[Federal Register Volume 78, Number 240 (Friday, December 13, 2013)]
[Notices]
[Pages 75949-75952]
[FR Doc No: 2013-29740]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71028; File No. SR-NASDAQ-2013-149]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to NOM Penny and Non-Penny Pilot Options

December 9, 2013.
    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 November 29, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by NASDAQ.
The Commission is publishing this notice to solicit comments on the
proposed rule change 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

    NASDAQ proposes to modify Chapter XV, entitled ``Options Pricing,''
at Section 2 governing pricing for NASDAQ members using the NASDAQ
Options Market (``NOM''), NASDAQ's facility for executing and routing
standardized equity and index options. Specifically, NOM proposes to
amend the NOM Market Maker \3\ Non-Penny Pilot Options \4\ Fee for
Removing Liquidity and the NOM Market Maker Rebate to Add Liquidity in
Penny Pilot Options.\5\
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    \3\ The term ``NOM Market Maker'' means a Participant that has
registered as a Market Maker on NOM pursuant to Chapter VII, Section
2, and must also remain in good standing pursuant to Chapter VII,
Section 4. In order to receive NOM Market Maker pricing in all
securities, the Participant must be registered as a NOM Market Maker
in at least one security.
    \4\ This would include options on Nasdaq-100 Index (``NDX'').
For transactions in NDX, a surcharge of $0.10 per contract will be
added to the Fee for Adding Liquidity and the Fee for Removing
Liquidity in Non-Penny Pilot Options, except for a Customer who will
not be assessed a surcharge.
    \5\ The Penny Pilot was established in March 2008 and in October
2009 was expanded and extended through December 31, 2013. See
Securities Exchange Act Release Nos. 57579 (March 28, 2008), 73 FR
18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of filing and
immediate effectiveness establishing Penny Pilot); 60874 (October
23, 2009), 74 FR 56682 (November 2, 2009) (SR-NASDAQ-2009-091)
(notice of filing and immediate effectiveness expanding and
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292
(November 17, 2009) (SR-NASDAQ-2009-097) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
65969 (December 15, 2011), 76 FR 79268 (December 21, 2011) (SR-
NASDAQ-2011-169) (notice of filing and immediate effectiveness
extension and replacement of Penny Pilot); 67325 (June 29, 2012), 77
FR 40127 (July 6, 2012) (SR-NASDAQ-2012-075) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through December 31, 2012); 68519 (December 21, 2012), 78 FR 136
(January 2, 2013) (SR-NASDAQ-2012-143) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through June 30, 2013); and 69787 (June 18, 2013), 78 FR 37858 (June
24, 2013) (SR-NASDAQ-2013-082). See also NOM Rules, Chapter VI,
Section 5.
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    While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on December 2,
2013.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaq.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change. 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ proposes to modify Chapter XV, entitled ``Options Pricing,''
at Section 2(1) governing the rebates and fees assessed for option
orders entered into NOM.
    The Exchange proposes to increase the NOM Market Maker Fee for
Removing Liquidity in Non-Penny Pilot Options from $0.85 to $0.86 per
contract. The Exchange believes that despite the increase to the Fee
for Removing Liquidity the Exchange continues to offer competitive
rates to NOM Market Makers.
    The Exchange proposes to amend the NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity tiers. Today, the Exchange offers a
four-tiered Rebate to Add Liquidity in Penny Pilot Options to NOM
Market Makers as follows:

------------------------------------------------------------------------
                                                        Rebate to add
       Monthly volume                                     liquidity
------------------------------------------------------------------------
Tier 1......................  Participant adds NOM  $0.25.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of up
                               to 29,999 contracts
                               per day in a month.
Tier 2......................  Participant adds NOM  $0.30.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of
                               30,000 to 59,999
                               contracts per day
                               in a month.
Tier 3......................  Participant adds NOM  $0.32.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of
                               60,000 to 79,999
                               contracts per day
                               in a month.
Tier 4......................  Participant adds NOM  $0.32 or $0.38 in
                               Market Maker          the following
                               liquidity in Penny    symbols BAC, GLD,
                               Pilot Options of      IWM, QQQ and VXX or
                               80,000 or more        $0.40 in SPY.
                               contracts per day
                               in a month.
------------------------------------------------------------------------

    The Exchange is proposing to amend the qualification for NOM Market
Maker Penny Pilot rebate Tiers 1 through 4 to provide that Participants
may qualify for each tier by adding NOM Market Maker liquidity in Penny
Pilot Options and/or Non-Penny Pilot Options. The Exchange would
continue to pay the rebates for each volume tier on transactions in
Penny Pilot Options. This amendment would only impact a Participant's
ability to qualify for a certain rebate tier. The Exchange anticipates
that this amendment would provide an opportunity for Participants to
qualify for higher rebate tiers for their NOM Market Maker liquidity.
    The Exchange is also proposing to add a new Tier 5 rebate to the
Penny Pilot Rebates to Add Liquidity. The Exchange proposes to pay
$0.40 per contract to a Participant that adds NOM Market Maker
liquidity of 40,000 or more contracts per day in a month in Penny Pilot
Options and/or Non-Penny Pilot Options and also qualifies for Tier 7 or
8 of the Customer and/or Professional Rebate to Add Liquidity in Penny
Pilot Options. The Exchange believes the opportunity to earn a higher
rebate will encourage Participants to direct a greater amount of NOM
Market Maker liquidity to NOM.
    The Exchange also proposes to relocate certain text in the fee
schedule. The Exchange proposes to relocate the following text:
`` The NOM Market Maker Rebate to Add Liquidity in Penny Pilot
Options will be paid as noted below.'' The Exchange would place the
text above the NOM Market Maker tiers in the fee schedule for ease of
reference.
2. Statutory Basis
    NASDAQ believes that its proposal to amend its Pricing Schedule is
consistent with Section 6(b) of the Act \6\ in general, and furthers
the objectives of Section 6(b)(4) and (b)(5) of the Act \7\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system which NASDAQ operates or
controls, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange's proposal to increase the NOM Market Maker Fee for
Removing Liquidity from $0.85 to $0.86 per contract is reasonable
because the rate remains competitive with other Non-Penny Pilot Fees
for Removing Liquidity. The increase also permits the Exchange to
support providing liquidity rebates to Participants executing NOM
Market Maker orders.
    The Exchange's proposal to increase the NOM Market Maker Fee for
Removing Liquidity from $0.85 to $0.86 per contract is equitable and
not unfairly discriminatory because the rate remains competitive with
other Non-Penny Pilot Fees for Removing Liquidity. NOM Market Makers
would continue to be assessed a lower fee as compared to other non-
Customer Participants.\8\ NOM Market Makers have obligations to the
market and regulatory requirements,\9\ which normally do not apply to
other market participants. A NOM Market Maker has an obligation to make
continuous markets, engage in course of dealings reasonably calculated
to contribute to the maintenance of a fair and orderly market, and not
make bids or offers or enter into transactions that are inconsistent
with a course of dealings. Customers would continue to be assessed the
lowest fee of $0.82 per contract. Customer order flow brings unique
benefits to the market which benefits all market participants through
increased liquidity.
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    \8\ All other non-Customer market participants (Professionals,
Firms, Non-NOM Market Makers and Broker-Dealers) would continue to
be assessed $0.89 per contract.
    \9\ Pursuant to Chapter VII (Market Participants), Section 5
(Obligations of Market Makers), in registering as a market maker, an
Options Participant commits himself to various obligations.
Transactions of a Market Maker in its market making capacity must
constitute a course of dealings reasonably calculated to contribute
to the maintenance of a fair and orderly market, and Market Makers
should not make bids or offers or enter into transactions that are
inconsistent with such course of dealings. Further, all Market
Makers are designated as specialists on NOM for all purposes under
the Act or rules thereunder. See Chapter VII, Section 5.
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    The Exchange's proposal to amend the qualifications for the NOM
Market Maker Rebates to Add Liquidity in Penny Pilot Options is
reasonable because by providing Participants the opportunity to add NOM
Market Maker Penny and/or Non-Penny Pilot Option liquidity to qualify
for a rebate tier provides a greater opportunity to qualify for higher
rebate tiers. The Exchange would continue to only pay rebates on Penny
Pilot volume. By incentivizing Participants to select the Exchange as a
venue to post NOM Market Maker liquidity will benefit market

