[Federal Register: December 7, 2007 (Volume 72, Number 235)]
[Rules and Regulations]
[Page 69148-69150]
[DOCID:fr07de07-7]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2007-1059-200748a; FRL-8503-1]

Approval and Promulgation of Implementation Plans Georgia:
Enhanced Inspection and Maintenance Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving revisions to the Georgia State Implementation
Plan (SIP), submitted by the Georgia Department of Natural Resources
(GA DNR), through the Georgia Environmental Protection Division (GA
EPD), on September 26, 2007. The revisions include modifications to
Georgia's Air Quality Rules found at Chapter 391-3-20-.21, pertaining
to rules for Enhanced Inspection and Maintenance (I/M). Enhanced I/M
was required for 1-hour nonattainment areas classified as serious and
above, under the Clean Air Act (CAA) as amended in 1990. The I/M
program is a way to ensure that vehicles are maintained properly and
verify that the emission control system is operating correctly, in
order to reduce vehicle-related emissions. This action is being taken
pursuant to section 110 of the CAA.

DATES: This direct final rule is effective February 5, 2008 without
further notice, unless EPA receives adverse comment by January 7, 2008.
If adverse comment is received, EPA will publish a timely withdrawal of
the direct final rule in the Federal Register and inform the public
that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID Number, ``EPA-
R04-OAR-2007-1059,'' by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for

submitting comments.
    2. E-mail<EMAIL_ADDRESS>    3. Fax:<PHONE_NUMBER>.
    4. Mail: ``EPA-R04-OAR-2007-1059,'' Regulatory Development Section,
Air Planning Branch, Air, Pesticides and Toxics Management Division,
U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW.,
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Stacy Harder, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are only
accepted during the Regional Office's normal hours of operation. The
Regional Office's official hours of business are Monday through Friday,
8:30 a.m. to 4:30 p.m., excluding federal holidays.
    Instructions: Direct your comments to Docket ID Number, ``EPA-R04-
OAR-2007-1059.'' EPA's policy is that all comments received will be
included in the public docket without change and may be made available
online at http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit through
http://www.regulations.gov or e-mail, information that you consider to be CBI

or otherwise protected. The http://www.regulations.gov Web site is an

``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    Docket: All documents in the electronic docket are listed in the
http://www.regulations.gov index. Although listed in the index, some

information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov or

in hard copy at the Regulatory Development Section, Air Planning
Branch, Air, Pesticides and Toxics Management Division, U.S.
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW.,

Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section to schedule your inspection. The Regional Office's official
hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m.,
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: Stacy Harder, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. The telephone number is (404)
562-9042. Ms. Harder can also be reached via electronic mail at
<EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

Table of Contents

I. EPA's Action
II. Analysis of the State's Submittal
III. Final Action
IV. Statutory and Executive Order Reviews

I. EPA's Action

    EPA is approving a SIP revision submitted by the GA DNR, through GA
EPD on September 26, 2007, pertaining to rules for I/M. The revisions
include changes to Georgia's Air Quality Rules, found at Chapters 391-
3-20-.21, subparagraphs (3)(a) through (d). These revisions became
State effective on September 26, 2007.

II. Analysis of the State's Submittal

    Rule 391-3-20-.21 ``Inspection Fees,'' is being revised, effective
October 1, 2007, to reduce the administrative fee paid by the station
owner to the GA DNR from $6.95 to $4.02 per pre-purchased Certificate
of Emission Inspection. The fee for fleet inspection stations where GA
EPD has required the installation and operation of a video camera
surveillance system, is being reduced from $7.95 to $5.02. The
reductions are based, in part, on lower contractual expenses effective
October 1, 2007. This change will have a positive impact on small
business owners that conduct vehicle inspections, by reducing their
costs. There is no change in cost to the general public, as the
inspection fee will remain the same. Additionally, this change has no
effect on the emissions reductions claimed in the SIP.

III. Final Action

    EPA is taking direct final action to approve the aforementioned
revisions, specifically, Chapters 391-3-20-.21 subparagraphs (3)(a)
through (d) into the Georgia SIP. These revisions were submitted by GA
EPD on September 26, 2007.
    EPA is publishing this rule without prior proposal because the
Agency views this as a noncontroversial submittal and anticipates no
adverse comments. However, in the proposed rules section of this
Federal Register publication, EPA is publishing a separate document
that will serve as the proposal to approve the SIP revision should
adverse comments be filed. This rule will be effective February 5, 2008
without further notice unless the Agency receives adverse comments by
January 7, 2008.
    If EPA receives such comments, EPA will then publish a document
withdrawing the direct final rule and informing the public that such
rule will not take effect. All public comments received will then be
addressed in a subsequent final rule based on the proposed rule. EPA
will not institute a second comment period. Parties interested in
commenting should do so at this time. If no such comments are received,
the public is advised that this rule will be effective on February 5,
2008 and no further action will be taken on the proposed rule.

