ``collection of information'' requirements
within the meaning of the Paperwork Reduction Act of 1995.\40\ The
Office of Management and Budget (``OMB'') approved the burden estimates
presented in the 2007 Principal Trade Rule Release,\41\ first on an
emergency basis and subsequently on a regular basis. OMB approved the
collection of information with an expiration date of March 31, 2011. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number. The title for the collection of information
is: ``Temporary rule for principal trades with certain advisory
clients, rule 206(3)-3T'' and the OMB control number for the collection
of information is 3235-0630. The 2007 Principal Trade Rule Release and
the Proposing Release solicited comments on our PRA estimates, but we
did not receive comment on them.\42\
---------------------------------------------------------------------------

    \40\ 44 U.S.C. 3501 et seq.
    \41\ See 2007 Principal Trade Rule Release, Section V.B&C.
    \42\ See 2009 Extension Release, Section IV; Proposing Release,
Section IV.
---------------------------------------------------------------------------

    The amendment to the rule we are adopting today--to extend rule
206(3)-3T for two years--does not affect the burden estimates contained
in the 2007 Principal Trade Rule Release. Therefore, as was the case
when we extended rule 206(3)-3T in December 2009, we are not revising
our Paperwork Reduction Act burden and cost estimates submitted to OMB
as a result of this amendment. We will submit burden and cost estimates
as part of our routine renewal of OMB's approval of the rule's
collection of information.

V. Cost-Benefit Analysis

    Other than extending rule 206(3)-3T's sunset period for two years,
we are not otherwise modifying the rule from the form in which we
initially adopted it on an interim final basis in September 2007 or as
final in December 2009. We discussed the benefits provided by rule
206(3)-3T in both the 2007 Principal Trade Rule Release and the 2009
Extension Release.
    In summary, as explained in the 2007 Principal Trade Rule Release,
the 2009 Extension Release, and the Proposing Release,\43\ we believe
the principal benefit of rule 206(3)-3T is that it maintains investor
choice and protects the interests of investors who formerly held an
estimated $300 billion in fee-based brokerage accounts. A resulting
second benefit of the rule is that non-discretionary advisory clients
of advisory firms that are also registered as broker-dealers have
easier access to a wider range of securities which, in turn, should
continue to lead to increased liquidity in the markets for these
securities and promote capital formation in these areas. A third
benefit of the rule is that it provides the protections of the sales
practice rules of the Securities Exchange Act of 1934 (``Exchange
Act'') \44\ and the relevant self-regulatory organizations because an
adviser relying on the rule must also be a registered broker-dealer.
Another benefit of rule 206(3)-3T is that it provides a lower cost
alternative for an adviser to engage in principal transactions.
---------------------------------------------------------------------------

    \43\ See 2007 Principal Trade Rule Release, Section VI.C; 2009
Extension Release, Section V; Proposing Release, Section V.
    \44\ 15 U.S.C. 78 et seq.
---------------------------------------------------------------------------

    One commenter disputed a number of the benefits of rule 206(3)-3T
we have described above. The commenter did not provide any specific
data, analysis, or other information in support of its comment.\45\ No
commenter provided any substantive or specific evidence to contradict
the Commission's previous conclusion that the rule benefits investors,
and the Commission continues to believe that the rule provides those
benefits.\46\
---------------------------------------------------------------------------

    \45\ See NAPFA Letter (questioning the benefits of the rule in:
(1) Providing protections of the sales practice rules of the
Exchange Act and the relevant self-regulatory organizations; (2)
allowing non-discretionary advisory clients of advisory firms that
are also registered as broker-dealers to have easier access to a
wider range of securities which, in turn, should continue to lead to
increased liquidity in the markets for these securities and promote
capital formation in these areas; and (3) maintaining investor
choice).
    \46\ See 2007 Principal Trade Rule Release, Section VI.C; 2009
Extension Release, Section V; Proposing Release, Section V.
---------------------------------------------------------------------------