participants through increased order interaction.
    The Exchange's proposal to amend the qualifications for the NOM
Market Maker Rebates to Add Liquidity in Penny Pilot Options is
equitable and not unfairly discriminatory because this amendment will
be applied to all Participants in a uniform manner. In addition,
Participants should continue to qualify for the rebates that they
currently receive and may earn increased rebates by qualifying for a
higher volume tier as a result of combing Penny and Non-Penny Pilot NOM
Market Maker liquidity to qualify for the rebate. The proposal does not
misalign the current rebate structure. NOM Market Makers are valuable
market participants that provide liquidity in the marketplace and incur
costs unlike other market participants. The Exchange believes that NOM
Market Makers should be offered the opportunity to earn higher rebates
as compared to Non-NOM Market Makers, Firms and Broker Dealers because
NOM Market Makers add value through continuous quoting \10\ and the
commitment of capital. The Exchange believes that encouraging NOM
Market Makers to be more aggressive when posting liquidity benefits all
market participants through increased liquidity. The Exchange also
believes that including Non-Penny volume in calculating on the various
NOM Market Maker rebate tiers is equitable and not unfairly
discriminatory because NOM Market Makers will continue to earn higher
rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers
and will earn the same or lower rebates as compared to Customers and
Professionals.\11\
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    \10\ See note 9.
    \11\ The Tier 1 NOM Market Maker Rebate to Add Liquidity in
Penny Pilot Options is the same rebate as the Tier 1 Customer and
Professional rebate in Penny Pilot Options. The Exchange pays the
highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of
$0.25 per contract to Customers, Professionals and NOM Market Makers
for transacting one qualifying contract as compared to other market
participants. Firms, Non-NOM Market Makers and Broker-Dealers
receive a $0.10 per contract Penny Pilot Option Rebate to Add
Liquidity. In addition, Participant that adds Firm, Non-NOM Market
Maker or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 15,000 contracts per day or more in a given
month will receive a Rebate to Add Liquidity in Penny Pilot Options
of $0.20 per contract.
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    The Exchange believes that continuing to offer NOM Market Makers
the opportunity to receive higher rebates as compared to Firms, Non-NOM
Market Makers and Broker-Dealers is equitable and not unfairly
discriminatory because all Participants may qualify for the NOM Market
Maker rebate tiers and every Participant is entitled to a rebate solely
by adding one contract of NOM Market Maker liquidity on NOM. Also, as
mentioned, the NOM Market Maker would receive the same rebate in Tier 1
as compared to Customers and Professionals and a higher rebate in all
other tiers as compared to a Firm, Non-NOM Market Maker or Broker-
Dealer because of the obligations \12\ borne by NOM Market Makers as
compared to other market participants. Encouraging NOM Market Makers to
add greater liquidity benefits all Participants in the quality of order
interaction.
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    \12\ See note 9.
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    The Exchange's proposal to offer a new Tier 5 NOM Market Maker
Penny Pilot Options Rebate to Add Liquidity is reasonable because the
new rebate should incentivize Participants to select the Exchange as a
venue to post NOM Market Maker liquidity. This added liquidity will
benefit market participants through increased order interaction.
    The Exchange's proposal to offer a new Tier 5 NOM Market Maker
Penny Pilot Options Rebate to Add Liquidity is equitable and not
unfairly discriminatory because this amendment will be applied to all
Participants in a uniform manner.

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

    NASDAQ 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. The Exchange believes that incentivizing
NOM Market Makers to post liquidity on NOM benefits market participants
through increased order interaction. Also, NOM Market Makers have
obligations \13\ to the market which are not borne by other market
participants and therefore the Exchange believes that NOM Market Makers
are entitled to such higher rebates. Permitting Participants to add
either Penny or Non-Penny Pilot Market Maker liquidity should further
encourage NOM Market Makers to post liquidity on NOM.
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    \13\ See note 9.
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    The proposed amendments do not misalign the current rebate
structure because NOM Market Makers will continue to earn higher
rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers
and will earn the same or lower rebates as compared to Customers and
Professionals. The Exchange believes the differing outcomes, rebates
and fees created by the Exchange's proposed pricing incentives
contributes to the overall health of the market place for the benefit
of all Participants that willing choose to transact options on NOM. In
addition, NOM Market Makers will have the opportunity to earn even
higher rebates. For the reasons specified herein, the Exchange does not
believe this proposal creates an undue burden on competition.
    Additionally, NOM Market Maker would continue to be assessed a
lower Non-Penny Pilot Fee for Removing Liquidity as compared to other
non-Customer Participants.\14\ Customers would continue to be assessed
the lowest Non-Penny Pilot Fee for Removing Liquidity fee because of
the benefits that Customer order flow brings to other market
participants through increased liquidity.
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    \14\ All other non-Customer market participants (Professionals,
Firms, Non-NOM Market Makers and Broker-Dealers) would continue to
be assessed $0.89 per contract.
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    The Exchange operates in a highly competitive market comprised of
twelve U.S. options exchanges in which many sophisticated and
knowledgeable market participants can readily and do send order flow to
competing exchanges if they deem fee levels or rebate incentives at a
particular exchange to be excessive or inadequate. These market forces
support the Exchange belief that the proposed rebate structure and
tiers proposed herein are competitive with rebates and tiers in place
on other exchanges. The Exchange believes that this competitive
marketplace continues to impact the rebates present on the Exchange
today and substantially influences the proposals set forth above.

