[Federal Register Volume 76, Number 132 (Monday, July 11, 2011)]
[Rules and Regulations]
[Pages 40605-40612]
[FR Doc No: 2011-17039]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 240 and 260

[Release Nos. 33-9231; 34-64794; 39-2475; File No. S7-26-11]
RIN 3235-AL17

Exemptions for Security-Based Swaps

AGENCY: Securities and Exchange Commission.

ACTION: Interim final rules; request for comments.

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SUMMARY: We are adopting interim final rules providing exemptions under
the Securities Act of 1933, the Securities Exchange Act of 1934, and
the Trust Indenture Act of 1939 for those security-based swaps that
under current law are security-based swap agreements and will be
defined as ``securities'' under the Securities Act and the Exchange Act
as of July 16, 2011 due solely to the provisions of Title VII of the
Dodd-Frank Wall Street Reform and Consumer Protection Act. The interim
final rules will exempt offers and sales of these security-based swaps
from all provisions of the Securities Act, other than the Section 17(a)
anti-fraud provisions, as well as exempt these security-based swaps
from Exchange Act registration requirements and from the provisions of
the Trust Indenture Act, provided certain conditions are met. The
interim final rules will remain in effect until the compliance date for
final rules that we may adopt further defining the terms ``security-
based swap'' and ``eligible contract participant.''

DATES: Effective Date: The interim final rules are effective July 11,
2011 Comments should be received on or before August 15, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/interim-final-temp.shtml);
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-26-11 on the subject line; or
     Use the Federal Rulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

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 S7-26-11. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. We will post all comments on the Commission's Internet Web site
(http://www.sec.gov/rules/interim-final-temp.shtml). Comments also are
available for public inspection and copying in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. All comments
received will be posted without change; we do not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Andrew Schoeffler, Special Counsel,
Office of Capital Market Trends, Division of Corporation Finance, at
(202) 551-3860, U.S. Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are adopting interim final Rule 240 under
the Securities Act of 1933 (``Securities Act''),\1\ interim final Rule
12a-11 and Rule 12h-1(i) under the Securities Exchange Act of 1934
(``Exchange Act''),\2\ and interim final Rule 4d-12 under the Trust
Indenture Act of 1939 (``Trust Indenture Act'').\3\
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    \1\ 15 U.S.C. 77a et seq.
    \2\ 15 U.S.C. 78a et seq.
    \3\ 15 U.S.C. 77aaa et seq.
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I. Background