    In addition to the general benefits described above, there also are
benefits to extending the rule for an additional two years. By
extending the rule for two years, non-discretionary advisory clients
who have had access to certain securities because of their advisers'
reliance on the rule to trade on a principal basis will continue to
have access to those securities without disruption. If we chose not to
extend the rule in its current form, firms currently relying on the
rule would be required to restructure their operations and client
relationships on or before the rule's current expiration date--
potentially only to have to do so again shortly thereafter (first when
the rule expires or is modified, and again if we adopt a new approach
after the study mandated by the Dodd-Frank Act, discussed above, is
complete). Firms relying on the rule will continue to be able to offer
clients and prospective clients access to certain securities on a
principal basis as well and will not need during this two-year period
to incur the cost of adjusting to a new set of rules or abandoning the
systems established to comply with the current rule. In other words,
extension will avoid disruption to clients and firms during the period
while we complete the study mandated by section 913 of the Dodd-Frank
Act and our broader consideration of the regulatory requirements
applicable to broker-dealers and investment advisers.
    We also discussed the costs associated with rule 206(3)-3T in the
2007 Principal Trade Rule Release, the 2009 Extension Release, and the
Proposing Release.\47\ In the 2007 Principal Trade Rule Release, we
presented estimates of the costs of each of the rule's disclosure
elements, including: Prospective disclosure and consent; transaction-
by-transaction disclosure and consent; transaction-by-transaction
confirmations; and the annual report of principal transactions. We also
provided estimates for the following related costs of compliance with
rule 206(3)-3T: (i) The initial distribution of prospective disclosure
and collection of consents; (ii) systems programming costs to ensure
that trade confirmations contain all of the information required by the
rule; and (iii) systems programming costs to aggregate already-
collected information to generate compliant principal transactions
reports. We did not receive comments directly addressing with
supporting data the cost-benefit analysis we presented in the 2007
Principal Trade Rule Release.\48\ We do not believe that a two-year
extension of rule 206(3)-3T would materially affect those costs.\49\
---------------------------------------------------------------------------

    \47\ See 2007 Principal Trade Rule Release, Section VI.D; 2009
Extension Release, Section V; Proposing Release, Section V.
    \48\ In the 2007 Principal Trade Rule Release, we estimated the
total overall costs, including estimated costs for all eligible
advisers and eligible accounts, relating to compliance with rule
206(3)-3T to be $37,205,569. See 2007 Principal Trade Rule Release,
Section VI.D.
    \49\ See Proposing Release, Section V.
---------------------------------------------------------------------------

    We recognize that, as a result of our amendment, firms relying on
the rule will incur the costs associated with complying with the rule
for two additional years. We also recognize that a temporary rule, by
nature, creates uncertainty, which in turn, may generate costs and
inefficiency.\50\

However, we believe that a temporary extension of the rule is the most
appropriate action that we can take at this time while we conduct the
study mandated by section 913 of the Dodd-Frank Act and consider more
broadly the regulatory requirements applicable to broker-dealers and
investment advisers.\51\
---------------------------------------------------------------------------

    \50\ See Winslow, Evans & Crocker Letter (``We do, however, feel
that extending the temporary rule is in the best interest of
investors but think that doing so on a temporary basis is short
sighted and leads to certain inefficiencies, particularly to smaller
firms * * * We believe the Commission should adopt the rule on a
permanent basis thus eliminating uncertainty with respect to
compliance in this area.''). See also Bank of America Letter (urging
the Commission to consider a permanent rule that would allow firms
to continue acting in a principal capacity in transactions with
certain of their clients).
    \51\ See CFA Letter (``If, as we hope, more extensive revisions
to the principal trading requirements are just around the corner, it
would be unduly disruptive to abandon the existing system now absent
evidence of significant harm to investors.'').
---------------------------------------------------------------------------

VI. Promotion of Efficiency, Competition, and Capital Formation

    Section 202(c) of the Advisers Act mandates that the Commission,
when engaging in rulemaking that requires it to consider or determine
whether an action is necessary or appropriate in the public interest,
consider, in addition to the protection of investors, whether the
action will promote efficiency, competition, and capital formation.\52\
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 80b-2(c).
---------------------------------------------------------------------------

    We explained in the 2007 Principal Trade Rule Release, the 2009
Extension Release, and the Proposing Release, the manner in which rule
206(3)-3T, in general, would promote these aims.\53\ We continue to
believe that this analysis generally applies today.
---------------------------------------------------------------------------

    \53\ See 2007 Principal Trade Rule Release, Section VII; 2009
Extension Release, Section VI; Proposing Release, Section VI.
---------------------------------------------------------------------------