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.\15\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine

whether the proposed rule should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2013-149 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-NASDAQ-2013-149. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2013-149, and should
be submitted on or before January 3, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29740 Filed 12-12-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 125 (Thursday, June 28, 2012)]
[Notices]
[Pages 38699-38701]
[FR Doc No: 2012-15808]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67245; File No. SR-Phlx-2012-80]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Technical and Conforming Amendments to the Pricing Schedule

June 22, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that, on June 14, 2012, NASDAQ OMX PHLX LLC

(``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. The Commission is publishing this notice to solicit
comments on the proposed rule change 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 make various technical amendments to the
Pricing Schedule to format pricing the same throughout the Pricing
Schedule, correct a reference to Section IV fees and add the term
``Specialist'' to Section V.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXfilings, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to make clarifying amendments to the Pricing
Schedule. The Exchange proposes to amend Section II entitled ``Multiply
Listed Options'' to reformat the rebates and fees from the current
format, ``$.xx,'' to the format utilized in Section I, ``$0.xx,'' to
conform the pricing format throughout the Pricing Schedule.
    The Exchange also proposes to amend Section IV, A entitled ``PIXL
Pricing'' to correct a reference which was inadvertently not amended in
a prior filing to refer to Section II fees as ``Multiply Listed
Options.'' The Exchange recently amended the title of Section II from
``Equity Options Fees'' to ``Multiply Listed Options Fees.'' \3\
Finally, the Exchange proposes to amend Section V entitled ``Routing
Fees'' to add the term ``Specialist'' to the category ``Firm/Broker
Dealer/Market Maker.'' The Exchange recently amended the Pricing
Schedule to redefine its market participant categories and separate the
Specialist category from that of Market Maker.\4\ At that time, the
Exchange also filed SR-Phlx-2012-75, a filing pertaining to Routing
Fees, and noted in that filing that for the purposes of Routing Fees, a
Market Maker includes Specialists.\5\ At this time the Exchange
proposes to indicate that a Specialist shall be as defined in the
Pricing Schedule and add the Specialist category to the Routing Fees.
The Exchange believes that using the defined terms for purposes of the
Routing Fees will provide more clarity to the Pricing Schedule and
therefore proposes to add the term Specialist to the fees instead of
utilizing the term Market Maker to define a Specialist solely for the
Routing Fees.
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    \3\ See Securities Exchange Act Release No. 67189 (June 12,
2012) (SR-Phlx-2012-77).
    \4\ Id.
    \5\ See Securities Exchange Act Release No. 67123 (June 5,
2012), 77 FR 35092 (June 12, 2012) (SR-Phlx-2012-75). Specifically,
see note 3.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \6\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \7\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange's amendments to Section II are reasonable, equitable
and not unfairly discriminatory because the amendments are not
substantive in nature, but merely conform the manner in which the
pricing is displayed so that the format is similar throughout the
Pricing Schedule.
    The Exchange's amendment to Section IV is reasonable, equitable and
not unfairly discriminatory because this amendment clarifies the
Pricing Schedule by correcting a reference that was inadvertently
omitted in a prior filing to refer to Section II fees.
    The Exchange's amendment to Section V is reasonable, equitable and
not unfairly discriminatory because it also clarifies the Pricing
Schedule by reverting to the terms as defined in the Preface. Today, a
Specialist is defined in the Pricing Schedule as a separately defined
market participant apart from a Market Maker,\8\ although the Exchange
noted in a separate filing that for purposes of Routing Fees a Market
Maker includes a Specialist.\9\ The Exchange now proposes to utilize
the definition of Specialist, as defined in the Preface of the Pricing
Schedule, for consistency. The Routing Fees which are applicable to a
Specialist will remain the same.
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    \8\ See SR-Phlx-2012-77.
    \9\ See Securities Exchange Act Release No. 67123 (June 5,
2012), 77 FR 35092 (June 12, 2012) (SR-Phlx-2012-75). Specifically,
see note 3.
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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.\10\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2012-80 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-2012-80. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2012-80 and should be
submitted on or before July 19, 2012.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
---------------------------------------------------------------------------
pursuant to delegated authority.\11\

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15808 Filed 6-27-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 236 (Monday, December 9, 2019)]
[Notices]
[Page 67263]
[FR Doc No: 2019-26459]

=======================================================================
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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 10674-017]

Kaukauna Utilities; Notice of Application Accepted for Filing,
Soliciting Motions To Intervene and Protests, Ready for Environmental
Analysis, and Soliciting Comments, Recommendations, Terms and
Conditions, and Prescriptions

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection.
    a. Type of Application: New Major License.
    b. Project No.: 10674-017.
    c. Date filed: February 14, 2019.
    d. Applicant: Kaukauna Utilities.
    e. Name of Project: Kimberly Hydroelectric Project (Kimberly
Project).
    f. Location: The Kimberly Project is located at the U.S. Army Corps
of Engineers' (Corps) Cedars Dam on the Lower Fox River in the Village
of Kimberly in Outagamie County, Wisconsin. The proposed project
boundary would include 0.0225 acres of federal land.
    g. Filed Pursuant to: Federal Power Act 16 U.S.C. 791 (a)-825(r).
    h. Applicant Contact: Mike Pedersen, Manager of Generation and
Operations, Kaukauna Utilities, 777 Island Street, P.O. Box 1777,
Kaukauna, WI 54130-7077,<PHONE_NUMBER>1.
    i. FERC Contact: Colleen Corballis,<PHONE_NUMBER>,
<EMAIL_ADDRESS>    j. Deadline for filing motions to intervene and protests, comments,
recommendations, terms and conditions, and prescriptions: 60 days from
the issuance date of this notice; reply comments are due 105 days from
the issuance date of this notice.
    The Commission strongly encourages electronic filing. Please file
motions to intervene and protests, comments, recommendations, terms and
conditions, and prescriptions using the Commission's eFiling system at
http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit
brief comments up to 6,000 characters, without prior registration,
using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the
end of your comments. For assistance, please contact FERC Online
Support at<EMAIL_ADDRESS>(866) 208-3676 (toll free), or
(202) 502-8659 (TTY). In lieu of electronic filing, please send a paper
copy to: Secretary, Federal Energy Regulatory Commission, 888 First
Street NE, Washington, DC 20426. The first page of any filing should
include docket number P-10674-017.
    The Commission's Rules of Practice require all intervenors filing
documents with the Commission to serve a copy of that document on each
person on the official service list for the project. Further, if an
intervenor files comments or documents with the Commission relating to
the merits of an issue that may affect the responsibilities of a
particular resource agency, they must also serve a copy of the document
on that resource agency.
    k. This application has been accepted and is ready for
environmental analysis at this time.
    l. The Kimberly Project consists of: (1) A 161-foot-long, 43-foot-
wide, 61-foot-high reinforced concrete and brick masonry powerhouse
located at the south abutment of the Corps' Cedars Dam and containing
three turbine-generator units each rated at 723 kilowatts for a total
installed capacity of 2.170 megawatts; (2) a 2.4-kilovolts (kV) to
34.5-kV step-up transformer; (3) a 320-foot-long, 2.4-kV transmission
line; and (4) appurtenant facilities. The project is directly connected
to a 34.5-kV local distribution line, which is not part of the project.
The average annual generation was 12,324,827 kilowatt-hours for the
period 2011 to 2017.
    m. A copy of the application is available for review at the
Commission in the Public Reference Room or may be viewed on the
Commission's website at http://www.ferc.gov using the ``eLibrary''
link. Enter the docket number excluding the last three digits in the
docket number field to access the document. For assistance, contact
FERC Online Support. A copy is also available for inspection and
reproduction at the address in item h above.
    n. Anyone may submit comments, a protest, or a motion to intervene
in accordance with the requirements of Rules of Practice and Procedure,
18 CFR 385.210, .211, and .214. In determining the appropriate action
to take, the Commission will consider all protests or other comments
filed, but only those who file a motion to intervene in accordance with
the Commission's Rules may become a party to the proceeding. Any
comments, protests, or motions to intervene must be received on or
before the specified comment date for the particular application.
    All filings must (1) bear in all capital letters the title
``PROTEST'', ``MOTION TO INTERVENE'', ``COMMENTS'', ``REPLY COMMENTS'',
``RECOMMENDATIONS,'' ``TERMS AND CONDITIONS,'' or ``PRESCRIPTIONS;''
(2) set forth in the heading the name of the applicant and the project
number of the application to which the filing responds; (3) furnish the
name, address, and telephone number of the person protesting or
intervening; and (4) otherwise comply with the requirements of 18 CFR
385.2001 through 385.2005. All comments, recommendations, terms and
conditions or prescriptions must set forth their evidentiary basis and
otherwise comply with the requirements of 18 CFR 4.34(b). Agencies may
obtain copies of the application directly from the applicant. A copy of
any protest or motion to intervene must be served upon each
representative of the applicant specified in the particular
application. A copy of all other filings in reference to this
application must be accompanied by proof of service on all persons
listed in the service list prepared by the Commission in this
proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.
    You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.
    o. A license applicant must file no later than 60 days following
the date of issuance of this notice: (1) A copy of the water quality
certification; (2) a copy of the request for certification, including
proof of the date on which the certifying agency received the request;
or (3) evidence of waiver of water quality certification.
    p. Procedural schedule: The application will be processed according
to the following schedule. Revisions to the schedule will be made as
appropriate.

