Territory of the United States, the District of Columbia, any political
subdivision of any State, Territory or the District of Columbia, or any
public instrumentality of one or more States, Territories or the
District of Columbia.
    (h) An offering of an asset-backed security that is exempted from
the requirements of this rule pursuant to paragraph (f) of this section
remains subject to the requirements of Section 15E(s)(4)(A) of the Act
(15 U.S.C. 78o-7(s)(4)(A)), which requires that the issuer or
underwriter of any asset-backed security shall make publicly available
the findings and conclusions of any third-party due diligence report
obtained by the issuer or underwriter.

0
5. Section 240.17g-1 is amended:
0
a. In paragraphs (a), (b), and (c), by removing the phase ``furnish the
Commission with'' and its place adding the phrase ``file with the
Commission two paper copies of'';
0
b. In paragraph (d), by adding the phrase ``two paper copies of'' after
the phrase ``the applicant must furnish the Commission with''; and
0
c. By revising paragraphs (e), (f), (g), (h), and (i).
    The revisions read as follows:

Sec.  240.17g-1  Application for registration as a nationally
recognized statistical rating organization.

* * * * *
    (e) Update of registration. A nationally recognized statistical
rating organization amending materially inaccurate information in its
application for registration pursuant to section 15E(b)(1) of the Act
(15 U.S.C. 78o-7(b)(1)) must promptly file with the Commission an
update of its registration on Form NRSRO that follows all applicable
instructions for the Form. A Form NRSRO and the information and
documents in Exhibits 2 through 9 to Form NRSRO, as applicable, filed
under this paragraph must be filed electronically with the Commission
on EDGAR as a PDF document in the format required by the EDGAR Filer
Manual, as defined in Rule 11 of Regulation S-T (Sec.  232.11 of this
chapter).
    (f) Annual certification. A nationally recognized statistical
rating organization amending its application for registration pursuant
to section 15E(b)(2) of the Act (15 U.S.C. 78o-7(b)(2)) must file with
the Commission an annual certification on Form NRSRO that follows all
applicable instructions for the Form not later than 90 days after the
end of each calendar year. A Form NRSRO and the information and
documents in Exhibits 1 through 9 to Form NRSRO filed under this
paragraph must be filed electronically with the Commission on EDGAR as
a PDF document in the format required by the EDGAR Filer Manual, as
defined in Rule 11 of Regulation S-T.
    (g) Withdrawal from registration. A nationally recognized
statistical rating organization withdrawing from registration pursuant
to section 15E(e)(1) of the Act (15 U.S.C. 78o-7(e)(1)) must furnish
the Commission with a notice of withdrawal from registration on Form
NRSRO that follows all applicable instructions for the Form. The
withdrawal from registration will become effective 45 calendar days
after the notice is furnished to the Commission upon such terms and
conditions as the Commission may establish as necessary in the public
interest or for the protection of investors. A Form NRSRO furnished
under this paragraph must be furnished electronically with the
Commission on EDGAR as a PDF document in the format required by the
EDGAR Filer Manual, as defined in Rule 11 of Regulation S-T.
    (h) Filing or furnishing Form NRSRO. A Form NRSRO filed or
furnished, as applicable, under any paragraph of this section will be
considered filed with or furnished to the Commission on the date the
Commission receives a complete and properly executed Form NRSRO that
follows all applicable instructions for the Form. Information filed or
furnished, as applicable, on a confidential basis and for which
confidential treatment has been requested pursuant to applicable
Commission rules will be accorded confidential treatment to the extent
permitted by law.
    (i) Public availability of Form NRSRO. A nationally recognized
statistical rating organization must make its current Form NRSRO and
information and documents in Exhibits 1 through 9 to Form NRSRO
publicly and freely available on an easily accessible portion of its
corporate Internet Web site within 10 business days after the date of
the Commission order granting an initial application for registration
as a nationally recognized statistical rating organization or an
application to register for an additional class of credit ratings and
within 10 business days after filing with or furnishing to, as
applicable, the Commission a Form NRSRO under paragraph (e), (f), or
(g) of this section. In addition, a nationally recognized statistical
rating organization must make

its most recently filed Exhibit 1 to Form NRSRO freely available in
writing to any individual who requests a copy of the Exhibit.
0
6. Section 240.17g-2 is amended:
0
a. In paragraphs (a)(2)(iii) and (a)(7), by removing the words ``or
mortgage-backed'';
0
b. By adding paragraph (a)(9);
0
c. By revising paragraph (b)(1);
0
d. In paragraph (b)(9), by removing the words ``or mortgage-backed'';
0
e. By revising paragraph (b)(11);
0
f. By adding paragraphs (b)(12) through (15);
0
g. By revising paragraph (c);
0
h. By redesignating paragraph (d)(1) as paragraph (d); and
0
i. By removing paragraphs (d)(2) and (d)(3);
    The additions and revisions read as follows:

Sec.  240.17g-2  Records to be made and retained by nationally
recognized statistical rating organizations.

    (a) * * *
    (9) A record documenting the policies and procedures the nationally
recognized statistical rating organization is required to establish,
maintain, and enforce pursuant to section 15E(h)(4)(A) of the Act (15
U.S.C. 78o-7(h)(4)(A)) and Sec.  240.17g-8(c).
* * * * *
    (b) * * *
    (1) Significant records (for example, bank statements, invoices,
and trial balances) underlying the information included in the annual
financial reports the nationally recognized statistical rating
organization filed with or furnished to, as applicable, the Commission
pursuant to Sec.  240.17g-3.
* * * * *
    (11) Forms NRSRO (including Exhibits and accompanying information
and documents) the nationally recognized statistical rating
organization filed with or furnished to, as applicable, the Commission.
    (12) The internal control structure the nationally recognized
statistical rating organization is required to establish, maintain,
enforce, and document pursuant to section 15E(c)(3)(A) of the Act (15
U.S.C. 78o-7(c)(3)(A)).
    (13) The policies and procedures the nationally recognized
statistical rating organization is required to establish, maintain,
enforce, and document pursuant to Sec.  240.17g-8(a).
    (14) The policies and procedures the nationally recognized
statistical rating organization is required to establish, maintain,
enforce, and document pursuant to Sec.  240.17g-8(b).
    (15) The standards of training, experience, and competence for
credit analysts the nationally recognized statistical rating
organization is required to establish, maintain, enforce, and document
pursuant to Sec.  240.17g-9.
    (c) Record retention periods. The records required to be retained
pursuant to paragraphs (a) and (b) of this section must be retained for
three years after the date the record is made or received, except that
a record identified in paragraph (a)(9), (b)(12), (b)(13), (b)(14), or
(b)(15) of this section must be retained until three years after the
date the record is replaced with an updated record.
* * * * *