    As noted in the 2009 Extension Release and Proposing Release, we
received comments on the 2007 Principal Trade Rule Release from
commenters who opposed the limitation of the temporary rule to
investment advisers that are also registered as broker-dealers, as well
as to accounts that are subject to both the Advisers Act and Exchange
Act as providing a competitive advantage to investment advisers that
are also registered broker-dealers.\54\ Based on our experience with
the rule to date, just as we noted in the 2009 Extension Release and
Proposing Release, we have no reason to believe that broker-dealers (or
affiliated but separate investment advisers and broker-dealers) are put
at a competitive disadvantage to advisers that are themselves also
registered as broker-dealers; \55\ however we intend to continue to
evaluate these effects in connection with our broader consideration of
the regulatory requirements applicable to broker-dealers and investment
advisers.
---------------------------------------------------------------------------

    \54\ See 2009 Extension Release, Section VI; Proposing Release,
Section VI; Comment Letter of the Financial Planning Association
(Nov. 30, 2007).
    \55\ See 2009 Extension Release, Section VI; Proposing Release,
Section VI.
---------------------------------------------------------------------------

    We received one comment letter arguing that rule 206(3)-3T would
impede capital formation because it would lead to ``more numerous and
more severe violations * * * of the trust placed by individual
investors in their trusted investment adviser.'' \56\ While we share
the view that numerous and severe violations of trust could
theoretically impede capital formation, we have not seen any evidence
that rule 206(3)-3T has caused this result. We also reiterate that, in
addition to conducting a broader review, we will continue to consider
any potential violations of the rule and take appropriate action as
necessary.
---------------------------------------------------------------------------

    \56\ See NAPFA Letter.
---------------------------------------------------------------------------

VII. Final Regulatory Flexibility Analysis

    The Commission has prepared the following Final Regulatory
Flexibility Analysis (``FRFA'') regarding the amendment to rule 206(3)-
3T in accordance with 5 U.S.C. 604. We prepared and included an Initial
Regulatory Flexibility Analysis (``IRFA'') in the Proposing
Release.\57\
---------------------------------------------------------------------------

    \57\ See Proposing Release, Section VII.
---------------------------------------------------------------------------

A. Need for the Rule Amendment

    We are adopting an amendment to rule 206(3)-3T to extend the rule
for two years in its current form because we believe that it would be
premature to require firms relying on the rule to restructure their
operations and client relationships before we complete our study and
our broader consideration of the regulatory requirements applicable to
broker-dealers and investment advisers. The objective of the amendment
to rule 206(3)-3T, as discussed above, is to permit firms currently
relying on rule 206(3)-3T to limit the need to modify their operations
and relationships on multiple occasions, both before and potentially
after we complete our study and any related rulemaking.
    We are amending rule 206(3)-3T pursuant to sections 206A and 211(a)
of the Advisers Act [15 U.S.C. 80b-6a and 15 U.S.C. 80b-11(a)].

 B. Significant Issues Raised by Public Comments

    We received one comment letter related to our IRFA.\58\ The
commenter stated that extending the rule temporarily, rather than
permanently, would create uncertainty, thereby causing certain
inefficiencies, particularly with regard to smaller firms.\59\ We
recognize that a temporary rule, by nature, creates uncertainty, which
in turn may generate costs and inefficiency, especially for smaller
firms. However, as discussed above, we believe that a temporary
extension of the rule is the most appropriate approach at this time
while we conduct the study mandated by section 913 of the Dodd-Frank
Act and consider more broadly the regulatory requirements applicable to
broker-dealers and investment advisers.\60\
---------------------------------------------------------------------------

    \58\ See Winslow, Evans & Crocker Letter.
    \59\ See id.
    \60\ See CFA Letter (``If, as we hope, more extensive revisions
to the principal trading requirements are just around the corner, it
would be unduly disruptive to abandon the existing system now absent
evidence of significant harm to investors.'').
---------------------------------------------------------------------------

C. Small Entities Subject to the Rule

    Rule 206(3)-3T is an alternative method of complying with Advisers
Act section 206(3) and is available to all investment advisers that:
(i) Are registered as broker-dealers under the Exchange Act; and (ii)
effect trades with clients directly or indirectly through a broker-
dealer controlling, controlled by or under common control with the
investment adviser, including small entities. Under Advisers Act rule
0-7, for purposes of the Regulatory Flexibility Act an investment
adviser generally is a small entity if it: (i) Has assets under
management having a total value of less than $25 million; (ii) did not
have total assets of $5 million or more on the last day of its most
recent fiscal year; and (iii) does not control, is not controlled by,
and is not under common control with another investment adviser that
has assets under management of $25 million or more, or any person
(other than a natural person) that had $5 million or more on the last
day of its most recent fiscal year.\61\
---------------------------------------------------------------------------