Commission issues Environmental Assessment--June 2020
Comments on Environmental Assessment--July 2020

    Dated: December 3, 2019.
Kimberly D. Bose,
Secretary.
[FR Doc. 2019-26459 Filed 12-6-19; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 82, Number 100 (Thursday, May 25, 2017)]
[Rules and Regulations]
[Pages 24071-24076]
[FR Doc No: 2017-10765]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2016-0143; FRL-9960-76]

Isopyrazam; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of
isopyrazam in or on pepper, bell; tomato; and vegetable, cucurbit,
subgroup 9A. Syngenta Crop Protection, LLC, requested these tolerances
under the Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective May 25, 2017. Objections and
requests for hearings must be received on or before July 24, 2017, and
must be filed in accordance with the instructions provided in 40 CFR
part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2016-0143, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael L. Goodis, P.E., Registration
Division (7505P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-
0001; main telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).

B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Government
Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

C. How can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2016-0143 in the subject line on the first
page of your submission. All

objections and requests for a hearing must be in writing, and must be
received by the Hearing Clerk on or before July 24, 2017. Addresses for
mail and hand delivery of objections and hearing requests are provided
in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2016-0143, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of August 29, 2016 (81 FR 59165) (FRL-9950-
22), EPA issued a document pursuant to FFDCA section 408(d)(3), 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
5E8433) by Syngenta Crop Protection, LLC, 410 Swing Road, P.O. Box
18300, Greensboro, NC 27419. The petition requested that 40 CFR 180.654
be amended by establishing tolerances for residues of the fungicide
isopyrazam, in or on cucurbit crop subgroup 9A at 0.3 parts per million
(ppm); pepper, bell at 0.6 ppm; and tomato at 0.5 ppm. That document
referenced a summary of the petition prepared by Syngenta Crop
Protection, LLC, the registrant, which is available in the docket,
http://www.regulations.gov. There were no comments received in response
to the notice of filing.
    Based upon review of the data supporting the petition, EPA is
establishing a lower tolerance than was requested for pepper, bell and
is revising the commodity terminology for vegetable, cucurbit, subgroup
9A. The reasons for these changes are explained in Unit IV.C.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue . .
. .''
    Consistent with FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available
scientific data and other relevant information in support of this
action. EPA has sufficient data to assess the hazards of and to make a
determination on aggregate exposure for isopyrazam including exposure
resulting from the tolerances established by this action. EPA's
assessment of exposures and risks associated with isopyrazam follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    Subchronic and chronic oral toxicity studies in the rat, mouse,
rabbit and dog demonstrate that the primary target organ for isopyrazam
is the liver (increased organ weight and centrilobular hepatocyte
hypertrophy). Liver toxicity is usually accompanied by reductions in
bodyweight and food consumption. Isopyrazam did not cause reproductive
toxicity. Effects seen in the offspring (decreased bodyweight during
lactation and increase liver weight at weaning) in the rat reproduction
study occurred at the same doses that cause general toxicity in the
parents. Developmental effects described as small eyes and/or
microphthalmia were observed in both the Himalayan and New Zealand
rabbit strains. However, in the Himalayan strain, the intraocular
abnormalities occur in the absence of maternal toxicity while in the
New Zealand strain, the ocular abnormalities occurred at doses that
were maternally toxic. Developmental effects observed in the rat
(increased post-implantation loss, reduced fetal weight, and a non- or
incomplete ossification or retardation of ossification) occurred at
doses that also produced maternal toxicity (mortality, decreased body
weights, body weight gains, and food consumption, increased liver
weights and microscopic findings in the liver).
    No evidence of specific neurotoxicity was seen in acute and
subchronic oral neurotoxicity studies in rats. Clinical signs seen in
two subchronic dog studies (side-to-side head wobble, ataxia, reduced
stability) are consistent with neurotoxic effects. However, detailed
and specific neuropathological analyses were not conducted for the dog
studies (i.e., functional observational battery, motor activity,
detailed histopathology with special stains). Consequently, there is
uncertainty regarding whether the effects seen in the dog studies are
in fact signs of neurotoxicity. However, clear no observed adverse
effect levels (NOAELs)/lowest adverse effect levels (LOAELs) were
established for both subchronic dog studies. The point of departure
selected for the acute dietary assessment is based on clinical signs
seen on day 2 in one of four males in the subchronic dog study. This
study provides the lowest NOAEL in the database (most sensitive
endpoint) for a single dose effect. The dose used for the chronic
dietary risk assessment is eight times lower than the dose at which
clinical effects were seen at four weeks in the second subchronic dog
study.
    There is no evidence of immunotoxicity based on a 28-day dietary
immunotoxicity study in mice. The LOAEL for immunotoxicity was not
identified and the NOAEL for immunotoxicity was 1,356 milligrams/
kilograms (mg/kg).
    Isopyrazam is classified as ``Likely to be Carcinogenic to Humans''
based on increased incidence of uterine endometrial adenocarcinomas and
liver hepatocellular adenomas in female rats and increased incidence of
thyroid follicular cell adenomas and/or

carcinomas in male rats. Isopyrazam is not carcinogenic in the mouse.
There is no evidence of genotoxicity, mutagenicity, or clastogenicity
in the in vivo and in vitro studies. There are no structural
relationships with other known carcinogens. A linear low-dose approach
(Q1*) was used to extrapolate experimental animal tumor data
for the quantification of human cancer risk.
    Isopyrazam is of low acute toxicity by the oral, dermal, and
inhalation routes and is not a skin or eye irritant.
    Specific information on the studies received and the nature of the
adverse effects caused by isopyrazam as well as the no-observed-
adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-
level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document ``Isopyrazam: Human Health Risk
Assessment for the Establishment of Tolerances with No U.S.
Registrations in/on Cucurbit Vegetables Crop Subgroup 9A, Bell Pepper
and Tomato Imported from Belgium, Greece, Italy, Spain and the United
Kingdom'' in docket ID number EPA-HQ-OPP-2016-0143.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides. A summary of the toxicological endpoints for
isopyrazam used for human risk assessment is discussed in Table 1 of
the final rule published in the Federal Register of December 27, 2013
(78 FR 78740) (FRL-9903-53).