0
7. Section 240.17g-3 is amended:
0
a. By revising the section heading;
0
b. By revising paragraph (a) introductory text;
0
c. In paragraph (a)(1) introductory text, by removing the first word
``Audited'' and in its place adding the phrase ``File with the
Commission a financial report, as of the end of the fiscal year,
containing audited'';
0
d. In paragraph (a)(2) introductory text, by removing the first word
``If'' and in its place adding the phrase ``File with the Commission a
financial report, as of the end of the fiscal year, containing, if'';
0
e. In the Note to paragraph (a)(2), by removing the word ``furnished''
and in its place adding the word ``filed'';
0
f. In paragraphs (a)(3) introductory text, (a)(4) introductory text,
and (a)(5) introductory text, by removing the first word ``An'' and in
its place adding the phrase ``File with the Commission an unaudited
financial report, as of the end of the fiscal year,'';
0
g. In paragraph (a)(6) introductory text, by removing the first word
``An'' and in its place adding the phrase ``Furnish the Commission with
an unaudited report, as of the end of the fiscal year,'';
0
h. In the Note to paragraph (a)(6), by removing the words ``or
mortgage-backed'';
0
i. By adding paragraphs (a)(7) and (8);
0
j. By redesignating paragraph (b) as paragraph (b)(1) and revising it;
0
k. By adding paragraphs (b)(2), (d), and (e).
    The additions and revisions read as follows:

Sec.  240.17g-3  Annual financial and other reports to be filed or
furnished by nationally recognized statistical rating organizations.

    (a) A nationally recognized statistical rating organization must
annually, not more than 90 calendar days after the end of its fiscal
year (as indicated on its current Form NRSRO):
* * * * *
    (7)(i) File with the Commission an unaudited report containing an
assessment by management of the effectiveness during the fiscal year of
the internal control structure governing the implementation of and
adherence to policies, procedures, and methodologies for determining
credit ratings the nationally recognized statistical rating
organization is required to establish, maintain, enforce, and document
pursuant to section 15E(c)(3)(A) of the Act (15 U.S.C. 78o-7(c)(3)(A))
that includes:
    (A) A description of the responsibility of management in
establishing and maintaining an effective internal control structure;
    (B) A description of each material weakness in the internal control
structure identified during the fiscal year, if any, and a description,
if applicable, of how each identified material weakness was addressed;
and
    (C) A statement as to whether the internal control structure was
effective as of the end of the fiscal year.
    (ii) Management is not permitted to conclude that the internal
control structure of the nationally recognized statistical rating
organization was effective as of the end of the fiscal year if there
were one or more material weaknesses in the internal control structure
as of the end of the fiscal year.
    (iii) For purposes of this paragraph (a)(7), a deficiency in the
internal control structure exists when the design or operation of a
control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect a failure of
the nationally recognized statistical rating organization to:
    (A) Implement a policy, procedure, or methodology for determining
credit ratings in accordance with the policies and procedures of the
nationally recognized statistical rating organization; or
    (B) Adhere to an implemented policy, procedure, or methodology for
determining credit ratings.
    (iv) For purposes of this paragraph (a)(7), a material weakness
exists if a deficiency, or a combination of deficiencies, in the design
or operation of the internal control structure creates a reasonable
possibility that a failure identified in paragraph (a)(7)(iii) of this
section that is material will not be prevented or detected on a timely
basis.
    (8) File with the Commission an unaudited annual report on the
compliance of the nationally recognized statistical rating organization
with the securities laws and the policies and procedures of the
nationally recognized statistical rating organization pursuant

to section 15E(j)(5)(B) of the Act (15 U.S.C. 78o-7(j)(5)(B)).
    (b)(1) The nationally recognized statistical rating organization
must attach to the reports filed or furnished, as applicable, pursuant
to paragraphs (a)(1) through (6) of this section a signed statement by
a duly authorized person associated with the nationally recognized
statistical rating organization stating that the person has
responsibility for the reports and, to the best knowledge of the
person, the reports fairly present, in all material respects, the
financial condition, results of operations, cash flows, revenues,
analyst compensation, and credit rating actions of the nationally
recognized statistical rating organization for the period presented;
and
    (2) The nationally recognized statistical rating organization must
attach to the report filed pursuant to paragraph (a)(7) of this section
a signed statement by the chief executive officer of the nationally
recognized statistical rating organization or, if the nationally
recognized statistical rating organization does not have a chief
executive officer, an individual performing similar functions, stating
that the chief executive officer or equivalent individual has
responsibility for the report and, to the best knowledge of the chief
executive officer or equivalent individual, the report fairly presents,
in all material respects: an assessment by management of the
effectiveness of the internal control structure during the fiscal year
that includes a description of the responsibility of management in
establishing and maintaining an effective internal control structure; a
description of each material weakness in the internal control structure
identified during the fiscal year, if any, and a description, if
applicable, of how each identified material weakness was addressed; and
an assessment by management of the effectiveness of the internal
control structure as of the end of the fiscal year.
* * * * *
    (d) Electronic filing. The reports must be filed with or furnished
to, as applicable, the Commission electronically on EDGAR as PDF
documents in the format required by the EDGAR Filer Manual, as defined
in Rule 11 of Regulation S-T.
    (e) Confidential treatment. Information in a report filed or
furnished, as applicable, on a confidential basis and for which
confidential treatment has been requested pursuant to applicable
Commission rules will be accorded confidential treatment to the extent
permitted by law. Confidential treatment may be requested by marking
each page ``Confidential Treatment Requested'' and by complying with
Commission rules governing confidential treatment.

0
8. Section 240.17g-5 is amended:
0
a. In paragraph (a)(3) introductory text, by removing the words ``or
mortgaged-backed'';
0
b. In paragraphs (a)(3)(i), (a)(3)(ii) introductory text,
(a)(3)(iii)(A), (a)(3)(iii)(B) introductory text, and (a)(3)(iii)(C)
and (D), by removing the words ``Web site'' and in their place adding
the word ``website'';
0
c. In paragraphs (a)(3)(i) and (a)(3)(iii)(A), by removing the citation
``(a)(3)(iii)(C) and (a)(3)(iii)(D)'' and in their place adding the
words ``(a)(3)(iii)(C) through (E)'';
0
d. By adding paragraph (a)(3)(iii)(E);
0
e. In paragraph (b)(9), by removing the words ``or mortgaged-backed'';
0
f. In paragraph (c)(6), by removing the word ``or'' at the end of the
paragraph after the semicolon;
0
g. In paragraph (c)(7), by adding the word ``or'' at the end of the
paragraph after the semicolon;
0
f. By adding paragraph (c)(8);
0
h. In paragraph (e) introductory text, by removing the words ``Web
site'' and in their place adding the word ``Web site'' and in the
undesignated certification paragraph, removing the words ``websites''
and in their place adding the word ``Web sites''; and
0
i. By adding paragraphs (f) and (g).
    The additions read as follows:

Sec.  240.17g-5  Conflicts of interest.