    On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall
Street Reform and Consumer Protection Act (``Dodd-Frank Act'') into
law.\4\ The Dodd-Frank Act was enacted, among other reasons, to promote
the financial stability of the United States by improving
accountability and transparency in the financial system.\5\ The recent
financial crisis demonstrated the need for enhanced regulation of the
over-the-counter (``OTC'') derivatives markets, which have experienced
dramatic growth in recent years \6\ and are capable of affecting
significant sectors of the U.S. economy.\7\ Title VII of the Dodd-Frank
Act (``Title VII'') establishes a regulatory regime applicable to the
OTC derivatives markets by providing the Securities and Exchange
Commission (``Commission'' or ``we'') and the Commodity Futures Trading
Commission (``CFTC'') with the tools to oversee these heretofore
largely unregulated markets. Title VII provides that the CFTC will
regulate ``swaps,'' the Commission will regulate ``security-based
swaps,'' and the CFTC and the Commission will jointly regulate ``mixed
swaps.'' \8\
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    \4\ The Dodd-Frank Wall Street Reform and Consumer Protection
Act, Public Law 111-203, 124 Stat. 1376 (2010).
    \5\ See, e.g., Public Law 111-203, Preamble.
    \6\ From their beginnings in the early 1980s, the notional value
of these markets has grown to almost $600 trillion globally. See
Monetary and Econ. Dep't, Bank for Int'l Settlements, Triennial and
Semiannual Surveys--Positions in Global Over-the-Counter (OTC)
Derivatives Markets at End-June 2010 (Nov. 2010), available at
http://www.bis.org/publ/otc_hy1011.pdf.
    \7\ See 156 Cong. Rec. S5878 (daily ed. July 15, 2010)
(statement of Sen. Dodd).
    \8\ Section 712(d) of the Dodd-Frank Act provides that the
Commission and the CFTC, in consultation with the Board of Governors
of the Federal Reserve System, shall further define the terms
``swap,'' ``security-based swap,'' ``swap dealer,'' ``security-based
swap dealer,'' ``major security-based swap participant,'' ``eligible
contract participant,'' and ``security-based swap agreement.'' These
terms are defined in sections 721 and 761 of the Dodd-Frank Act and
the Commission and the CFTC have proposed to further define these
terms in proposed joint rulemaking. See Further Definition of ``Swap
Dealer,'' ``Security-Based Swap Dealer,'' ``Major Swap
Participant,'' ``Major Security-Based Swap Participant'' and
``Eligible Contract Participant'', Release No. 34-63452 (Dec. 7,
2010), 75 FR 80174 (Dec. 21, 2010)(``SBS Participant Definition
Proposing Release''); and Further Definition of ``Swap,''
``Security-Based Swap,'' and ``Security-Based Swap Agreement'';
Mixed Swaps; Security-Based Swap Agreement Recordkeeping, Release
No. 33-9204 (Apr. 29, 2011), 76 FR 29818 (May 23, 2011), corrected
in Release No. 33-9204A (June 1, 2011), 76 FR 32880 (June 7,
2011)(``SBS Product Definition Proposing Release'').
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    Title VII amends the Securities Act and the Exchange Act to
substantially expand the regulation of the security-based swap markets,
establishing a new regulatory framework within which such markets can
continue to evolve in a more transparent, efficient, fair, accessible,
and competitive manner.\9\ The Title VII amendments to the Exchange Act
impose, among other requirements, the following: (1) Registration and
comprehensive oversight of security-based swap dealers