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to isopyrazam, EPA considered exposure under the petitioned-
for tolerances as well as all existing isopyrazam tolerances in 40 CFR
180.654. EPA assessed dietary exposures from isopyrazam in food as
follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. Such effects were identified
for isopyrazam. In estimating acute dietary exposure, EPA used food
consumption information from the United States Department of
Agriculture (USDA) 2003-2008 National Health and Nutrition Examination
Survey, What We Eat in America, (NHANES/WWEIA). As to residue levels in
food, maximum residues from field trials conducted at the maximum use
rates were used to estimate isopyrazam residues of concern and 100
percent crop treated (PCT) assumptions were used. Dietary Exposure
Evaluation Model (DEEM) default processing factors were used for all
processed commodities including dried apple (8.0), apple juice/cider
(1.3), dried banana/plantain (3.9), peanut butter (1.89), dried tomato
(14.3), tomato juice (1.5), tomato paste (5.4), and tomato puree (3.3).
In the absence of peanut processing data, the maximum theoretical
concentration factor was used for peanut oil (2.8).
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the food consumption data from the USDA 2003-2008
NHANES/WWEIA. As to residue levels in food, EPA used the average
residues from field trials conducted at the maximum use rates were used
to estimate isopyrazam and the same processing factors and PCT
assumptions as in the acute dietary exposure analysis.
    iii. Cancer. Based on the data summarized in Unit III.A., EPA has
concluded that isopyrazam should be classified as ``Likely to be
Carcinogenic to Humans'' and a linear approach has been used to
quantify cancer risk. In evaluating the cancer risk, EPA used the same
residue levels, processing factors and PCT assumptions as in the
chronic dietary exposure analysis.
    iv. Anticipated residue and percent crop treated (PCT) information.
EPA did not use PCT information in the dietary assessment for
isopyrazam. Maximum or average residue levels from field trials
conducted at the maximum use rates were assumed for all food
commodities.
    Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data
and information on the anticipated residue levels of pesticide residues
in food and the actual levels of pesticide residues that have been
measured in food. If EPA relies on such information, EPA must require
pursuant to FFDCA section 408(f)(1) that data be provided 5 years after
the tolerance is established, modified, or left in effect,
demonstrating that the levels in food are not above the levels
anticipated. For the present action, EPA will issue such data call-ins
as are required by FFDCA section 408(b)(2)(E) and authorized under
FFDCA section 408(f)(1). Data will be required to be submitted no later
than 5 years from the date of issuance of these tolerances.
    2. Dietary exposure from drinking water. An assessment of residues
in drinking water is not needed for isopyrazam because there is no
drinking water exposure for isopyrazam uses, which are all non-
domestic.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets). Isopyrazam is not
registered for any specific use patterns that would result in
residential exposure.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.'' EPA has not found
isopyrazam to share a common mechanism of toxicity with any other
substances, and isopyrazam does not appear to produce a toxic
metabolite produced by other substances. For the purposes of this
tolerance action, therefore, EPA has assumed that isopyrazam does not
have a common mechanism of toxicity with other substances. For
information regarding EPA's procedures for cumulating effects from
substances found to have a common mechanism of toxicity, see EPA's Web
site at http://www2.epa.gov/

pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-
risk-pesticides.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity
and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the FQPA Safety
Factor (SF). In applying this provision, EPA either retains the default
value of 10X, or uses a different additional safety factor when
reliable data available to EPA support the choice of a different
factor.
    2. Prenatal and postnatal sensitivity. There are no residual
uncertainties for pre- and/or postnatal susceptibility even though
qualitative susceptibility was observed in the range-finding
developmental studies in rabbits. Developmental effects (eye
abnormalities) were observed in the absence of maternal toxicity in two
range finding developmental toxicity studies in the Himalayan rabbit.
However, the eye effects were only observed at relatively high doses
(200-400 mg/kg/day) with clear NOAELs/LOAELs established for the
developmental effects. Developmental effects observed in the rat
(increased post-implantation loss, reduced fetal weight and non-or
incomplete ossification or retardation of ossification) occurred only
at doses that also produced maternal toxicity (mortality, decreased
body weights, body weight gains, and food consumption). There was no
evidence of increased susceptibility in a 2-generation reproduction
study following pre- or postnatal exposure to isopyrazam. There was
also no evidence of neuropathology or abnormalities in the development
of the fetal nervous system from the available toxicity studies
conducted with isopyrazam. Clear NOAELs/LOAELs were established for the
developmental effects observed in rats and rabbits as well as for the
offspring effects (increased liver weights) seen in the 2-generation
reproduction study and a dose-response relationship for the effects of
concern is well characterized. The dose used for the acute dietary risk
assessment (30 mg/kg/day), based on effects seen in the subchronic dog
study, is protective of the developmental effects seen in rats (44.5
mg/kg/day) and rabbits (200 mg/kg/day). Based on these considerations,
there are no residual uncertainties for pre- and/or postnatal
susceptibility.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X. That decision is based on the following
findings:
    i. The toxicity database for isopyrazam is complete.
    ii. As discussed in Unit III.A, there is no indication that
isopyrazam is a neurotoxic chemical and there is no need for a
developmental neurotoxicity study or additional uncertainty factors to
account for neurotoxicity.
    iii. As discussed in Unit III.D.2, there are no residual
uncertainties for pre-and/or post-natal susceptibility.
    iv. There are no residual uncertainties identified in the exposure
databases. The dietary food exposure assessments were performed based
on 100 PCT and maximum or average residue levels from field trials
conducted at the maximum use rates. There are no currently registered
or proposed occupational or residential uses of isopyrazam in the U.S.
and adequate residue data are available. These assessments will not
underestimate the exposure and risks posed by isopyrazam.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. Using the exposure assumptions discussed in this
unit for acute exposure, the acute dietary exposure from food to
isopyrazam at the 95th percentile will occupy 4.7% of the aPAD for
children 1-2 years old, the population group receiving the greatest
exposure.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
isopyrazam from food will utilize 5.0% of the cPAD for children 1-2
years old, the population group receiving the greatest exposure. There
are no residential uses for isopyrazam.
    3. Short- and intermediate-term risk. Short- and intermediate-term
risk is assessed based on short- and intermediate-term residential
exposure plus chronic dietary exposure (which includes both food and
water and is considered to be a background exposure level). Isopyrazam
is not registered in the United States. Because there is no short- or
intermediate-term residential exposure and chronic dietary exposure has
already been assessed under the appropriately protective cPAD, no
further assessment of short- or intermediate-term risk is necessary,
and EPA relies on the chronic dietary risk assessment for evaluating
short- and intermediate-term risk for isopyrazam.
    4. Aggregate cancer risk for U.S. population. Using the exposure
assumptions discussed in this unit for cancer exposure, the cancer
dietary risk estimate for the U.S. population is 3 x 10-6.
EPA generally considers cancer risks (expressed as the probability of
an increased cancer case) in the range of 1 in 1 million (or 1 x
10-6) or less to be negligible. The precision that can be
assumed for cancer risk estimates is best described by rounding to the
nearest integral order of magnitude on the logarithmic scale; for
example, risks falling between 3 x 10-7 and 3 x
10-6 are expressed as risks in the range of 10-6.
Considering the precision with which cancer hazard can be estimated,
the conservativeness of low-dose linear extrapolation, and the rounding
procedure described above, cancer risk should generally not be assumed
to exceed the benchmark level of concern of the range of
10-6 until the calculated risk exceeds approximately 3 x
10-6. This is particularly the case where some conservatism
is maintained in the exposure assessment. For isopyrazam, EPA's
exposure assessment assumes average residues of concern from field
trials reflecting the maximum use rates, default processing factors,
the maximum theoretical concentration for residues in peanut oil, and
100 PCT, which is highly conservative. Accordingly, EPA has concluded
the cancer risk from exposure to isopyrazam falls within the range of
10-6 and is thus negligible.
    5. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to isopyrazam residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology (GRM006.01B) is available to
enforce