    (a) * * *
    (3) * * *
    (iii) * * *
    (E) Post on such password-protected Internet Web site, promptly
after receipt, any executed Form ABS Due Diligence-15E (Sec.  249b.500
of this chapter) containing information about the security or money
market instrument delivered by a person employed to provide third-party
due diligence services with respect to the security or money market
instrument.
* * * * *
    (c) * * *
    (8) The nationally recognized statistical rating organization
issues or maintains a credit rating where a person within the
nationally recognized statistical rating organization who participates
in determining or monitoring the credit rating, or developing or
approving procedures or methodologies used for determining the credit
rating, including qualitative and quantitative models, also:
    (i) Participates in sales or marketing of a product or service of
the nationally recognized statistical rating organization or a product
or service of an affiliate of the nationally recognized statistical
rating organization; or
    (ii) Is influenced by sales or marketing considerations.
* * * * *
    (f) Upon written application by a nationally recognized statistical
rating organization, the Commission may exempt, either unconditionally
or on specified terms and conditions, such nationally recognized
statistical rating organization from the provisions of paragraph (c)(8)
of this section if the Commission finds that due to the small size of
the nationally recognized statistical rating organization it is not
appropriate to require the separation within the nationally recognized
statistical rating organization of the production of credit ratings
from sales and marketing activities and such exemption is in the public
interest.
    (g) In a proceeding pursuant to section 15E(d)(1) of the Act (15
U.S.C. 78o-7(d)(1)), the Commission shall suspend or revoke the
registration of a nationally recognized statistical rating organization
if the Commission finds, in lieu of a finding specified under sections
15E(d)(1)(A), (B), (C), (D), (E), or (F) of the Act (15 U.S.C. 78o-
7(d)(1)(A) through (F)), that the nationally recognized statistical
rating organization has violated a rule issued under section 15E(h) of
the Act (15 U.S.C. 78o-7(h)) and that the violation affected a credit
rating.

Sec.  240.17g-6  [Amended]

0
9. Section 240.17g-6 is amended in paragraph (a)(4) by removing the
words ``or mortgage-backed''.

0
10. Section 240.17g-7 is revised to read as follows:

Sec.  240.17g-7  Disclosure requirements.

    (a) Disclosures to be made when taking a rating action. Except as
provided in paragraph (a)(3) of this section, a nationally recognized
statistical rating organization must publish the items described in
paragraphs (a)(1) and (2) of this section, as applicable, when taking a
rating action with respect to a credit rating assigned to an obligor,
security, or money market instrument in a class of credit ratings for
which the nationally recognized statistical rating organization is
registered. For purposes of this section, the term rating action means
any of the following: the publication of an expected or preliminary
credit rating assigned to an obligor, security, or

money market instrument before the publication of an initial credit
rating; an initial credit rating; an upgrade or downgrade of an
existing credit rating (including a downgrade to, or assignment of,
default); and an affirmation or withdrawal of an existing credit rating
if the affirmation or withdrawal is the result of a review of the
credit rating assigned to the obligor, security, or money market
instrument by the nationally recognized statistical rating organization
using applicable procedures and methodologies for determining credit
ratings. The items described in paragraphs (a)(1) and (2) of this
section must be published in the same manner as the credit rating that
is the result or subject of the rating action and made available to the
same persons who can receive or access the credit rating that is the
result or subject of the rating action.
    (1) Information disclosure form. A form generated by the nationally
recognized statistical rating organization that meets the requirements
of paragraphs (a)(1)(i) through (iii) of this section.
    (i) Format. The form generated by the nationally recognized
statistical rating organization must be in a format that:
    (A) Organizes the information into numbered items that are
identified by the type of information being disclosed and a reference
to the paragraph in this section that specifies the disclosure of the
information, and are in the order that the paragraphs specifying the
information to be disclosed are codified in this section;
    Note to paragraph (a)(1)(i)(A): A given item in the form should be
identified by a title that identifies the type of information and
references paragraph (a)(1)(ii)(A), (B), (C), (D), (E), (F), (G), (H),
(I), (J), (K), (L), (M), (N), or (a)(2) of this section based on the
information being disclosed in the item. For example, the information
specified in paragraph (a)(1)(ii)(C) of this section should be
identified with the caption ``Main Assumptions and Principles Used to
Construct the Rating Methodology used to Determine the Credit Rating as
required by Paragraph (a)(1)(ii)(C) of Rule 17g-7''). The form must
organize the items of information in the following order: items 1
through 14 must contain the information specified in paragraphs
(a)(1)(ii)(A) through (N) of this section, respectively, and item 15
must contain the certifications specified in paragraph (a)(2) of this
section (the information specified in each paragraph comprising a
separate item). For example, item 3 must contain the information
specified in paragraph (a)(1)(ii)(C) of this section.
    (B) Is easy to use and helpful for users of credit ratings to
understand the information contained in the form; and
    (C) Provides the content described in paragraphs (a)(1)(ii)(K)
through (M) of this section in a manner that is directly comparable
across types of obligors, securities, and money market instruments.
    (ii) Content. The form generated by the nationally recognized
statistical rating organization must contain the following information
about the credit rating:
    (A) The symbol, number, or score in the rating scale used by the
nationally recognized statistical rating organization to denote credit
rating categories and notches within categories assigned to the
obligor, security, or money market instrument that is the subject of
the credit rating and, as applicable, the identity of the obligor or
the identity and a description of the security or money market
instrument;
    (B) The version of the procedure or methodology used to determine
the credit rating;
    (C) The main assumptions and principles used in constructing the
procedures and methodologies used to determine the credit rating,
including qualitative methodologies and quantitative inputs, and, if
the credit rating is for a structured finance product, assumptions
about the correlation of defaults across the underlying assets;
    (D) The potential limitations of the credit rating, including the
types of risks excluded from the credit rating that the nationally
recognized statistical rating organization does not comment on,
including, as applicable, liquidity, market, and other risks;
    (E) Information on the uncertainty of the credit rating including:
    (1) Information on the reliability, accuracy, and quality of the
data relied on in determining the credit rating; and
    (2) A statement relating to the extent to which data essential to
the determination of the credit rating were reliable or limited,
including:
    (i) Any limits on the scope of historical data; and
    (ii) Any limits on accessibility to certain documents or other
types of information that would have better informed the credit rating;
    (F) Whether and to what extent the nationally recognized
statistical rating organization used due diligence services of a third
party in taking the rating action, and, if the nationally recognized
statistical rating organization used such services, either:
    (1) A description of the information that the third party reviewed
in conducting the due diligence services and a summary of the findings
and conclusions of the third party; or
    (2) A cross-reference to a Form ABS Due Diligence-15E executed by
the third party that is published with the form, provided the cross-
referenced Form ABS Due Diligence-15E (Sec.  249b.500 of this chapter)
contains a description of the information that the third party reviewed
in conducting the due diligence services and a summary of the findings
and conclusions of the third party;
    (G) If applicable, how servicer or remittance reports were used,
and with what frequency, to conduct surveillance of the credit rating;
    (H) A description of the types of data about any obligor, issuer,
security, or money market instrument that were relied upon for the
purpose of determining the credit rating;
    (I) A statement containing an overall assessment of the quality of
information available and considered in determining the credit rating
for the obligor, security, or money market instrument, in relation to
the quality of information available to the nationally recognized
statistical rating organization in rating similar obligors, securities,
or money market instruments;
    (J) Information relating to conflicts of interest of the nationally
recognized statistical rating organization, which must include:
    (1) As applicable, a statement that the nationally recognized
statistical rating organization was:
    (i) Paid to determine the credit rating by the obligor being rated
or the issuer, underwriter, depositor, or sponsor of the security or
money market instrument being rated;
    (ii) Paid to determine the credit rating by a person other than the
obligor being rated or the issuer, underwriter, depositor, or sponsor
of the security or money market instrument being rated; or
    (iii) Not paid to determine the credit rating;
    (2) If applicable, in a statement required under paragraph
(a)(1)(ii)(J)(1)(i) or (ii) of this section, a statement that the
nationally recognized statistical rating organization also was paid for
services other than determining credit ratings during the most recently
ended fiscal year by the person that paid the nationally recognized
statistical rating organization to determine the credit rating; and
    (3) If the rating action results from a review conducted pursuant
to section 15E(h)(4)(A) of the Act (15 U.S.C. 78o-7(h)(4)(A)) and Sec.
240.17g-8(c), the following information (as applicable):