IV. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely approves state law as meeting Federal requirements and imposes
no additional requirements beyond those imposed by state law.
Accordingly, the Administrator certifies that this rule will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because
this rule approves pre-existing requirements under state law and does
not impose any additional enforceable duty beyond that required by
state law, it does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This rule also does not have tribal implications because it will
not have a substantial direct effect on one or more Indian tribes, on
the relationship between the Federal Government and Indian tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified by Executive Order 13175 (65
FR 67249, November 9, 2000). This action also does not have Federalism
implications because it does not have substantial direct effects on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132 (64
FR 43255, August 10, 1999). This action merely approves a state rule
implementing a Federal standard, and does not alter the relationship or
the distribution of power and responsibilities established in the CAA.
This rule also is not subject to Executive Order 13045, ``Protection of
Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the CAA. In this
context, in the absence of a prior existing requirement for the State
to use voluntary consensus standards (VCS), EPA has no authority to
disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the CAA. Thus, the requirements of section
12(d) of the National Technology Transfer and Advancement Act of 1995
(15 U.S.C. 272 note) do not apply. This rule does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act, U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this 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. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by February 5, 2008. Filing a petition for
reconsideration by the

Administrator of this final rule does not affect the finality of this
rule for the purposes of judicial review nor does it extend the time
within which a petition for judicial review may be filed, and shall not
postpone the effectiveness of such rule or action. This action may not
be challenged later in proceedings to enforce its requirements. (See
section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: November 28, 2007.
J.I. Palmer, Jr.,
Regional Administrator, Region 4.

0
40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart L--Georgia

0
2. Section 52.570(c) is amended by revising the entry for ``391-3-20''
to read as follows:

Sec.  52.570  Identification of plan.

* * * * *
    (c) * * *

                                        EPA Approved Georgia Regulations
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                                                      State
      State citation           Title/subject     effective date    EPA approval date          Explanation
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                                                  * * * * * * *
391-3-20.................  Enhanced Inspection       09/26/2007  12/07/2007 [Insert
                            and Maintenance.                      citation of
                                                                  publication].

                                                  * * * * * * *
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* * * * *
[FR Doc. E7-23710 Filed 12-6-07; 8:45 am]

BILLING CODE 6560-50-P


[Federal Register Volume 86, Number 196 (Thursday, October 14, 2021)]
[Notices]
[Pages 57208-57213]
[FR Doc No: 2021-22440]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93280; File No. SR-FICC-2021-004]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving the Proposed Rule Change Relating to Confidential
Information, Market Disruption Events, and Other Changes

October 8, 2021.

I. Introduction

    On June 25, 2021, Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-FICC-2021-004 (the ``Proposed Rule Change'')
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder \2\ to amend FICC's Government
Securities Division (``GSD'') rules and Mortgage-Backed Securities
Division (``MBSD'') rules relating to confidentiality requirements,
Market Disruption Events, and procedures for disconnecting a
participant from FICC's network, among other changes.\3\ The Proposed
Rule Change was published for comment in

the Federal Register on July 13, 2021.\4\ The Commission received
comments that it has considered with respect to the Proposed Rule
Change.\5\ For the reasons discussed below, the Commission is approving
the Proposed Rule Change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Notice of Filing, infra note 4, at 86 FR 36799.
    \4\ Securities Exchange Act Release No. 92341 (June 25, 2021),
86 FR 36799 (July 13, 2021) (File No. SR-FICC-2021-004) (``Notice of
Filing'').
    \5\ Specifically, the Commission received comments on a proposed
rule change filed by FICC's affiliate, the Depository Trust Company,
regarding parallel changes to DTC's Rules. See Securities Exchange
Act Release No. 92342 (June 25, 2021), 86 FR 36833 (July 13, 2021)
(File No. SR-DTC-2021-011). The comment letters are available on the
Commission's website at https://www.sec.gov/comments/sr-dtc-2021-011/srdtc2021011.htm. Because the comments address issues that also
appear in this Proposed Rule Change, the Commission has considered
it in connection with FICC's proposal as well. Several comments
generally supported the Proposed Rule Change, and the Commission
considers the additional comments in its analysis at Section III
infra.
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II. Description of the proposed rule change