    \61\ See 17 CFR 275.0-7.
---------------------------------------------------------------------------

    As noted in the Proposing Release, we estimate that as of November
1, 2010, 680 SEC-registered investment advisers were small
entities.\62\ As discussed in the 2007 Principal Trade Rule Release, we
opted not to make the relief provided by rule 206(3)-3T available to
all investment advisers, and instead have restricted it to investment
advisers that also are registered as broker-dealers under the Exchange
Act.\63\ We therefore estimate for purposes of this FRFA that 38 of
these small entities (those that are

both investment advisers and broker-dealers) could rely on rule 206(3)-
3T.\64\ We did not receive any comments on these estimates.
---------------------------------------------------------------------------

    \62\ IARD data as of November 1, 2010.
    \63\ See 2007 Principal Trade Rule Release, Section VIII.B.
    \64\ IARD data as of November 1, 2010.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The provisions of rule 206(3)-3T impose certain reporting or
recordkeeping requirements, and our amendment will extend the
imposition of these requirements for an additional two years. The two-
year extension will not alter these requirements.
    Rule 206(3)-3T is designed to provide an alternative means of
compliance with the requirements of section 206(3) of the Advisers Act.
Investment advisers taking advantage of the rule with respect to non-
discretionary advisory accounts are required to make certain
disclosures to clients on a prospective, transaction-by-transaction and
annual basis.
    Specifically, rule 206(3)-3T permits an adviser, with respect to a
non-discretionary advisory account, to comply with section 206(3) of
the Advisers Act by, among other things: (i) Making certain written
disclosures; (ii) obtaining written, revocable consent from the client
prospectively authorizing the adviser to enter into principal trades;
(iii) making oral or written disclosure and obtaining the client's
consent orally or in writing prior to the execution of each principal
transaction; (iv) sending to the client confirmation statements for
each principal trade that disclose the capacity in which the adviser
has acted and indicating that the client consented to the transaction;
and (v) delivering to the client an annual report itemizing the
principal transactions. Advisers are already required to communicate
the content of many of the disclosures pursuant to their fiduciary
obligations to clients. Other disclosures are already required by rules
applicable to broker-dealers.
    Our amendment will only extend the rule for two years in its
current form. Advisers currently relying on the rule already should be
making the disclosures described above.

E. Agency Action To Minimize Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant
alternatives that would accomplish our stated objective, while
minimizing any significant adverse impact on small entities.\65\
Alternatives in this category would include: (i) Establishing different
compliance or reporting standards or timetables that take into account
the resources available to small entities; (ii) clarifying,
consolidating, or simplifying compliance requirements under the rule
for small entities; (iii) using performance rather than design
standards; and (iv) exempting small entities from coverage of the rule,
or any part of the rule.
---------------------------------------------------------------------------

    \65\ See 5 U.S.C. 603(c).
---------------------------------------------------------------------------

    We believe that special compliance or reporting requirements or
timetables for small entities, or an exemption from coverage for small
entities, may create the risk that the investors who are advised by and
effect securities transactions through such small entities would not
receive adequate disclosure. Moreover, different disclosure
requirements could create investor confusion if it creates the
impression that small investment advisers have different conflicts of
interest with their advisory clients in connection with principal
trading than larger investment advisers. We believe, therefore, that it
is important for the disclosure protections required by the rule to be
provided to advisory clients by all advisers, not just those that are
not considered small entities. Further consolidation or simplification
of the rule for investment advisers that are small entities would be
inconsistent with the Commission's goals of fostering investor
protection.
    We have endeavored through rule 206(3)-3T to minimize the
regulatory burden on all investment advisers eligible to rely on the
rule, including small entities, while meeting our regulatory
objectives. It was our goal to ensure that eligible small entities may
benefit from the Commission's approach to the new rule to the same
degree as other eligible advisers. The condition that advisers seeking
to rely on the rule must also be registered as broker-dealers and that
each account with respect to which an adviser seeks to rely on the rule
must be a brokerage account subject to the Exchange Act, and the rules
thereunder, and the rules of the self-regulatory organization(s) of
which it is a member, reflect what we believe is an important element
of our balancing between easing regulatory burdens (by affording
advisers an alternative means of compliance with section 206(3) of the
Act) and meeting our investor protection objectives.\66\ Finally, we do
not consider using performance rather than design standards to be
consistent with our statutory mandate of investor protection in the
present context.
---------------------------------------------------------------------------

    \66\ See 2007 Principal Trade Rule Release, Section II.B.7
(noting commenters that objected to this condition as disadvantaging
small broker-dealers (or affiliated but separate investment advisers
and broker-dealers)).
---------------------------------------------------------------------------

VIII. Statutory Authority

    The Commission is amending rule 206(3)-3T pursuant to sections 206A
and 211(a) of the Advisers Act.