    (i) If the rating action is a revision of a credit rating pursuant
to Sec.  240.17g-8(c)(2)(i)(A), an explanation that the reason for the
action is the discovery that a credit rating assigned to the obligor,
security, or money market instrument in one or more prior rating
actions was influenced by a conflict of interest, including a
description of the nature of the conflict, the date and associated
credit rating of each prior rating action that the nationally
recognized statistical rating organization has determined was
influenced by the conflict, and a description of the impact the
conflict had on the prior rating action or actions; or
    (ii) If the rating action is an affirmation of a credit rating
pursuant to Sec.  240.17g-8(c)(2)(i)(B), an explanation that the reason
for the action is the discovery that a credit rating assigned to the
obligor, security, or money market instrument in one or more prior
rating actions was influenced by a conflict of interest, including a
description of the nature of the conflict, an explanation of why no
rating action was taken to revise the credit rating notwithstanding the
presence of the conflict, the date and associated credit rating of each
prior rating action the nationally recognized statistical rating
organization has determined was influenced by the conflict, and a
description of the impact the conflict had on the prior rating action
or actions.
    (K) An explanation or measure of the potential volatility of the
credit rating, including:
    (1) Any factors that are reasonably likely to lead to a change in
the credit rating; and
    (2) The magnitude of the change that could occur under different
market conditions determined by the nationally recognized statistical
rating organization to be relevant to the rating;
    (L) Information on the content of the credit rating, including:
    (1) If applicable, the historical performance of the credit rating;
and
    (2) The expected probability of default and the expected loss in
the event of default;
    (M) Information on the sensitivity of the credit rating to
assumptions made by the nationally recognized statistical rating
organization, including:
    (1) Five assumptions made in the ratings process that, without
accounting for any other factor, would have the greatest impact on the
credit rating if the assumptions were proven false or inaccurate;
provided that, if the nationally recognized statistical rating
organization has made fewer than five such assumptions, it need only
disclose information on the assumptions that would have an impact on
the credit rating; and
    (2) An analysis, using specific examples, of how each of the
assumptions identified in paragraph (a)(1)(ii)(M)(1) of this section
impacts the credit rating;
    (N)(1) If the credit rating is assigned to an asset-backed security
as defined in section 3(a)(79) of the Act (15 U.S.C. 78c(a)(79)),
information on:
    (i) The representations, warranties, and enforcement mechanisms
available to investors which were disclosed in the prospectus, private
placement memorandum or other offering documents for the asset-backed
security and that relate to the asset pool underlying the asset-backed
security; and
    (ii) How they differ from the representations, warranties, and
enforcement mechanisms in issuances of similar securities;
    (2) A nationally recognized statistical rating organization must
include the information required under paragraph (a)(1)(ii)(N)(1) of
this section only if the rating action is a preliminary credit rating,
an initial credit rating, or, in the case of a rating action other than
a preliminary credit rating or initial credit rating, the rating action
is the first rating action taken after a material change in the
representations, warranties, or enforcement mechanisms described in
paragraph (a)(1)(ii)(N)(1) of this section and the rating action
involves an asset-backed security that was initially rated by the
nationally recognized statistical rating organization on or after
September 26, 2011.
    (iii) Attestation. The nationally recognized statistical rating
organization must attach to the form a signed statement by a person
within the nationally recognized statistical rating organization
stating that the person has responsibility for the rating action and,
to the best knowledge of the person:
    (A) No part of the credit rating was influenced by any other
business activities;
    (B) The credit rating was based solely upon the merits of the
obligor, security, or money market instrument being rated; and
    (C) The credit rating was an independent evaluation of the credit
risk of the obligor, security, or money market instrument.
    (2) Third-party due diligence certification. Any executed Form ABS
Due Diligence-15E (Sec.  249b.500 of this chapter) containing
information about the security or money market instrument subject to
the rating action that is received by the nationally recognized
statistical rating organization or obtained by the nationally
recognized statistical rating organization through an Internet Web site
maintained by the issuer, sponsor, or underwriter of the security or
money market instrument pursuant to Sec.  240.17g-5(a)(3).
    (3) Exemption. The provisions of paragraphs (a)(1) and (a)(2) do
not apply to a rating action if:
    (i) The rated obligor or issuer of the rated security or money
market instrument is not a U.S. person (as defined in Sec.  230.902(k)
of this chapter); and
    (ii) The nationally recognized statistical rating organization has
a reasonable basis to conclude that a security or money market
instrument issued by the rated obligor or the issuer will be offered
and sold upon issuance, and that any underwriter or arranger linked to
the security or money market instrument will effect transactions in the
security or money market instrument after issuance, only in
transactions that occur outside the United States.
    (b) Disclosure of credit rating histories--(1) Credit ratings
subject to the disclosure requirement. A nationally recognized
statistical rating organization must publicly disclose for free on an
easily accessible portion of its corporate Internet Web site:
    (i) For a class of credit rating in which the nationally recognized
statistical rating organization is registered with the Commission as of
the effective date of paragraph (b) of this section, the credit rating
assigned to each obligor, security, and money market instrument in the
class that was outstanding as of, or initially determined on or after,
the date three years prior to the effective date of this rule, and any
subsequent upgrade or downgrade of the credit rating (including a
downgrade to, or assignment of, default), and a withdrawal of the
credit rating; and
    (ii) For a class of credit rating in which the nationally
recognized statistical rating organization is registered with the
Commission after the effective date of paragraph (b) of this section,
the credit rating assigned to each obligor, security, and money market
instrument in the class that was outstanding as of, or initially
determined on or after, the date three years prior to the date the
nationally recognized statistical rating organization is registered in
the class, and any subsequent upgrade or downgrade of the credit rating
(including a downgrade to, or assignment of, default), and a withdrawal
of the credit rating.
    (2) Information. A nationally recognized statistical rating
organization must include, at a minimum, the