    Pursuant to the Proposed Rule Change, FICC is proposing three main
changes to its GSD Rulebook (``GSD Rules'') and its MBSD Clearing Rules
(``MBSD Rules'') and MBSD Electronic Pool Notification (``EPN Rules'')
(hereinafter collectively, ``Rules''): \6\ (1) Standardizing the
confidentiality requirement applicable to FICC with respect to its
participants' information and adding confidentiality requirement
applicable to participants with respect to FICC's information, (2)
updating its GSD and MBSD Market Disruption and Force Majeure Rules
(``Force Majeure Rule'') to authorize two additional officers to
determine that a Market Disruption Event has occurred, and (3) adding a
new GSD rule and MBSD rule setting forth the procedures under which
FICC would be able to disconnect a participant from its network in
certain circumstances (``Systems Disconnect Rule''). The Commission
provides relevant background and describes each of these proposed
changes in greater detail below.
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    \6\ Capitalized terms not defined herein are defined in the GSD
Rulebook, MBSD Clearing Rules, and MBSD EPN Rules, as applicable,
available at https://www.dtcc.com/legal/rules-and-procedures.
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A. Background

    FICC plays a prominent role in the fixed income markets as the sole
clearing agency in the United States acting as a central counterparty
and provider of significant clearance and settlement services for cash
settled U.S. treasury and agency securities and the non-private label
mortgage-backed securities markets FICC.\7\ In light of FICC's critical
role in the marketplace, FICC was designated a Systemically Important
Financial Market Utility (``SIFMU'') under Title VIII of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010.\8\ Due to
FICC's unique position in the marketplace, a failure or a disruption to
FICC could, among other things, significantly disrupt settlement of
securities transactions cleared by FICC and increase the risk of
substantial liquidity problems spreading among financial institutions
or markets, and thereby threaten the stability of the financial system
in the United States.\9\
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    \7\ See Financial Stability Oversight Counsel 2012 Annual
Report, Appendix A (``FSOC 2012 Report''), available at http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf.
    \8\ 12 U.S.C. 5465(e)(1). See FSOC 2012 Report, supra note 7.
    \9\ See FSOC 2012 Report, supra note 7.
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    FICC participants connect to FICC's systems, either directly
through the Securely Managed and Reliable Technology (``SMART'')
network or through a third party service provider or service
bureau.\10\ FICC's parent company, The Depository Trust & Clearing
Corporation (``DTCC'') manages the SMART network, which connects a
nationwide complex of networks, processing centers, and control
facilities.\11\
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    \10\ See Securities Exchange Act Release No. 87697 (December 9,
2019), 84 FR 68266 (December 13, 2019) (File No. SR-FICC-2019-005)
(describing the DTCC SMART network).
    \11\ DTCC provides a set of core business processes for FICC and
DTCC's other subsidiaries, including the technology systems and
networks, that provide connectivity between FICC and its
participants and that provide FICC with the ability to provide its
services as required under the Rules. Most corporate functions are
established and managed on an enterprise-wide basis pursuant to
intercompany agreements under which it is generally DTCC that
provides services to FICC and DTCC's other subsidiaries.
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B. Proposed Changes

1. Confidentiality Requirements
    Confidentiality Requirements Applicable to FICC: FICC collects
confidential information from its participants to assess whether each
participant meets FICC's membership requirements either to gain or
continue access to FICC's clearance and settlement services.\12\ In
turn, FICC is required to maintain the confidentiality of any
information furnished by its participants, including the books and
records FICC has a right to inspect. Currently, FICC's Rules obligate
FICC to hold participants' information in the same degree of confidence
as may be required by law or the rules and regulations (hereinafter
collectively, ``regulations'') of the appropriate regulatory body
having jurisdiction over the participant.\13\
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    \12\ See GSD Rules 2A, 3, 3A, and 3B; MBSD Rules 2A and 3; and
EPN Rule 1 of Article III, supra note 6 (establishing FICC's right
to require applicants to furnish information to become participants
of FICC, to require participants to furnish information relating to
assurances of financial responsibility and operational capability,
and to require certain participants to provide FICC access to their
books and records).
    \13\ See Section 5 of GSD Rule 2A and Section 6 of MBSD Rule 2A,
Sections 4 and 10 of GSD Rule 3 and Sections 3 and 9 of MBSD Rule 3,
Section 2(j) of GSD Rule 3A, Sections 3(e) and 5(k) of GSD Rule 3B,
Section 9 of EPN Rule 1 of Article III, supra note 6.
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    FICC states that its current Rules create ambiguity because FICC's
obligations depend on each participant's regulatory requirements, which
could lead to unequal treatment of participants and conflicts of law
with FICC's regulatory requirements or with respect to a participant
who is subject to multiple jurisdictions' regulations.\14\ FICC also
states that applying different standards creates operational burdens
because FICC must track the regulations applicable to each of its
participants and must maintain the confidentiality of each
participant's information to the same degree as required by the
applicable regulations.\15\
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    \14\ See Notice of Filing, supra note 4, at 36800.
    \15\ See id. at 36800-01.
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    In order to clarify its confidentiality requirements and to enhance
its operational efficiency, FICC proposes to revise its Rules to
establish a standard, which will require FICC to hold participant
confidential information to the same degree as FICC's regulatory
requirements that relate to the confidentiality of records, and to
remove the references to each participant's particular regulatory
obligations. FICC represents that the proposed change would provide
participants with similar protections because FICC believes its
regulatory requirements are comparable to the regulations applicable to
its participants and, therefore, would not result in changes to FICC's
current practices or the protection offered to its participants'
confidential information.\16\
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    \16\ See id. at 36801.
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    Confidentiality Requirements Applicable to Participants: FICC's
Rules do not include obligations for its participants to protect
confidential information furnished by FICC or its affiliates.\17\
However, FICC states that, in