and major security-based swap participants; \10\ (2) reporting of
security-based swaps to a registered security-based swap data
repository, to the Commission, and to the public; \11\ (3) clearing of
security-based swaps through a registered clearing agency or through a
clearing agency that is exempt from registration \12\ if such security-
based swaps are of a type that the Commission determines is required to
be cleared, unless an exemption or exception from such mandatory
clearing applies; \13\ and (4) if a security-based swap is subject to
the clearing requirement,\14\ execution of the security-based swap
transaction on an exchange, on a security-based swap execution facility
(``security-based SEF'') registered under the Exchange Act,\15\ or on a
security-based SEF that has been exempted from registration by the
Commission under the Exchange Act,\16\ unless no security-based SEF or
exchange makes such security-based swap available for trading.\17\
Title VII also amends the Securities Act and the Exchange Act to
include ``security-based swaps'' in the definition of ``security'' for
purposes of those statutes.\18\ As a result, ``security-based swaps''
will be subject to the provisions of the Securities Act and the
Exchange Act and the rules thereunder applicable to ``securities.''
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    \9\ See generally subtitle B of Title VII.
    \10\ See section 15F of the Exchange Act, 15 U.S.C. 78o-10.
    \11\ See section 3(a)(75) of the Exchange Act, 15 U.S.C.
78c(a)(75) (defining the term ``security-based swap data
repository''). See also Security-Based Swap Data Repository
Registration, Duties, and Core Principles, Release No. 34-63347
(Nov. 19, 2010), 75 FR 77306 (Dec. 10, 2010); corrected at 75 FR
79320 (Dec. 20, 2010) and 76 FR 2287 (Jan. 13, 2011)(proposed
rules); and Regulation SBSR--Reporting and Dissemination of
Security-Based Swap Information, Release No. 34-63346 (Nov. 19,
2010), 75 FR 75208 (Dec. 2, 2010) (proposed rules).
    \12\ See subparagraphs (i) and (j) to Section 17A of the
Exchange Act, 15 U.S.C. 78q-1. See also Clearing Agency Standards
for Operation and Governance, Release No. 34-64017 (Mar. 3, 2011),
76 FR 14472 (Mar. 16, 2011)(proposed rules).
    \13\ See section 3C(a)(1) of the Exchange Act, 15 U.S.C. 78c-
3(a)(1). See also Process for Submissions for Review of Security-
Based Swaps for Mandatory Clearing and Notice Filing Requirements
for Clearing Agencies; Technical Amendments to Rule 19b-4 and Form
19b-4 Applicable to All Self-Regulatory Organizations, Release No.
34-63557 (Dec. 15, 2010), 75 FR 82490 (Dec. 30, 2010)(proposed
rules).
    \14\ See section 3C(g) of the Exchange Act, 15 U.S.C. 78c-3(g)
(providing an exception to the clearing requirement for certain
persons).
    \15\ 15 U.S.C. 78c-4.
    \16\ 15 U.S.C. 78c-4(e).
    \17\ See section 3C(g) of the Exchange Act, 15 U.S.C. 78c-3(g).
See section 3C(h) of the Exchange Act, 15 U.S.C. 78c-3(h). See also
section 3(a)(77) of the Exchange Act, 15 U.S.C. 78c(77) (defining
the term ``security-based swap execution facility''). See also
Registration and Regulation of Security-Based Swap Execution
Facilities, Release No. 34-63825 (Feb. 2, 2011), 76 FR 10948 (Feb.
28, 2011)(``Security-Based SEF Proposing Release'').
    \18\ See sections 761(a)(2) and 768(a)(1) of the Dodd-Frank Act
(amending sections 3(a)(10) of the Exchange Act, 15 U.S.C.
78c(a)(10), and 2(a)(1) of the Securities Act, 15 U.S.C. 77b(a)(1),
respectively).
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    The provisions of Title VII generally are effective on July 16,
2011 (360 days after enactment of the Dodd-Frank Act, the ``Effective
Date''), unless a provision requires a rulemaking. Specifically, if a
Title VII provision requires a rulemaking, it will go into effect ``not
less than'' 60 days after publication of the related final rule or on
July 16, 2011, whichever is later.\19\ We do not expect to complete all
of the rulemaking we are directed to carry out pursuant to the
provisions of Title VII prior to the Effective Date.
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    \19\ See Section 774 of the Dodd-Frank Act, 15 U.S.C. 77b note.
As we noted in our recent Order Pursuant to Sections 15F(b)(6) and
36 of the Securities Exchange Act of 1934 Granting Temporary
Exemptions and Other Temporary Relief, Together with Information on
Compliance Dates for New Provisions of the Securities Exchange Act
of 1934 Applicable to Security-Based Swaps, and Request for Comment,
Release No. 34-64678 (June 15, 2011)(``Effective Date Order''), the
effective date of certain provisions or requirements may require
other Commission actions before the parties can comply with mandated
obligations.
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    We have proposed to further define and provide guidance regarding
the terms ``security-based swap'' \20\ and ``eligible contract
participant.'' \21\ These proposed rules are among the rulemakings that
will not be adopted by the Effective Date. We recognize that until we
further define such terms, market participants may be uncertain as to
how to comply with the applicable registration requirements of the
Securities Act, the registration requirements of the Exchange Act
applicable to classes of securities, and the indenture provisions of
the Trust Indenture Act. In that regard, a number of commenters
recently have raised concerns about potential uncertainty regarding the
definitions of ``security-based swap'' and ``eligible contract
participant'' and the related proposed rulemakings.\22\ As part of our
recent action providing guidance as to which of the requirements of
Title VII will apply to security-based swap transactions as of the
Effective Date and granting temporary relief to market participants
from compliance with certain of these requirements, we granted certain
temporary exemptions relating to security-based swap transactions with
persons who are eligible contract participants as that term is defined
today and relating to the operation of trading platforms for security-
based swaps.\23\ The exemption relating to eligible contract
participants will allow persons currently participating in the
security-based swap markets, who could potentially be considered non-
eligible contract participants under the definition of ``eligible
contract participant'' as amended by Title VII, to continue to do so
until the term ``eligible contract participant'' is further defined in
final rulemaking.\24\ We also provided a temporary exemption to allow
an entity that trades security-based swaps and is not currently
registered as a national securities exchange or that cannot yet
register as a security-based SEF because final rules for such
registration have not yet been adopted, to continue trading security-
based swaps during this temporary period without registering as a
national securities exchange or security-based SEF.\25\
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    \20\ See SBS Product Definition Proposing Release, supra note 8.
    \21\ See SBS Participant Definition Proposing Release, supra
note 8. The term ``eligible contract participant'' currently is
defined in Section 1a(12) of the Commodity Exchange Act (7 U.S.C.
1a(12)). For purposes of transactions in security-based swap
agreements, ``eligible contract participant'' is defined by
reference to such section as in effect on the date of enactment of
the Commodity Futures Modernization Act (Public Law 106-554, 114
Stat. 2763 (2000)) and does not include any person determined by the
CFTC to be an eligible contract participant pursuant to their
authority in Section 1a(12)(C) of the Commodity Exchange Act (7
U.S.C. 1a(12)). Title VII amended the definition of ``eligible
contract participant'' to narrow in some respects the definition of
eligible contract participant in Section 1a(12). See footnote 38,
supra.
    \22\ See, e.g., Letter from American Bankers Association,
Financial Services Roundtable, Futures Industry Association,
Institute of International Bankers, International Swaps and
Derivatives Association, Investment Company Institute, Securities
Industry and Financial Markets Association, U.S. Chamber of Commerce
(June 10, 2011)(``Trade Association Letter''). (``The definition of
[eligible contract participant] was amended by [the Dodd-Frank Act],
and the [Commission and the CFTC] have sought comments in [the SBS
Participant Definition Proposing Release] on how to further define
such term, including how to interpret the phrase ``discretionary
basis.'' Until the term [eligible contract participant] is further
defined in a final rulemaking, market participants will not know
whether they are dealing with an [eligible contract participant],
and where the line is between their institutional and retail
businesses. As a result, they will not know * * * whether certain
transactions are subject to the new requirement for [non-eligible
contract participant] transactions to be executed on an exchange. *
* * As a result, market participants may cease or severely limit
their business with counterparties that could potentially be
considered [non-eligible contract participants] under the Dodd-Frank
statutory definition of [eligible contract participant].'').
    \23\ See Effective Date Order, supra note19.
    \24\ See Id.
    \25\ See Id.
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    In addition to the matters addressed in our recent action, we
understand that there are other implications for security-based swaps
under the Securities Act, other provisions of the Exchange Act,