following information with each credit rating disclosed pursuant to
paragraph (b)(1) of this section:
    (i) The identity of the nationally recognized statistical rating
organization disclosing the rating action;
    (ii) The date of the rating action;
    (iii) If the rating action is taken with respect to a credit rating
of an obligor as an entity, the following identifying information about
the obligor, as applicable:
    (A) The Legal Entity Identifier issued by a utility endorsed or
otherwise governed by the Global LEI Regulatory Oversight Committee or
the Global LEI Foundation (LEI) of the obligor, if available, or, if an
LEI is not available, the Central Index Key (CIK) number of the
obligor, if available; and
    (B) The name of the obligor.
    (iv) If the rating action is taken with respect to a credit rating
of a security or money market instrument, as applicable:
    (A) The LEI of the issuer of the security or money market
instrument, if available, or, if an LEI is not available, the CIK
number of the issuer of the security or money market instrument, if
available;
    (B) The name of the issuer of the security or money market
instrument; and
    (C) The CUSIP of the security or money market instrument;
    (v) A classification of the rating action as either:
    (A) An addition to the rating history disclosure because the credit
rating was outstanding as of the date three years prior to the
effective date of the requirements in paragraph (b) of this section or
because the credit rating was outstanding as of the date three years
prior to the nationally recognized statistical rating organization
becoming registered in the class of credit ratings;
    (B) An initial credit rating;
    (C) An upgrade of an existing credit rating;
    (D) A downgrade of an existing credit rating, which would include
classifying the obligor, security, or money market instrument as in
default, if applicable; or
    (E) A withdrawal of an existing credit rating and, if the
classification is withdrawal, the nationally recognized statistical
rating organization also must classify the reason for the withdrawal as
either:
    (1) The obligor defaulted, or the security or money market
instrument went into default;
    (2) The obligation subject to the credit rating was extinguished by
payment in full of all outstanding principal and interest due on the
obligation according to the terms of the obligation; or
    (3) The credit rating was withdrawn for reasons other than those
set forth in paragraph (b)(2)(v)(E)(1) or (2) of this section; and
    (vi) The classification of the class or subclass that applies to
the credit rating as either:
    (A) Financial institutions, brokers, or dealers;
    (B) Insurance companies;
    (C) Corporate issuers; or
    (D) Issuers of structured finance products in one of the following
subclasses:
    (1) Residential mortgage backed securities (``RMBS'') (for purposes
of this subclass, RMBS means a securitization primarily of residential
mortgages);
    (2) Commercial mortgage backed securities (``CMBS'') (for purposes
of this subclass, CMBS means a securitization primarily of commercial
mortgages);
    (3) Collateralized loan obligations (``CLOs'') (for purposes of
this subclass, a CLO means a securitization primarily of commercial
loans);
    (4) Collateralized debt obligations (``CDOs'') (for purposes of
this subclass, a CDO means a securitization primarily of other debt
instruments such as RMBS, CMBS, CLOs, CDOs, other asset backed
securities, and corporate bonds);
    (5) Asset-backed commercial paper conduits (``ABCP'') (for purposes
of this subclass, ABCP means short term notes issued by a structure
that securitizes a variety of financial assets, such as trade
receivables or credit card receivables, which secure the notes);
    (6) Other asset-backed securities (``other ABS'') (for purposes of
this subclass, other ABS means a securitization primarily of auto
loans, auto leases, floor plans, credit card receivables, student
loans, consumer loans, or equipment leases); or
    (7) Other structured finance products (``other SFPs'') (for
purposes of this subclass, other SFPs means any structured finance
product not identified in paragraphs (b)(2)(iv)(D)(1) through (6)) of
this section; or
    (E) Issuers of government securities, municipal securities, or
securities issued by a foreign government in one of the following
subclasses:
    (1) Sovereign issuers;
    (2) U.S. public finance; or
    (3) International public finance; and
    (vii) The credit rating symbol, number, or score in the applicable
rating scale of the nationally recognized statistical rating
organization assigned to the obligor, security, or money market
instrument as a result of the rating action or, if the credit rating
remained unchanged as a result of the action, the credit rating symbol,
number, or score in the applicable rating scale of the nationally
recognized statistical rating organization assigned to the obligor,
security, or money market instrument as of the date of the rating
action (in either case, include a credit rating in a default category,
if applicable).
    (3) Format and frequency of updating. The information identified in
paragraph (b)(2) of this section must be disclosed in an interactive
data file that uses an XBRL (eXtensible Business Reporting Language)
format and the List of XBRL Tags for nationally recognized statistical
rating organizations as published on the Internet Web site of the
Commission, and must be updated no less frequently than monthly.
    (4) Timing. The nationally recognized statistical rating
organization must disclose the information required in paragraph (b)(2)
of this section:
    (i) Within twelve months from the date the rating action is taken,
if the credit rating subject to the action was paid for by the obligor
being rated or by the issuer, underwriter, depositor, or sponsor of the
security being rated; or
    (ii) Within twenty-four months from the date the rating action is
taken, if the credit rating subject to the action is not a credit
rating described in paragraph (b)(4)(i) of this section.
    (5) Removal of a credit rating history. The nationally recognized
statistical rating organization may cease disclosing a rating history
of an obligor, security, or money market instrument if at least 15
years have elapsed since a rating action classified as a withdrawal of
a credit rating pursuant to paragraph (b)(2)(v)(E) of this section was
disclosed in the rating history of the obligor, security, or money
market instrument.
    11. Section 240.17g-8 is added to read as follows:

Sec.  240.17g-8  Policies, procedures, and internal controls.

    (a) Policies and procedures with respect to the procedures and
methodologies used to determine credit ratings. A nationally recognized
statistical rating organization must establish, maintain, enforce, and
document policies and procedures reasonably designed to ensure:
    (1) That the procedures and methodologies, including qualitative
and quantitative data and models, the nationally recognized statistical
rating organization uses to determine credit ratings are approved by
its board of directors or a body performing a function similar to that
of a board of directors.
    (2) That the procedures and methodologies, including qualitative