connection with the development of cyber and information security
programs pursuant to applicable participant regulatory requirements,
FICC and DTCC have received an increasing number of requests from
participants for confidential information, such as information
regarding DTCC's network operations, data security practices, and legal
settlements.\18\ Additionally, FICC states that participants may
request FICC or DTCC to disclose confidential information regarding its
cyber threat indicators, sources of cyber threat information, or other
information and actions taken following a cyber incident relating to a
participant, FICC, or DTCC.\19\
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    \17\ FICC states that, historically, it has generally not
provided, nor been requested to provide, information that contains
confidential or proprietary information of FICC or its affiliates to
its participants except for information necessary for participants
to connect to DTCC Systems, which is typically protected under
intellectual property laws. See id.
    \18\ See Notice of Filing, supra note 4, at 36801. See also,
supra discussion in Section II.A (Background) relating to DTCC
Systems.
    \19\ See Notice of Filing, supra note 4, at 36801.
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    To facilitate information sharing by FICC while protecting the
confidentiality of proprietary and confidential information FICC shares
with its participants, FICC proposes to add participant confidentiality
requirements to its Rules. The new provisions will require participants
to maintain the confidentiality of information furnished by FICC
through proper safeguards to prevent disclosure of such confidential
information, except as necessary to perform its obligations under
FICC's Rules or as otherwise required by applicable law. FICC proposes
that participants be required to maintain the confidentiality of this
information to the same extent and using the same means the participant
uses to protect its own confidential information, but no less than a
reasonable standard of care. FICC's proposal will also entitle FICC or
DTCC to seek any temporary or permanent injunctive or other equitable
relief in addition to any monetary damages under the Rules if a
participant breaches its confidentiality requirements. Additionally,
FICC's proposal will entitle FICC to impose other disciplinary
proceedings or restrictions on access to services for a participant's
failure to comply with its confidentiality requirements, consistent
with the existing tools available to FICC regarding a participant's
failure to comply with its Rules.
2. Market Disruption Event
    FICC's Rules contain provisions that identify the events or
circumstances that FICC would consider to be a Market Disruption Event,
including, for example, events that lead to the suspension or
limitation of trading or banking in the markets in which FICC operates,
or the unavailability or failure of any material payment, bank
transfer, wire or securities settlement systems.\20\ Upon the
declaration of a Market Disruption Event, FICC's Rules provide FICC
with tools to address such an event, such as suspending any or all
services and taking, or requiring participants to take, any actions
FICC considers appropriate to facilitate the continuation of FICC's
services.\21\
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    \20\ See GSD Rule 50 and MBSD Rule 40, supra note 6. MBSD Rule
40 is incorporated into the EPN Rules. See Section 5 of EPM Rule 1
of Article III, supra note 6. See also Securities Exchange Act
Release Nos. 83954 (August 27, 2018), 83 FR 44361 (August 30, 2018)
(File No. SR-FICC-2017-805); 83973 (August 28, 2018), 83 FR 44942
(September 4, 2018) (File No. SR-FICC-2017-021).
    \21\ See GSD Rule 50 and MBSD Rule 40, supra note 6.
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    Currently, FICC's Board of Directors may declare a Market
Disruption Event and may take any actions authorized by FICC's Rules to
address the event.\22\ However, FICC's Rules also authorize certain
officers to make an interim declaration of a Market Disruption Event,
to allow FICC to prevent delays in addressing a Market Disruption Event
if the Board of Directors is unable to convene.\23\ In the event of
such an interim declaration, the Board of Directors must ratify,
modify, or rescind the officer's determination as soon as
practicable.\24\ Currently, the officers authorized to make such
determination are the Chief Executive Officer, Chief Financial Officer,
Group Chief Risk Officer, and General Counsel.\25\
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    \22\ See Section 2 of GSD Rule 50 and Section 2 of MBSD Rule 40,
supra note 6.
    \23\ See id.
    \24\ See id.
    \25\ See id.
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    FICC proposes to add two additional officers of FICC, the Chief
Information Officer and the Head of Clearing Agency Services, to the
list of authorized officers that could make such an interim
determination if the Board of Directors is unable to convene. FICC
states these two officers, like the other officers currently provided
in the Rules, maintain senior executive level positions at FICC,
oversee divisions of FICC, and hold positions at FICC that would
provide them a necessary global view into FICC's operations and systems
to enable them to determine the existence of a Market Disruption
Event.\26\ FICC states adding these two additional officers would
facilitate FICC's ability to implement its emergency procedures in the
event of a Market Disruption Event.\27\
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    \26\ See Notice of Filing, supra note 4, at 36801.
    \27\ See id.
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3. Systems Disconnect Rule
    As mentioned above in Section II.A (Background), FICC's
participants connect to FICC's systems, either through the DTCC-managed
SMART network or through other electronic means, such as through a
third party service provider or service bureau. FICC's Rules do not
address FICC's ability to disconnect participant whose network
connection risks harming FICC's systems. FICC's proposal will establish
procedures under which FICC would be able to disconnect a participant
from its network due to the risk of an imminent threat to FICC,
participants, or other market participants.\28\
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    \28\ See Notice of Filing, supra note 4, at 36802.
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    FICC's proposal will address FICC's authority to take certain
actions upon the occurrence, and during the pendency, of a Major Event.
A ``Major Event'' will be defined as the happening of one or more
``Systems Disruptions'' reasonably likely to have a significant impact
on FICC's operations, including ``DTCC Systems,'' \29\ that affect the
business, operations, safeguarding of securities or funds, or physical
functions of FICC, its participants, or other market participants.
``Systems Disruption'' will, in turn, be defined as the unavailability,
failure, malfunction, overload, or restriction (whether partial or
total) of a DTCC Systems Participant's systems that disrupts or
degrades the normal operation of such DTCC Systems Participant's
systems; or anything that impacts or alters the normal communication or
the files that are received, or information transmitted, to or from the
DTCC Systems.
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    \29\ ``DTCC Systems'' will be defined as the systems, equipment
and technology networks of DTCC, FICC and/or their Affiliates,
whether owned, leased, or licensed, software, devices, IP addresses
or other addresses or accounts used in connection with providing the
services set forth in the Rules, or used to transact business or to
manage the connection with FICC.
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    FICC's proposal would also provide governance procedures applicable
to FICC's determination whether, and how, to implement the provisions
of the Systems Disconnect rule. The same officers with delegated
authority under the Force Majeure Rule may make a determination that a
Major Event has occurred. As discussed in Section II.B.2 (Market
Disruption Event) above, FICC states these officers maintain senior
executive level positions at FICC, oversee divisions of FICC, and hold
positions at FICC that would provide them a necessary global view into
FICC's operations and systems to enable them to determine the existence
of a Market Disruption Event, which would