the tolerance expression. The method may be requested from: Chief,
Analytical Chemistry Branch, Environmental Science Center, 701 Mapes
Rd., Ft. Meade, MD 20755-5350; telephone number:<PHONE_NUMBER>; email
address<EMAIL_ADDRESS>
B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint United Nations
Food and Agriculture Organization/World Health Organization food
standards program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. EPA may establish a tolerance that is different from
a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain
the reasons for departing from the Codex level.
    The Codex has not established MRLs for isopyrazam in or on
vegetable, cucurbit, subgroup 9A; pepper, bell; and tomato.

C. Revisions to Petitioned-For Tolerances

    Based on the residue levels observed in the field trial studies,
EPA is establishing a tolerance of 0.50 ppm in or on pepper, bell in
lieu of the 0.6 ppm as requested by the petitioner. The tolerance
requested for Cucurbit Crop Group 9A is also being established as
Vegetable, cucurbit, subgroup 9A, which is the standard commodity
description for these commodities. The petitioned-for tolerances for
residues of isopyrazam in/on cucurbit crop group 9A (0.3 ppm) and
tomato (0.5 ppm) are set at 0.30 ppm and 0.50 ppm, respectively,
consistent with the current practices for setting tolerances.

V. Conclusion

    Therefore, tolerances are established for residues of isopyrazam,
(3-(difluoromethyl)-1-methyl-N-[1,2,3,4-tetrahydro-9-(1-methylethyl)-
1,4-methano-naphthalen-5-yl]-1H-pyrazole-4-carboxamide), determined as
the sum of its syn-isomer (3-(difluoromethyl)-1-methyl-N-[(1RS, 4SR,
9RS)-1,2,3,4-tetrahydro-9-(1-methylethyl)-1,4-methanonaphthalen-5-yl]-
1H-pyrazole-4-carboxamide) and anti-isomer (3-(difluoromethyl)-1-
methyl-N-[(1RS, 4SR, 9SR)-1,2,3,4-tetrahydro-9-(1-methylethyl)-1,4-
methano-naphthalen-5-yl]-1H-pyrazole-4-carboxamide), in or on
vegetable, cucurbit, subgroup 9A at 0.30 ppm; pepper, bell at 0.50 ppm;
and tomato at 0.50 ppm.

VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) in
response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this action has been
exempted from review under Executive Order 12866, this action is not
subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997). This action does not contain any
information collections subject to OMB approval under the Paperwork
Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any
special considerations under Executive Order 12898, entitled ``Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the tolerance in this
final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), do not apply.
    This action directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this action. In addition, this
action does not impose any enforceable duty or contain any unfunded
mandate as described under Title II of the Unfunded Mandates Reform Act
(UMRA) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) (15 U.S.C. 272 note).

VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
EPA will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to publication of
the rule in the Federal Register. This action is not a ``major rule''
as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.

    Dated: April 25, 2017.
Michael Goodis,
Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

0
1. The authority citation for part 180 continues to read as follows:

    Authority: 21 U.S.C. 321(q), 346a and 371.

0
2. In Sec.  180.654, add alphabetically the entries ``Pepper, bell'',
``Tomato'', and ``Vegetable, cucurbit, subgroup 9A'' to the table in
paragraph (a), and revise footnote 1 at the end of the table to read as
follows:

Sec.  180.654  Isopyrazam; tolerances for residues.

    (a) * * *

------------------------------------------------------------------------
                                                              Parts per
                         Commodity                             million
------------------------------------------------------------------------

                                * * * * *
Pepper, bell \1\...........................................         0.50
Tomato \1\.................................................         0.50
Vegetable, cucurbit, subgroup 9A \1\.......................         0.30
------------------------------------------------------------------------
\1\ There are no U.S. registrations for use of isopyrazam on these
  commodities.

* * * * *
[FR Doc. 2017-10765 Filed 5-24-17; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 76, Number 120 (Wednesday, June 22, 2011)]
[Notices]
[Pages 36608-36610]
[FR Doc No: 2011-15554]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64689; File No. SR-NYSEArca-2011-18]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change To List and Trade the Meidell Tactical
Advantage ETF

 June 16, 2011.

I. Introduction

    On April 15, 2011, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the Meidell Tactical Advantage
ETF (``Fund'') under NYSE Arca Equities Rule 8.600. The proposed rule
change was published in the Federal Register on May 3, 2011.\3\ The
Commission received no comments on the proposal. This order grants
approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64357 (April 28,
2011), 76 FR 24936 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to list and trade the Shares of the Fund
pursuant to NYSE Arca Equities Rule 8.600. The Shares will be offered
by AdvisorShares Trust (``Trust''), a statutory trust organized under
the laws of the State of Delaware and registered with the Commission as
an open-end management investment company.\4\ The investment adviser to
the Fund is AdvisorShares Investments, LLC (``Adviser''). American
Wealth Management is the Fund's sub-adviser (``Sub-Adviser'') and
provides day-to-day portfolio management of the Fund. Foreside Fund
Services, LLC (``Distributor'') is the principal underwriter and
distributor of the Fund's Shares. The Exchange states that neither the
Adviser nor the Sub-Adviser is affiliated with a broker-dealer.\5\
---------------------------------------------------------------------------