List of Subjects in 17 CFR Part 275

    Investment advisers, Reporting and recordkeeping requirements.

Text of Rule Amendment

0
For the reasons set out in the preamble, Title 17, Chapter II of the
Code of Federal Regulations is amended as follows.

PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940

0
1. The authority citation for part 275 continues to read in part as
follows:

    Authority:  15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(17), 80b-3, 80b-
4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless otherwise noted.
* * * * *

Sec.  275.206(3)-3T  [Amended]

0
2. In Sec.  275.206(3)-3T, amend paragraph (d) by removing the words
``December 31, 2010'' and adding in their place ``December 31, 2012''.

    Dated: December 28, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-33077 Filed 12-28-10; 4:15 pm]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 239 (Tuesday, December 13, 2016)]
[Notices]
[Pages 90038-90039]
From the Federal Register Online via the Government Publishing Office [http://www.gpo.gov/]
[FR Doc No: 2016-29965]

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

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a closed meeting on Thursday,
December 15, 2016 at 2 p.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the closed meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or her designee, has
certified that, in her opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR
200.402(a)(3), (a)(5), (a)(7), (a)(9)(ii) and (a)(10), permit
consideration of the scheduled matter at the closed meeting.
    Commissioner Stein, as duty officer, voted to consider the items
listed for the closed meeting in closed session.
    The subject matter of the closed meeting will be:

     Institution and settlement of injunctive actions;
     Institution and settlement of administrative proceedings;
     Formal order of investigations;
     Resolution of litigation claims;
     Adjudicatory matters; and
     Other matters relating to enforcement proceedings.
    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed; please contact Brent J. Fields from
the Office of the Secretary at<PHONE_NUMBER>.

     Dated: December 8, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-29965 Filed 12-9-16; 11:15 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 194 (Friday, October 5, 2012)]
[Rules and Regulations]
[Pages 60901-60903]
[FR Doc No: 2012-24582]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket No. USCG-2012-0849]
RIN 1625-AA00

Safety Zone; Battle of Queenston Heights Bicentennial, Niagara
River, Lewiston, NY

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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

SUMMARY: The Coast Guard is establishing a temporary safety zone on the
Niagara River, Lewiston, NY. This safety zone is intended to restrict
vessels from a portion of the Lower Niagara River during the Battle of
Queenston Heights Bicentennial historical reenactment and fireworks
display. This temporary safety zone is necessary to protect spectators
and vessels from the hazards associated with a historical reenactment
and fireworks display.

DATES: This rule will be effective from 6:30 p.m. until 8:00 p.m. on
October 12, 2012.

ADDRESSES: Documents mentioned in this preamble are part of docket
USCG-2012-0849. To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type the
docket number in the ``SEARCH'' box, and click ``Search.'' You may
visit the Docket Management Facility, Department of Transportation,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary rule, call or email LT Christopher Mercurio, Chief of
Waterways Management, U.S. Coast Guard Sector Buffalo; telephone 716-
843-9343, email<EMAIL_ADDRESS>If you have
questions on viewing or submitting material to the docket, call Renee
V. Wright, Program Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Acronyms

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

A. Regulatory History and Information

    The Coast Guard is issuing this temporary final rule without prior
notice and opportunity to comment pursuant to authority under section
4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This
provision authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
with respect to this rule because doing so would be impracticable and
contrary to the public interest. The final details for this event were
not known to the Coast Guard until there was insufficient time
remaining before the event to publish an NPRM. Thus, delaying the
effective date of this rule to wait for a comment period to run would
be both impracticable and contrary to the public interest because it
would inhibit the Coast Guard's ability to protect spectators and
vessels from the hazards associated with a historical reenactment and
maritime fireworks display, which are discussed further below.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. For the same reasons discussed in
the preceding paragraph, waiting for a 30 day notice period to run
would be impracticable and contrary to the public interest.