also enable them to determine the existence of a Major Event.
    However, the proposed process for declaring a Major Event, by
contrast, would start with a designated officer, whereas, for a Market
Disruption Event, the officer would make an interim determination only
if the Board of Directors were unable to timely convene. FICC states it
designed the process in this way to improve its ability to respond
quickly, efficiently, and effectively to a Major Event that arises
abruptly.\30\ Following this determination, any management committee
including all of the officers authorized to determine a Major Event
would convene, and FICC would convene a Board of Directors meeting as
soon as practicable thereafter, and in any event within five Business
Days following such determination, to ratify, modify, or rescind the
Officer Major Event Action.\31\
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    \30\ See Notice of Filing, supra note 4, at 36802.
    \31\ See id.
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    In addition, the proposed rule will require participants to notify
FICC immediately upon becoming aware of a Major Event, and, likewise,
will require FICC to notify its participants promptly of any action
FICC takes or intends to take with respect to a Major Event.\32\
Finally, the proposal will address certain miscellaneous related
matters including: (i) A limitation of liability for any failure or
delay in performance, in whole or in part of FICC's obligations under
the Rules, arising out of or related to a Major Event, (ii) a statement
that FICC's power to take any action pursuant to the Systems Disconnect
Rule also includes the power to repeal, rescind, revoke, amend or vary
such action, (iii) a statement that FICC's powers pursuant to the
Systems Disconnect Rule shall be in addition to, and not in derogation
of, authority granted elsewhere in the Rules to take action as
specified therein, (iv) a requirement that participants shall keep any
confidential information provided to them by FICC in connection with a
Major Event confidential, and (v) a statement that in the event of any
conflict between the provisions of the Systems Disconnect Rule and any
other Rules or Procedures, the provisions of the Systems Disconnect
Rule would prevail.
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    \32\ See id.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \33\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such organization. After careful consideration, the
Commission finds that the Proposed Rule Change is consistent with the
requirements of the Act and the rules and regulations applicable to
FICC. In particular, the Commission finds that the Proposed Rule Change
is consistent with Section 17A(b)(3)(F) \34\ of the Act and Rules 17Ad-
22(e)(1),\35\ (e)(2),\36\ and (e)(17)(i) \37\ thereunder.
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    \33\ 15 U.S.C. 78s(b)(2)(C).
    \34\ 15 U.S.C. 78q-1(b)(3)(F).
    \35\ 17 CFR 240.17Ad-22(e)(1).
    \36\ 17 CFR 240.17Ad-22(e)(2).
    \37\ 17 CFR 240.17Ad-22(e)(17)(i).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) \38\ of the Exchange Act requires, in part,
that the rules of a clearing agency, such as FICC, be designed, in
part, to promote the prompt and accurate clearance and settlement of
securities transactions and to assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible. The Commission finds that the Proposed
Rule Change is consistent with Section 17A(b)(3)(F) of the Act \39\ for
the reasons discussed below.
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    \38\ 15 U.S.C. 78q-1(b)(3)(F).
    \39\ Id.
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    As described above in Section II.B.1 (Confidentiality
Requirements), FICC proposes to revise its Rules to establish a
standard relating to FICC's obligation to maintain the confidentiality
of information it collects from participants to assess each
participant's compliance with FICC's membership requirements. The
Commission believes such a uniform standard will help FICC meet its
obligations and will help each participant better understand FICC's
obligations for maintaining the confidential information it shares with
FICC, which, in turn, may facilitate the sharing of such information
and improve FICC's ability to evaluate its participants' eligibility to
access FICC's clearance and settlement services.
    Also, as described above in Section II.B.1 (Confidentiality
Requirements), FICC proposes to add participant confidentiality
requirements to its Rules to ensure participants maintain the
confidentiality of information FICC shares, which participants may then
use to determine whether to participate in FICC's clearance and
settlement services by understanding FICC system requirements and FICC
system safeguards. The Commission believes participant confidentiality
requirements will help each participant better understand its rights
and obligations for maintaining the confidential information FICC
shares, which, in turn, may facilitate participant compliance.
Therefore, the Commission believes the proposed changes to FICC and
participant confidentiality requirements are consistent with promoting
the prompt and accurate clearance and settlement of securities
transactions by FICC.
    As described above in Section II.B.2 (Market Disruption Event) and
Section II.B.3 (Systems Disconnect Rule), risks, threats, and potential
vulnerabilities due to a Market Disruption Event or a Major Event could
impede FICC's ability to provide its clearance and settlement services.
FICC proposes to add two officers authorized to make an interim
determination that a Market Disruption Event has occurred if the Board
of Directors is unable to timely convene. The Commission believes the
proposed change will improve FICC's ability to respond quickly to a
Market Disruption Event, which could help FICC mitigate the impact of
such event on FICC, its participants, and the broader market.
    Additionally, as described above in Section II.B.3 (Systems
Disconnect Rule), FICC proposes to add the Systems Disconnect Rule,
which will set forth the procedures under which FICC would be
authorized, upon the occurrence of a Major Event (as defined in the
proposed rules), to take certain actions, including disconnecting a
participant from FICC's systems, suspending data transmissions between
FICC and the participant, and requiring the participant to take other
actions necessary to protect FICC and its participants. The Commission
believes the proposed Systems Disconnect Rule will enable FICC to
respond quickly to a potential cyber threat or other network
disruption, which could help FICC prevent the spread of a participant's
systems disruptions to FICC, its participants, and other market
participants that could otherwise cause losses to FICC or its
participants.
    One commenter suggests certain revisions to the definition of Major
Event so that certain terms in the Systems Disconnect Rule are
consistent with the definition of Market Disruption Event in the Force
Majeure Rule.\40\ The Commission disagrees. Consistency between the
Systems Disconnect Rule and the Force Majeure Rule is not necessary
because FICC designed the