    \4\ The Trust is registered under the Investment Company Act of
1940 (``1940 Act''). On March 15, 2011, the Trust filed with the
Commission Post-Effective Amendment No. 20 to Form N-1A under the
Securities Act of 1933 (15 U.S.C. 77a) and under the 1940 Act
relating to the Fund (File Nos. 333-157876 and 811-22110)
(``Registration Statement'').
    \5\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The
Exchange represents that, in the event (a) the Adviser or Sub-
Adviser becomes newly affiliated with a broker-dealer, or (b) any
new adviser or sub-adviser becomes affiliated with a broker-dealer,
such adviser and/or sub-adviser will implement a fire wall with
respect to such broker-dealer regarding access to information
concerning the composition and/or changes to the portfolio, and will
be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio.
---------------------------------------------------------------------------

Description of the Fund

    The Fund's investment objective is to seek to provide long-term
capital appreciation with a secondary emphasis on capital preservation.
The Fund is an actively managed exchange-traded fund (``ETF'') and,
thus, does not seek to replicate the performance of a specified index.
The Fund is considered a ``fund-of-funds'' that seeks to achieve its
investment objective by primarily investing in other ETFs that offer
diversified exposure to global regions, countries, styles (market
capitalization, value, growth, etc.) or sectors, and other exchange-
traded products (``ETPs,'' and, together with ETFs, ``Underlying
ETPs''),\6\ including, but not limited to, exchange-traded notes
(``ETNs''), exchange-traded currency trusts, and closed-end funds. The
Fund will primarily invest in U.S.-listed domestic and foreign equity-
based, fixed income-based, currency-based, and commodity-based
Underlying ETPs.
---------------------------------------------------------------------------

    \6\ Underlying ETPs include Investment Company Units (as
described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked
Securities (as described in NYSE Arca Equities Rule 5.2(j)(6));
Portfolio Depositary Receipts (as described in NYSE Arca Equities
Rule 8.100); Trust Issued Receipts (as described in NYSE Arca
Equities Rule 8.200); Commodity-Based Trust Shares (as described in
NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described
in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as
described in NYSE Arca Equities Rule 8.203); Trust Units (as
described in NYSE Arca Equities Rule 8.500); Managed Fund Shares (as
described in NYSE Arca Equities Rule 8.600); and closed-end funds.
---------------------------------------------------------------------------

    The Sub-Adviser will seek to achieve the Fund's investment
objective by managing a tactical strategy that has the ability to
dynamically rebalance the Fund's portfolio from as much as 100% equity-
based assets to 100% fixed income-based assets or cash and cash
equivalents depending on market trends. This is a long-only tactical
strategy that seeks to minimize portfolio losses by rotating out of
higher volatility assets and into lower volatility assets when the Sub-
Adviser believes there are significant risks in the equity markets.
Risk management is an integral part of the Sub-Adviser's investment
strategy. The Sub-Adviser will use a quantitative tactical methodology
to identify the Underlying ETPs believed to be participating in long-
term ``durable trends'' within the market. This model will enable the
Sub-Adviser to evaluate, rank, and select the appropriate mix of
investments in Underlying ETPs given market conditions.
    The Sub-Adviser's investment philosophy emphasizes investments in
broad market indexes and market sector indexes. In general, the Fund
will purchase or increase its exposure to Underlying ETPs that track
equity markets or market sectors when the Sub-Adviser's quantitative
tactical asset allocation model and risk analysis indicate that the
applicable market or sector is at low risk of losing value or presents
opportunity for growth and appreciation. The Fund will generally sell
interests in, or reduce investment exposure to, Underlying ETPs
tracking equity markets or market sectors in favor of fixed income-
based Underlying ETPs or cash positions when the Sub-Adviser's
quantitative tactical asset allocation model and risk analysis indicate
that such markets have become, or are becoming, risky.
    The Sub-Adviser will use a quantitative metric to rank and select
the appropriate mix of investments given prevailing market conditions.
The Sub-Adviser's quantitative tactical asset allocation model
determines asset allocation between bonds and stocks, equity selection,
sector concentration, as well as limiting portfolio drawdown. The
general guidelines for the Fund's portfolio are as follows:
Assets Held by Underlying ETPs

Equity-Based                             0%-100%
Fixed Income-Based/Cash                  0%-100%

Depending on the economic and market climate, the portfolio may
increase or decrease portfolio concentrations within the ranges shown
below.

Foreign Equity                           0%-50%
Large Cap Equity                         0%-50%
Mid Cap Equity                           0%-30%
Small Cap Equity                         0%-30%
Commodities                              0%-20%
Currencies                               0%-10%

The Fund's portfolio may temporarily exceed these percentage ranges for
short periods without notice, and the Sub-Adviser may alter the
percentage ranges when it deems appropriate.
    Additional quantitative tools will be used to evaluate the
probability of investment success within the equity market. These tools
will allow the Sub-Adviser to get into or out of equity positions and
will include, but are not limited to: (1) Interest rate spreads; (2)
options activity; (3) market breadth; and (4) equity index trends.
    The Fund intends to invest primarily in the securities of
Underlying ETPs consistent with the requirements of Section 12(d)(1) of
the 1940 Act, or any rule, regulation, or order of the Commission or
interpretation thereof. In addition, the Fund will only make such

investments in conformity with the requirements of Section 817 of the
Internal Revenue Code of 1986, as amended (``Code'').

Other Investments of the Fund

    The Fund may invest 100% of its total assets in high-quality debt
securities and money market instruments either directly or through
Underlying ETPs to respond to adverse market, economic, political, or
other conditions.\7\ The Fund may be invested in these instruments for
extended periods, depending on the Sub-Adviser's assessment of market
conditions. These debt securities and money market instruments include
shares of other mutual funds, commercial paper, certificates of
deposit, bankers' acceptances, U.S. Government securities, repurchase
and reverse repurchase agreements, and bonds that are BBB or higher.
---------------------------------------------------------------------------

    \7\ Adverse market conditions would include large downturns in
the broad market value of two or more times current average
volatility, where the Sub-Adviser views such downturns as likely to
continue for an extended period of time. Adverse economic conditions
would include significant negative results in factors deemed
critical at the time by the Sub-Adviser, including significant
negative results regarding unemployment, Gross Domestic Product,
consumer spending or housing numbers. Adverse political conditions
would include events such as government overthrows or instability,
where the Sub-Adviser expects that such events may potentially
create a negative market or economic condition for an extended
period of time. E-mail from Timothy J. Malinowski, Senior Director,
NYSE Euronext, to Edward Y. Cho, Special Counsel, Division of
Trading and Markets, Commission, dated June 8, 2011.
---------------------------------------------------------------------------

    The Fund will not (i) with respect to 75% of its total assets,
purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
or shares of investment companies) if, as a result, more than 5% of its
total assets would be invested in the securities of such issuer, or
(ii) acquire more than 10% of the outstanding voting securities of any
one issuer. For purposes of this policy, the issuer of the underlying
security will be deemed to be the issuer of any respective American
Depositary Receipts (``ADRs'') or Global Depositary Receipts
(``GDRs'').\8\
---------------------------------------------------------------------------