and quantitative data and models, the nationally recognized statistical
rating organization uses to determine credit ratings are developed and
modified in accordance with the policies and procedures of the
nationally recognized statistical rating organization.
    (3) That material changes to the procedures and methodologies,
including changes to qualitative and quantitative data and models, the
nationally recognized statistical rating organization uses to determine
credit ratings are:
    (i) Applied consistently to all current and future credit ratings
to which the changed procedures or methodologies apply; and
    (ii) To the extent that the changes are to surveillance or
monitoring procedures and methodologies, applied to current credit
ratings to which the changed procedures or methodologies apply within a
reasonable period of time, taking into consideration the number of
credit ratings impacted, the complexity of the procedures and
methodologies used to determine the credit ratings, and the type of
obligor, security, or money market instrument being rated.
    (4) That the nationally recognized statistical rating organization
promptly publishes on an easily accessible portion of its corporate
Internet Web site:
    (i) Material changes to the procedures and methodologies, including
to qualitative models or quantitative inputs, the nationally recognized
statistical rating organization uses to determine credit ratings, the
reason for the changes, and the likelihood the changes will result in
changes to any current credit ratings; and
    (ii) Notice of the existence of a significant error identified in a
procedure or methodology, including a qualitative or quantitative
model, the nationally recognized statistical rating organization uses
to determine credit ratings that may result in a change to current
credit ratings.
    (5) That the nationally recognized statistical rating organization
discloses the version of a credit rating procedure or methodology,
including the qualitative methodology or quantitative inputs, used with
respect to a particular credit rating.
    (b) Policies and procedures with respect to credit rating symbols,
numbers, or scores. A nationally recognized statistical rating
organization must establish, maintain, enforce, and document policies
and procedures that are reasonably designed to:
    (1) Assess the probability that an issuer of a security or money
market instrument will default, fail to make timely payments, or
otherwise not make payments to investors in accordance with the terms
of the security or money market instrument.
    (2) Clearly define each symbol, number, or score in the rating
scale used by the nationally recognized statistical rating organization
to denote a credit rating category and notches within a category for
each class of credit ratings for which the nationally recognized
statistical rating organization is registered (including subclasses
within each class) and to include such definitions in Exhibit 1 to Form
NRSRO (Sec.  249b.300 of this chapter).
    (3) Apply any symbol, number, or score defined pursuant to
paragraph (b)(2) of this section in a manner that is consistent for all
types of obligors, securities, and money market instruments for which
the symbol, number, or score is used.
    (c) Policies and procedures with respect to look-back reviews. The
policies and procedures a nationally recognized statistical rating
organization is required to establish, maintain, and enforce pursuant
to section 15E(h)(4)(A) of the Act (15 U.S.C. 78o-7(h)(4)(A)) must
address instances in which a review conducted pursuant to those
policies and procedures determines that a conflict of interest
influenced a credit rating assigned to an obligor, security, or money
market instrument by including, at a minimum, procedures that are
reasonably designed to ensure that the nationally recognized
statistical rating organization will:
    (1) Promptly determine whether the current credit rating assigned
to the obligor, security, or money market instrument must be revised so
that it no longer is influenced by a conflict of interest and is solely
a product of the documented procedures and methodologies the nationally
recognized statistical rating organization uses to determine credit
ratings; and
    (2)(i) Promptly publish, based on the determination of whether a
current credit rating referred to in paragraph (c)(1) of this section
must be revised (as applicable):
    (A) A revised credit rating, if appropriate, and include with the
publication of the revised credit rating the information required by
Sec.  240.17g-7(a)(1)(ii)(J)(3)(i); or
    (B) An affirmation of the credit rating, if appropriate, and
include with the publication of the affirmation the information
required by Sec.  240.17g-7(a)(1)(ii)(J)(3)(ii).
    (ii) If the credit rating is not revised or affirmed pursuant to
paragraph (c)(2)(i) of this section within fifteen calendar days of the
date of the discovery that the credit rating was influenced by a
conflict of interest, publish a rating action placing the credit rating
on watch or review and include with the publication an explanation that
the reason for the action is the discovery that the credit rating was
influenced by a conflict of interest.
    (d) Internal control structures. A nationally recognized
statistical rating organization must take into consideration the
factors identified in paragraphs (d)(1) through (4) of this section
when establishing, maintaining, enforcing, and documenting an effective
internal control structure governing the implementation of and
adherence to policies, procedures, and methodologies for determining
credit ratings pursuant to section 15E(c)(3)(A) of the Act.
    (1) With respect to establishing the internal control structure,
the nationally recognized statistical rating organization must take
into consideration:
    (i) Controls reasonably designed to ensure that a newly developed
methodology or proposed update to an in-use methodology for determining
credit ratings is subject to an appropriate review process (for
example, by persons who are independent from the persons that developed
the methodology or methodology update) and to management approval prior
to the new or updated methodology being employed by the nationally
recognized statistical rating organization to determine credit ratings;
    (ii) Controls reasonably designed to ensure that a newly developed
methodology or update to an in-use methodology for determining credit
ratings is disclosed to the public for consultation prior to the new or
updated methodology being employed by the nationally recognized
statistical rating organization to determine credit ratings, that the
nationally recognized statistical rating organization makes comments
received as part of the consultation publicly available, and that the
nationally recognized statistical rating organization considers the
comments before implementing the methodology;
    (iii) Controls reasonably designed to ensure that in-use
methodologies for determining credit ratings are periodically reviewed
(for example, by persons who are independent from the persons who
developed and/or use the methodology) in order to analyze whether the
methodology should be updated;
    (iv) Controls reasonably designed to ensure that market
participants have an opportunity to provide comment on whether in-use
methodologies for