Systems Disconnect Rule for a different purpose. Although both rules
relate to events that, if left unaddressed, could affect FICC's ability
to provide clearance and settlement services, the Force Majeure Rule is
designed to cover events caused by external forces that impact FICC and
its participants, whereas the Systems Disconnect Rule is designed only
to cover disruptions to a participant's computer systems or network
that could flow through to FICC systems. Therefore, differences between
the two rules do not raise consistency concerns, because of their
different purposes.\41\
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    \40\ See letter from Anonymous, dated July 28, 2021, supra note
5.
    \41\ The commenter also suggests adding language to the end of
the Major Event definition to indicate that, to avoid doubt, a Major
Event would not include disruptions due to normal market forces. The
Commission does not believe that such additional language is
necessary because, as discussed above in Section II.B.3 (Systems
Disconnect Rule), a Major Event is limited to one or more ``Systems
Disruption(s)'' (as defined in the proposed rule), which is properly
limited to disruptions to participant systems or its network
connection.
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    Therefore, for the reasons described above, the Commission believes
the proposed changes relating to a Market Disruption Event or a Major
Event will help promote the prompt and accurate clearance and
settlement of securities transactions and with assuring FICC safeguards
securities and funds that are in its custody or control or for which it
is responsible. Accordingly, the Commission finds that the
implementation of the Proposed Rule Change is consistent with Section
17A(b)(3)(F) of the Act.\42\
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    \42\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(1)