B. Basis and Purpose

    Between 7:00 p.m. and 7:30 p.m. on October 12, 2012, a historical
reenactment will take place in which period cannons will be activated
from the shoreline with pyrotechnic rockets being used to simulate
cannonballs being launched several hundred feet over the water. This
historical reenactment will be held on the Lower Niagara River near the
Silo Restaurant, Lewiston, NY. The Captain of the Port Buffalo has
determined that fireworks launched proximate to a gathering of
watercraft pose a significant risk to public safety and property. Such
hazards include premature and accidental detonations, dangerous
projectiles, and falling or burning debris.

C. Discussion of Rule

    With the aforementioned hazards in mind, the Captain of the Port
Buffalo has determined that this temporary safety zone is necessary to
ensure the safety of spectators and vessels during the Battle of
Queenston Heights Bicentennial historical reenactment and fireworks
display. This zone will be effective and enforced from 6:30 p.m. until
8:00 p.m. on October 12, 2012. This zone will encompass all waters of
the Niagara River, Lewiston, NY starting from position 43[deg]10'28.2''
N and 79[deg]02'58.6'' W then South to 43[deg]10'22.9'' N and
79[deg]02'58.9'' W then West to 43[deg]10'23.2'' N and 79[deg]03'05.0''
W then North to 43[deg]10'28.5'' N and 79[deg]03'05.0'' W then
returning to the point of origin to form a square (NAD 83).
    Entry into, transiting, or anchoring within the safety zone is
prohibited unless authorized by the Captain of the Port Buffalo or his
designated on-scene representative. The Captain of the Port or his
designated on-scene representative may be contacted via VHF Channel 16.

D. Regulatory Analyses

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

1. Regulatory Planning and Review

    This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866, Regulatory Planning and Review, as
supplemented by Executive Order 13563, Improving Regulation and
Regulatory Review, and does not require an assessment of potential
costs and benefits under section 6(a)(3) of that Order. Executive Order
12866 or under section 1 of Executive Order 13563. The Office of
Management and Budget has not reviewed it under those Orders. It is not
``significant'' under the regulatory policies and procedures of the
Department of Homeland Security (DHS). We conclude that this rule is
not a significant regulatory action because we anticipate that it will
have minimal impact on the economy, will not interfere with other
agencies, will not adversely alter the budget of any grant or loan
recipients, and will not raise any novel legal or policy issues. The
safety zone created by this rule will be relatively small and enforced
for relatively short time. Also, the safety zone is designed to
minimize its impact on navigable waters. Furthermore, the safety zone
has been designed to allow vessels to transit around it. Thus,
restrictions on vessel movement within that particular area are
expected to be minimal. Under certain conditions, moreover, vessels may
still transit through the safety zone when permitted by the Captain of
the Port.

2. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as
amended, requires federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The Coast Guard
certifies under 5 U.S.C. 605(b) that this rule will not have a
significant economic impact on a substantial number of small entities.
    This rule will affect the following entities, some of which might
be small entities: The owners or operators of vessels intending to
transit or anchor in a portion of the Niagara River on the evening of
October 12, 2012.
    This safety zone will not have a significant economic impact on a
substantial number of small entities for the following reasons: This
safety zone will be enforced for only 90 minutes late in the day.
Traffic will be allowed to pass through the zone with the permission of
the Captain of the Port. The Captain of the Port can be reached via VHF
channel 16. Before the activation of the zone, we would issue local
Broadcast Notice to Mariners.

3. Assistance for Small Entities

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

4. Collection of Information

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

5. Federalism

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

6. Protest Activities

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

7. Unfunded Mandates Reform Act

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

8. Taking of Private Property

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

9. Civil Justice Reform

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

10. Protection of Children

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

11. Indian Tribal Governments

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

12. Energy Effects

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

13. Technical Standards

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

14. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have determined
that this action is one of a category of actions that do not
individually or cumulatively have a significant effect on the human
environment. This rule involves the establishment of a safety zone, and
therefore, it is categorically excluded from further review under
paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An
environmental analysis checklist supporting this determination and a
Categorical Exclusion Determination are available in the docket where
indicated under ADDRESSES. We seek any comments or information that may
lead to the discovery of a significant environmental impact from this
rule.

List of Subjects in 33 CFR Part 165

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

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

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

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

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

0
2. Add Sec.  165.T09-0849 to read as follows:

Sec.  165.T09-0849  Safety Zone; Battle of Queenston Heights
Bicentennial, Niagara River, Lewiston, NY.