determining credit ratings should be updated, that the nationally
recognized statistical rating organization makes any such comments
received publicly available, and that the nationally recognized
statistical rating organization considers the comments;
    (v) Controls reasonably designed to ensure that newly developed or
updated quantitative models proposed to be incorporated into a credit
rating methodology are evaluated and validated prior to being put into
use;
    (vi) Controls reasonably designed to ensure that quantitative
models incorporated into in-use credit rating methodologies are
periodically reviewed and back-tested;
    (vii) Controls reasonably designed to ensure that a nationally
recognized statistical rating organization engages in analysis before
commencing the rating of a class of obligors, securities, or money
market instruments the nationally recognized statistical rating
organization has not previously rated to determine whether the
nationally recognized statistical rating organization has sufficient
competency, access to necessary information, and resources to rate the
type of obligor, security, or money market instrument;
    (viii) Controls reasonably designed to ensure that a nationally
recognized statistical rating organization engages in analysis before
commencing the rating of an ``exotic'' or ``bespoke'' type of obligor,
security, or money market instrument to review the feasibility of
determining a credit rating;
    (ix) Controls reasonably designed to ensure that measures (for
example, statistics) are used to evaluate the performance of credit
ratings as part of the review of in-use methodologies for determining
credit ratings to analyze whether the methodologies should be updated
or the work of the analysts employing the methodologies should be
reviewed;
    (x) Controls reasonably designed to ensure that, with respect to
determining credit ratings, the work and conclusions of the lead credit
analyst developing an initial credit rating or conducting surveillance
on an existing credit rating is reviewed by other analysts,
supervisors, or senior managers before a rating action is formally
taken (for example, having the work reviewed through a rating committee
process);
    (xi) Controls reasonably designed to ensure that a credit analyst
documents the steps taken in developing an initial credit rating or
conducting surveillance on an existing credit rating with sufficient
detail to permit an after-the-fact review or internal audit of the
rating file to analyze whether the analyst adhered to the nationally
recognized statistical rating organization's procedures and
methodologies for determining credit ratings;
    (xii) Controls reasonably designed to ensure that the nationally
recognized statistical rating organization conducts periodic reviews or
internal audits of rating files to analyze whether analysts adhere to
the nationally recognized statistical rating organization's procedures
and methodologies for determining credit ratings; and
    (xiii) Any other controls necessary to establish an effective
internal control structure taking into consideration the nature of the
business of the nationally recognized statistical rating organization,
including its size, activities, organizational structure, and business
model.
    (2) With respect to maintaining the internal control structure, the
nationally recognized statistical rating organization must take into
consideration:
    (i) Controls reasonably designed to ensure that the nationally
recognized statistical rating organization conducts periodic reviews of
whether it has devoted sufficient resources to implement and operate
the documented internal control structure as designed;
    (ii) Controls reasonably designed to ensure that the nationally
recognized statistical rating organization conducts periodic reviews or
ongoing monitoring to evaluate the effectiveness of the internal
control structure and whether it should be updated;
    (iii) Controls reasonably designed to ensure that any identified
deficiencies in the internal control structure are assessed and
addressed on a timely basis;
    (iv) Any other controls necessary to maintain an effective internal
control structure taking into consideration the nature of the business
of the nationally recognized statistical rating organization, including
its size, activities, organizational structure, and business model.
    (3) With respect to enforcing the internal control structure, the
nationally recognized statistical rating organization must take into
consideration:
    (i) Controls designed to ensure that additional training is
provided or discipline taken with respect to employees who fail to
adhere to requirements imposed by the internal control structure;
    (ii) Controls designed to ensure that a process is in place for
employees to report failures to adhere to the internal control
structure; and
    (iii) Any other controls necessary to enforce an effective internal
control structure taking into consideration the nature of the business
of the nationally recognized statistical rating organization, including
its size, activities, organizational structure, and business model.
    (4) With respect to documenting the internal control structure, the
nationally recognized statistical rating organization must take into
consideration any controls necessary to document an effective internal
control structure taking into consideration the nature of the business
of the nationally recognized statistical rating organization, including
its size, activities, organizational structure, and business model.

0
12. Section 240.17g-9 is added to read as follows:

Sec.  240.17g-9  Standards of training, experience, and competence for
credit analysts.

    (a) A nationally recognized statistical rating organization must
establish, maintain, enforce, and document standards of training,
experience, and competence for the individuals it employs to
participate in the determination of credit ratings that are reasonably
designed to achieve the objective that the nationally recognized
statistical rating organization produces accurate credit ratings in the
classes of credit ratings for which the nationally recognized
statistical rating organization is registered.
    (b) The nationally recognized statistical rating organization must
consider the following when establishing the standards required under
paragraph (a) of this section:
    (1) If the credit rating procedures and methodologies used by the
individual involve qualitative analysis, the knowledge necessary to
effectively evaluate and process the data relevant to the
creditworthiness of the obligor being rated or the issuer of the
securities or money market instruments being rated;
    (2) If the credit rating procedures and methodologies used by the
individual involve quantitative analysis, the technical expertise
necessary to understand any models and model inputs that are a part of
the procedures and methodologies;
    (3) The classes and subclasses of credit ratings for which the
individual participates in determining credit ratings and the factors
relevant to such classes and subclasses, including the geographic
location, sector, industry, regulatory and legal framework, and
underlying assets, applicable to the obligors or issuers in the classes
and subclasses; and
    (4) The complexity of the obligors, securities, or money market
instruments

for which the individual participates in determining credit ratings.
    (c) The nationally recognized statistical rating organization must
include the following in the standards required under paragraph (a) of
this section:
    (1) A requirement for periodic testing of the individuals employed
by the nationally recognized statistical rating organization to
participate in the determination of credit ratings on their knowledge
of the procedures and methodologies used by the nationally recognized
statistical rating organization to determine credit ratings in the
classes and subclasses of credit ratings for which the individual
participates in determining credit ratings; and
    (2) A requirement that at least one individual with an appropriate
level of experience in performing credit analysis, but not less than
three years, participates in the determination of a credit rating.

0
13. Section 240.17g-10 is added to read as follows:

Sec.  240.17g-10  Certification of providers of third-party due
diligence services in connection with asset-backed securities.

    (a) The written certification that a person employed to provide
third-party due diligence services is required to provide to a
nationally recognized statistical rating organization pursuant to
section 15E(s)(4)(B) of the Act (15 U.S.C. 78o-7(s)(4)(B)) must be on
Form ABS Due Diligence-15E (Sec.  249b.500 of this chapter).
    (b) The written certification must be signed by an individual who
is duly authorized by the person providing the third-party due
diligence services to make such a certification.
    (c) A person employed to provide third-party due diligence services
will be deemed to have satisfied its obligations under section
15E(s)(4)(B) of the Act (15 U.S.C. 78o-7(s)(4)(B)) if the person
promptly delivers an executed Form ABS Due Diligence-15E (Sec.
249b.500 of this chapter) after completion of the due diligence
services to:
    (1) A nationally recognized statistical rating organization that
provided a written request for the Form prior to the completion of the
due diligence services stating that the services relate to a credit
rating the nationally recognized statistical rating organization is
producing;
    (2) A nationally recognized statistical rating organization that
provides a written request for the Form after the completion of the due
diligence services stating that the services relate to a credit rating
the nationally recognized statistical rating organization is producing;
and
    (3) The issuer or underwriter of the asset-backed security for
which the due diligence services relate that maintains the Internet Web
site with respect to the asset-backed security pursuant to Sec.
240.17g-5(a)(3).
    (d) For purposes of section 15E(s)(4)(B) of the Act (15 U.S.C. 78o-
7(s)(4)(B)) and this section:
    (1) The term due diligence services means a review of the assets
underlying an asset-backed security, as defined in section 3(a)(79) of
the Act (15 U.S.C. 78c(a)(79)) for the purpose of making findings with
respect to:
    (i) The accuracy of the information or data about the assets
provided, directly or indirectly, by the securitizer or originator of
the assets;
    (ii) Whether the origination of the assets conformed to, or
deviated from, stated underwriting or credit extension guidelines,
standards, criteria, or other requirements;
    (iii) The value of collateral securing the assets;
    (iv) Whether the originator of the assets complied with federal,
state, or local laws or regulations; or
    (v) Any other factor or characteristic of the assets that would be
material to the likelihood that the issuer of the asset-backed security
will pay interest and principal in accordance with applicable terms and
conditions.
    (2) The term issuer includes a sponsor, as defined in Sec.
229.1101 of this chapter, or depositor, as defined in Sec.  229.1101 of
this chapter, that participates in the issuance of an asset-backed
security, as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79)).
    (3) The term originator has the same meaning as in section
15G(a)(4) of the Act (15 U.S.C. 78o-9(a)(4)).
    (4) The term securitizer has the same meaning as in section
15G(a)(3) of the Act (15 U.S.C. 78o-9(a)(3)).