    Rule 17Ad-22(e)(1) under the Exchange Act requires that a covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to provide for a well-
founded, clear, transparent and enforceable legal basis for each aspect
of its activities in all relevant jurisdictions.\43\ The Commission
finds that the Proposed Rule Change is consistent with Rule 17Ad-
22(e)(1) of the Exchange Act \44\ for the reasons discussed below.
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    \43\ 17 CFR 240.17Ad-22(e)(1).
    \44\ Id.
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    As described above in Sections II.B.1 (Confidentiality
Requirements) and II.B.2 (Market Disruption Event), FICC proposes to
establish a consistent standard for its obligation to maintain the
confidentiality of information it collects from its participants and to
establish participant confidentiality requirements. The Commission
believes a consistent standard for FICC's confidentiality requirements
will provide for clear and transparent standard rules for participants,
rather than maintaining potentially different confidentiality standards
for participants based on the various, unrelated regulatory bodies
governing those participants. Additionally, the Commission believes
that imposing specific legal standards applicable to both FICC and its
participants to follow will provide for a well-founded legal basis for
the sharing and maintaining of confidential information between FICC
and its participants.\45\
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    \45\ One commenter suggests adding an exception for negligence
or fraud to the limitation of liability clause in the proposed
Systems Disconnect Rule, which the commenter states is customary
contractual language. See letter from Anonymous, dated July 28,
2021, supra note 5. The Commission notes FICC has already included
similar language in its Rules, which would be applicable to this
aspect of the proposal. See Sections 3 of GSD Rule 39 and MBSD Rule
30 and Section 1 of EPN Rule 6 of Article 5, supra note 6 (providing
for FICC liability to its participants for ``gross negligence,
willful misconduct, or violations of Federal securities laws for
which there is a private right of action'' notwithstanding any other
provision in the Rules).
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    Accordingly, the Commission finds that the implementation of the
Proposed Rule Change is consistent with Rule 17Ad-22(e)(1) of the
Exchange Act.\46\
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    \46\ 17 CFR 240.17Ad-22(e)(1).
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C. Consistency With Rule 17Ad-22(e)(2)

    Rule 17Ad-22(e)(2) under the Exchange Act requires, in part, that a
covered clearing agency establish, implement, maintain and enforce
written policies and procedures reasonably designed to provide for
governance arrangements that are clear and transparent and that specify
clear and direct lines of responsibility.\47\ The Commission finds that
the Proposed Rule Change is consistent with Rule 17Ad-22(e)(2) of the
Exchange Act \48\ for the reasons discussed below.
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    \47\ 17 CFR 240.17Ad-22(e)(2).
    \48\ Id.
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    The Commission believes FICC's proposal, as described above in
Section II.B.2 (Market Disruption Event), to add two officers
authorized to make an interim determination of a Market Disruption
Event if the Board of Directors is unable to convene in a timely manner
provides for governance arrangements that are clear and transparent and
that provide clear and direct lines of responsibility. Likewise, the
Commission believes FICC's proposal to identify the officers authorized
to make an interim determination of a Major Event, which will then be
ratified, modified, or rescinded by the management committee and the
Board of Directors will provide for clear and transparent governance
procedures and will specify clear and direct lines of responsibility.
Accordingly, the Commission finds that the implementation of the
Proposed Rule Change is consistent with Rule 17Ad-22(e)(2) of the
Exchange Act.\49\
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    \49\ Id.
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D. Consistency With Rule 17Ad-22(e)(17)(i)