    \8\ ADRs, as well as GDRs, are certificates evidencing ownership
of shares of a foreign issuer, and may be sponsored or unsponsored.
These certificates are issued by depositary banks and generally
trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or
similar financial institution in the issuer's home country. The
depositary bank may not have physical custody of the underlying
securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions.
---------------------------------------------------------------------------

    The Fund may not invest 25% or more of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry or group of industries. This limitation
does not apply to investments in securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, or shares of
investment companies. The Fund will not invest 25% or more of its total
assets in any investment company that so concentrates. For purposes of
this policy, the issuer of the underlying security will be deemed to be
the issuer of any respective ADRs or GDRs.
    The Fund will seek to qualify for treatment as a Regulated
Investment Company under the Code. In addition, the Fund will not: (1)
Purchase illiquid securities; (2) except for Underlying ETPs that may
hold non-U.S. issues, invest in non-U.S. issues; and (3) invest in
leveraged, inverse, or inverse leveraged Underlying ETPs. Additional
information regarding the Trust, the Fund, and the Shares, the Fund's
investment strategies, risks, creation and redemption procedures, fees,
portfolio holdings and disclosure policies, distributions and taxes,
availability of information, trading rules and halts, and surveillance
procedures, among other things, can be found in the Notice and the
Registration Statement, as applicable.\9\
---------------------------------------------------------------------------

    \9\ See Notice and Registration Statement, supra notes 3 and 4,
respectively.
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act \10\ and the rules and regulations thereunder applicable to a
national securities exchange.\11\ In particular, the Commission finds
that the proposal is consistent with Section 6(b)(5) of the Act,\12\
which requires, among other things, that the Exchange's rules be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The Commission notes that the Shares must comply with
the requirements of NYSE Arca Equities Rule 8.600 to be listed and
traded on the Exchange.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 17 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\13\ which sets forth Congress's finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for, and transactions in, securities. Quotation and last-
sale information for the Shares will be available via the Consolidated
Tape Association high-speed line and, for the Underlying ETPs, will be
available from the national securities exchange(s) on which they are
listed. In addition, the Portfolio Indicative Value (``PIV''), as
defined in NYSE Arca Equities Rule 8.600(c)(3), will be disseminated by
one or more major market data vendors at least every 15 seconds during
the Core Trading Session. On each business day, before commencement of
trading in Shares during the Core Trading Session on the Exchange, the
Fund will disclose on its Web site the Disclosed Portfolio, as defined
in NYSE Arca Equities Rule 8.600(c)(2), that will form the basis for
the Fund's calculation of the net asset value (``NAV'') at the end of
the business day.\14\ The NAV of the Fund will normally be determined
as of the close of the regular trading session on the New York Stock
Exchange (``NYSE'') (ordinarily 4 p.m. Eastern Time) on each business
day. A basket composition file, which includes the security names and
share quantities required to be delivered in exchange for Fund shares,
together with estimates and actual cash components, will be publicly
disseminated daily prior to the opening of the NYSE via the National
Securities Clearing Corporation. Information regarding market price and
trading volume of the Shares is and will be continually available on a
real-time basis throughout the day on brokers' computer screens and
other electronic services, and information regarding the previous day's
closing price and trading volume information for the Shares will be
published daily in the financial section of newspapers. The Fund's Web
site will also include a form of the prospectus for the Fund,
information relating to NAV (updated daily), and

other quantitative and trading information.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \14\ On a daily basis, the Adviser will disclose for each
portfolio security or other financial instrument of the Fund the
following information: Ticker symbol (if applicable); name of
security or financial instrument; number of shares or dollar value
of financial instruments held in the portfolio; and percentage
weighting of the security or financial instrument in the portfolio.
---------------------------------------------------------------------------

    The Commission further believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Commission notes that the Exchange will obtain a
representation from the issuer of the Shares that the NAV will be
calculated daily and that the NAV and the Disclosed Portfolio will be
made available to all market participants at the same time.\15\ In
addition, the Exchange will halt trading in the Shares under the
specific circumstances set forth in NYSE Arca Equities Rule
8.600(d)(2)(D) and may halt trading in the Shares if trading is not
occurring in the securities and/or the financial instruments comprising
the Disclosed Portfolio of the Fund, or if other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.\16\ Further, the Commission notes that the
Reporting Authority that provides the Disclosed Portfolio must
implement and maintain, or be subject to, procedures designed to
prevent the use and dissemination of material non-public information
regarding the actual components of the portfolio.\17\ The Exchange
states that it has a general policy prohibiting the distribution of
material, non-public information by its employees, and neither the
Adviser nor the Sub-Adviser is affiliated with a broker-dealer.\18\
---------------------------------------------------------------------------

    \15\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \16\ See NYSE Arca Equities Rule 8.600(d)(2)(C)(ii). With
respect to trading halts, the Exchange may consider other relevant
factors in exercising its discretion to halt or suspend trading in
the Shares of the Fund. Trading in Shares of the Fund will be halted
if the circuit breaker parameters in NYSE Arca Equities Rule 7.12
have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable.
    \17\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \18\ See supra note 5 and accompanying text. The Commission
notes that an investment adviser to an open-end fund is required to
be registered under the Investment Advisers Act of 1940 (``Advisers
Act''). As a result, the Adviser and Sub-Adviser and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
---------------------------------------------------------------------------

    The Exchange represents that the Shares are deemed to be equity
securities, thus rendering trading in the Shares subject to the
Exchange's existing rules governing the trading of equity securities.
In support of this proposal, the Exchange has made representations,
including:
    (1) The Shares will conform to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.600.
    (2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
    (3) The Exchange's surveillance procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable Federal
securities laws.
    (4) Prior to the commencement of trading, the Exchange will inform
its Equity Trading Permit Holders in an Information Bulletin of the
special characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (a)
The procedures for purchases and redemptions of Shares in Creation Unit
aggregations (and that Shares are not individually redeemable); (b)
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence
on its Equity Trading Permit Holders to learn the essential facts
relating to every customer prior to trading the Shares; (c) the risks
involved in trading the Shares during the Opening and Late Trading
Sessions when an updated PIV will not be calculated or publicly
disseminated; (d) how information regarding the PIV is disseminated;
(e) the requirement that Equity Trading Permit Holders deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; and (f) trading
and other information.
    (5) For initial and/or continued listing, the Fund will be in
compliance with Rule 10A-3 under the Act,\19\ as provided by NYSE Arca
Equities Rule 5.3.
---------------------------------------------------------------------------

    \19\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (6) The Fund will not: (a) Purchase illiquid securities; (b) invest
in non-U.S. issues (except for Underlying ETPs that may hold non-U.S.
issues); and (c) invest in leveraged, inverse, or inverse leveraged
Underlying ETPs.
    (7) A minimum of 100,000 Shares of the Fund will be outstanding at
the commencement of trading on the Exchange.

This approval order is based on the Exchange's representations.

    For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act \20\ and the
rules and regulations thereunder applicable to a national securities
exchange.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-NYSEArca-2011-18) be, and it
hereby is, approved.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-15554 Filed 6-21-11; 8:45 am]
BILLING CODE 8011-01-P