    (a) Location. The safety zone will encompass all waters of the
Niagara River, Lewiston, NY starting from position 43[deg]10'28.2'' N
and 79[deg]02'58.6'' W then South to 43[deg]10'22.9'' N and
79[deg]02'58.9'' W then West to 43[deg]10'23.2'' N and 79[deg]03'05.0''
W then North to 43[deg]10'28.5'' N and 79[deg]03'05.0'' W then
returning to the point of origin to form a square (NAD 83).
    (b) Effective and enforcement period. This regulation is effective
and will be enforced on October 12, 2012 from 6:30 p.m. until 8:00 p.m.
    (c) Regulations. (1) In accordance with the general regulations in
Sec.  165.23 of this part, entry into, transiting, or anchoring within
this safety zone is prohibited unless authorized by the Captain of the
Port Buffalo or his designated on-scene representative.
    (2) This safety zone is closed to all vessel traffic, except as may
be permitted by the Captain of the Port Buffalo or his designated on-
scene representative.
    (3) The ``on-scene representative'' of the Captain of the Port
Buffalo is any Coast Guard commissioned, warrant or petty officer who
has been designated by the Captain of the Port Buffalo to act on his
behalf.
    (4) Vessel operators desiring to enter or operate within the safety
zone shall contact the Captain of the Port Buffalo or his on-scene
representative to obtain permission to do so. The Captain of the Port
Buffalo or his on-scene representative may be contacted via VHF Channel
16. Vessel operators given permission to enter or operate in the safety
zone must comply with all directions given to them by the Captain of
the Port Buffalo, or his on-scene representative.

    Dated: September 19, 2012.
S.M. Wischmann,
Captain, U.S. Coast Guard, Captain of the Port, Sector Buffalo.
[FR Doc. 2012-24582 Filed 10-4-12; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 77, Number 123 (Tuesday, June 26, 2012)]
[Proposed Rules]
[Pages 38016-38017]
[FR Doc No: 2012-15339]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Chapter I

[Docket No. FAA-2012-0658]

Proposed Policy Clarification for the Registration of Aircraft to
U.S. Citizen Trustees in Situations Involving Non-U.S. Citizen Trustors
and Beneficiaries

AGENCY: Federal Aviation Administration, DOT.

ACTION: Proposed Policy; Availability of Documents for Inspection and
Extension of Time in which to Submit Written Comments.

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

SUMMARY: The FAA is extending the comment period on its proposed policy
regarding the registration of aircraft to U.S. Citizen Trustees in
situations involving Non-U.S. citizen trustors and beneficiaries.

DATES: The FAA is extending the comment period to August 17, 2012.

FOR FURTHER INFORMATION CONTACT: LaDeana Peden at<PHONE_NUMBER>, Office
of Aeronautical Center Counsel, Federal Aviation Administration.

SUPPLEMENTARY INFORMATION: Incident to a public meeting held by the
Federal Aviation Administration (FAA) on Wednesday, June 6, 2012, in
Oklahoma City, Oklahoma, concerning aircraft registration by owner
trustees for non-U.S. citizen beneficiaries, interested parties have
submitted written comments to FAA. Those comments, as well as the
Notice of Public Meeting and FAA slide presentation may be viewed at
the Office of Chief Counsel's FAA Web site located at http://
www.faa.gov/

about/office--org/headquarters--offices/agc/. The comment period is
hereby extended through Friday, August 17, 2012, and may be submitted
via email to<EMAIL_ADDRESS>    As part of its review of non-citizen trusts, the FAA published a
notice of its proposed policy clarification on February 9, 2012 (77 FR
6694) on use of non-citizen trusts to register aircraft in the United
States. After the FAA discusses the legal issues, the FAA will suggest
which provisions in trust agreements may need to be changed and it will
suggest language that would enable the FAA to facilitate the
registration of aircraft in the future that are owned in trust. The
suggested language and the reasons for the suggested language, if
adopted as the FAA's final policy on this matter, will guide the FAA in
the future in determining eligibility for registering non-U.S. citizen
trusts.

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

    Issued in Oklahoma City, Oklahoma, on June 13, 2012.
Joseph R. Standell,
Aeronautical Center Counsel.
[FR Doc. 2012-15339 Filed 6-25-12; 8:45 am]
BILLING CODE 4910-13-P