    Rule 17Ad-22(e)(17)(i) under the Exchange Act requires that a
covered clearing agency establish, implement, maintain and enforce
written policies and procedures reasonably designed to manage the
covered clearing agency's operational risks by identifying the
plausible sources of operational risk, both internal and external, and
mitigating their impact through the use of appropriate systems,
policies, procedures, and controls.\50\ The Commission finds that the
Proposed Rule Change is consistent with Rule 17Ad-22(e)(17)(i) of the
Exchange Act \51\ for the reasons discussed below.
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    \50\ 17 CFR 240.17Ad-22(e)(17)(i).
    \51\ Id.
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    The Commission believes FICC's proposal, as described above in
Section II.B.2 (Market Disruption Event), to add two officers
authorized to make an interim determination of a Market Disruption
Event could help FICC mitigate the impact of a Market Disruption Event
by ensuring FICC can respond quickly to such event if the Board of
Directors were unable to convene in a timely manner. Likewise, the
Commission believes the proposed Systems Disconnect Rule, as described
in Section II.B.3 above, provides a rules-based process that will
enable FICC to identify potential cyber threats or other network
disruptions, which could help FICC prevent the spread of a
participant's systems disruptions to FICC, its participants, and other
market participants that could otherwise cause losses to FICC or its
participants.
    One commenter suggests revising the definition of Major Event to be
consistent with the definition of Market Disruption Event in the Force
Majeure Rule.\52\ The commenter further argues the impact to FICC
covered by the definition of Major Event should be limited to ``DTCC
Systems'' (as defined in the proposed rule) to ensure the scope of the
proposed rule is limited to technical systems.\53\ The Commission

disagrees. As noted above, the purposes of both the Force Majeure Rule
and the Systems Disconnect Rule are different. The Force Majeure Rule
is designed to cover events external to FICC and its participants that
materially impact, or are likely to materially impact, FICC's ability
to provide its clearance and settlement services. The Systems
Disconnect Rule, by contrast, is designed to cover a participant's
systems or network disruption, which through its connection to FICC, is
reasonably likely to have a significant impact on FICC's systems. The
differences between the rules' purposes support the need for differing
standards.\54\ Furthermore, the Commission notes the reference to
``including DTCC Systems'' in the proposed definition of Major Event
takes into account how FICC's operations, i.e., its clearance and
settlement services, work, in that they utilize DTCC Systems.
Consequently, the commenter's proposed revisions are not necessary.\55\
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    \52\ Specifically, the commenter suggests deleting reference to
``reasonably'' and by replacing ``significant'' with ``material''
when describing the likelihood and level of impact to FICC. See
letter from Anonymous, dated July 28, 2021, supra note 5.
    \53\ See id.
    \54\ The Commission also disagrees with the commenter's
suggestion to remove the references to ``reasonably'' with respect
to the likelihood of an event impacting FICC's operations. The
Commission believes that FICC's assessment of the likelihood of such
an impact should be reasonable before taking actions like
disconnecting a participant from its systems. In addition, the
Commission notes that FICC's references to ``reasonably likely'' and
``significant impact'' in the proposed definition of Major Event are
consistent with the Commission's definition of a ``Major SCI Event''
under Regulation SCI. 17 CFR 242.1000. Likewise, the Commission
notes that references in the proposed rule text to ``reasonable
basis'' and ``appropriate'' is consistent with the obligations
related to a Major SCI Event under Regulation SCI. 17 CFR 242.1002.
    \55\ Another commenter expressed concern that the proposed
Systems Disconnect Rule could be used to benefit the trading
activity of certain participants at the detriment of disconnected
participants. See letter from Jarrod Knudson, dated June 27, 2021,
supra note 5. The Commission disagrees because the proposed rule, by
its terms, would only apply when certain Systems Disruptions occur
at a participant that could impact FICC's operations.
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    Accordingly, the Commission finds that the implementation of the
Proposed Rule Change is consistent with Rule 17Ad-22(e)(17)(i) of the
Exchange Act.\56\
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    \56\ 17 CFR 240.17Ad-22(e)(17)(i).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
Proposed Rule Change is consistent with the requirements of the Act and
in particular with the requirements of Section 17A of the Act \57\ and
the rules and regulations promulgated thereunder.
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    \57\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\58\ that Proposed Rule Change SR-FICC-2021-004, be, and hereby is,
approved.\59\
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    \58\ 15 U.S.C. 78s(b)(2).
    \59\ In approving the Proposed Rule Change, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\60\
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    \60\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22440 Filed 10-13-21; 8:45 am]
BILLING CODE 8011-01-P