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
14. The authority citation for part 249 continues to read as follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
0
15. Subpart O and Form ABS-15G (referenced in Sec.  249.1400) to Part
249 are revised to read as follows:

    Note: The text of Form ABS-15G does not, and this amendment will
not, appear in the Code of Federal Regulations.

Subpart O--Forms for Securitizers of Asset-Backed Securities

Sec.  249.1400  Form ABS-15G, Asset-backed securitizer report pursuant
to Section 15G of the Securities Exchange Act of 1934.

    This form shall be used for reports of information required by Rule
15Ga-1 (Sec.  240.15Ga-1 of this chapter) and Rule 15Ga-2 (Sec.
240.15Ga-2 of this chapter).

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By the Commission.

    Dated: August 27, 2014.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20890 Filed 9-12-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 138 (Tuesday, July 19, 2016)]
[Proposed Rules]
[Page 46851]
[FR Doc No: 2016-16922]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 73

[Docket No. FAA-2016-4282; Airspace Docket No. 16-AWP-3]

Proposed Establishment of Temporary Restricted Areas R-2509E, R-
2509W, and R-2509N; Twentynine Palms, CA; Withdrawal

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); withdrawal.

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SUMMARY: This action withdraws the NPRM published in the Federal
Register of March 30, 2016, proposing to establish temporary restricted
areas R-2509E, R-2509W, and R-2509N, Twentynine Palms, CA. The FAA has
determined that withdrawal of that NPRM is warranted due to
aeronautical impacts associated with the proposed action.

DATES: Effective date: 0901 UTC, July 19, 2016.

FOR FURTHER INFORMATION CONTACT: Colby Abbott, Airspace Policy Group,
Office of Airspace Services, Federal Aviation Administration, 800
Independence Avenue SW., Washington DC, 20591; telephone (202) 267-
8783.

SUPPLEMENTARY INFORMATION:

History

    An NPRM was published in the Federal Register of March 30, 2016 (81
FR 17619), to establish new temporary restricted areas R-2509E, R-
2509W, and R-2509N to accommodate a United States Marine Corps (USMC)
Large Scale Exercise (LSE) on new Twentynine Palms lands planned for
August 1 to August 18, 2016. The proposed new temporary restricted
areas would support live fire activities including anti-tank weapons,
mortars, and artillery, as well as Unmanned Aircraft Systems, fixed
wing, and rotary wing training activities conducting close air support
and live ordnance delivery. Efforts to mitigate the aeronautical
impacts associated with the proposed action have been unsuccessful and
there is no longer sufficient time remaining to complete the actions
required to process the airspace proposal in time for the August 1,
2016, exercise start date. Therefore, the NPRM is being withdrawn.

List of Subjects in 14 CFR Part 73

    Airspace, Prohibited areas, Restricted areas.

The Withdrawal

    In consideration of the foregoing, the NPRM for FR Doc. FAA-2016-
4282, Airspace Docket No. 16-AWP-3, as published in the Federal
Register of March 30, 2016 (81 FR 17619) (FR Doc. 2016-07166), is
hereby withdrawn.

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

    Issued in Washington, DC, on July 12, 2016.
Leslie M. Swann,
Acting Manager, Airspace Policy Group.
[FR Doc. 2016-16922 Filed 7-18-16; 8:45 am]
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[Federal Register: July 30, 2009 (Volume 74, Number 145)]
[Notices]
[Page 38067-38068]
[DOCID:fr30jy09-104]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60381; File No. SR-CBOE-2009-038]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving a Proposed Rule Change Relating to the
Complex Order Book

July 24, 2009.

I. Introduction

    On June 16, 2009, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposal to amend CBOE Rule 6.53C(c) to modify the
order and quote types that market participants may enter to trade
against orders resting in the complex order book (``COB''). The
proposed rule change was published for comment in the Federal Register
on June 24, 2009.\3\ The Commission received no comments regarding the
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60130 (June 17,
2009), 74 FR 30194.
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II. Description of the Proposal

    A market participant, as defined in CBOE Rule 6.45A or CBOE Rule
6.45B, may submit orders or quotes to trade against orders in the
COB.\4\ However, under CBOE Rule 6.53C(c)(i), the CBOE may determine
the options classes and the complex order origin types (i.e., non-
broker-dealer public customer, broker-dealers that are not Market
Makers or specialists on an options exchange, and/or Market Makers or
specialists on an options exchange) that are eligible to be entered
into (i.e., rest in) the COB, and whether such orders may route
directly to the COB and/or from PAR to the COB.
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    \4\ See CBOE Rule 6.53C(c)(ii)(3).
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    Currently, a market participant whose quotes or orders are not
eligible to rest in the COB, but that wishes to trade against orders
resting in the COB, may enter limit orders using an immediate-or-cancel
(``IOC'') contingency to avoid resting its orders in the COB. If such a
market participant does not use an IOC contingency, it must cancel the
unexecuted balance of its limit order or quote if the limit order or
quote is partially filled by trading against an order resting in the
COB.

    The CBOE proposes to amend CBOE Rule 6.53C(c)(ii)(3) to require
market participants whose quotes or orders are not eligible to rest in
the COB to enter only IOC orders and such other order or quote types as
the CBOE may determine on a class-by-class basis. Quote types that are
not eligible to rest in or trade against the COB will be cancelled
automatically.\5\ According to the CBOE, Market Makers whose quotes are
not eligible to rest in or trade against the COB would be able, at a
minimum, to submit IOC orders to trade against the COB.\6\
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    \5\ See CBOE Rule 6.53C(c)(ii)(3).
    \6\ Only Market Makers may enter quotes.
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    Finally, the CBOE proposes to amend CBOE Rule 6.53C(c)(i) to
clarify that an order entry firm whose complex orders are not eligible
to route to the COB could route its orders to the firm's booth, as well
as to PAR.

III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\7\ In
particular, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\8\ which requires, in part, that the rules
of a national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. CBOE Rule
6.53C(c)(i) currently allows the Exchange to determine the class of
entities that may enter orders to rest in the COB. By requiring market
participants who are not eligible to rest orders or quotes in the COB
to enter only IOC orders and such other order or quote types as the
CBOE determines, and by providing for the automatic cancellation of
quote types that are not eligible to rest in or trade against the COB,
the proposal could help to prevent the entry of ineligible orders and
quote types in the COB. The Commission notes that Market Makers that
are not eligible to enter quotes to rest in or trade against the COB
would be permitted, at a minimum, to enter IOC orders to trade against
orders in the COB. Finally, the Commission believes that the amendment
to CBOE Rule 6.53C(c)(i) to indicate that an order entry firm may route
its orders to the firm's booth, as well as to PAR, should clarify the
operation of CBOE Rule 6.53C.
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    \7\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (File No. SR-CBOE-2009-038) is
approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18168 Filed 7-29-09; 8:45 am]

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