and the Trust Indenture Act. As we note, we have received comments
expressing concern regarding the implications of including security-
based swaps in the definition of ``security.'' Commenters have
indicated that they are still analyzing the full implications of such
expansion of the definition of ``security,'' but that it will take
time. Market participants therefore have requested temporary relief
from certain provisions of the Securities Act and the Exchange Act so
that parties may complete their analysis and submit requests for more
targeted relief.\26\
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    \26\ See Trade Association Letter, supra note 22.
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    While we recently proposed exemptions under the Securities Act, the
Exchange Act and the Trust Indenture Act for security-based swaps
issued by certain clearing agencies in their function as central
counterparties (CCP) under certain conditions (the ``Proposed SBS
Exemptions'') \27\ and also recently extended our temporary rules that
provided certain exemptions under the Securities Act, the Exchange Act
and the Trust Indenture Act for cleared credit default swaps (the
``Temporary CDS Rules''),\28\ these exemptions would not apply to
transactions in security-based swaps, including credit default swaps,
not involving a clearing agency. We also note that while the Temporary
CDS Rules will be in place on the Effective Date, the Proposed SBS
exemptions will not.
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    \27\ See Exemptions For Security-Based Swaps Issued By Certain
Clearing Agencies, Release No. 33-9222 (June 9, 2011), 76 FR 34920
(June 15, 2011) (``SBS Exemptions Proposing Release''). The proposed
exemptions would exempt transactions by clearing agencies in
security-based swaps from all provisions of the Securities Act,
other than the Section 17(a) anti-fraud provisions, as well as
exempt these security-based swaps from Exchange Act registration
requirements and from the provisions of the Trust Indenture Act,
provided certain conditions are met.
    \28\ See Temporary Exemptions for Eligible Credit Default Swaps
to Facilitate Operation of Central Counterparties to Clear and
Settle Credit Default Swaps, Release No. 33-8999 (Jan. 14, 2009), 74
FR 3967 (Jan. 22, 2009); Extension of Temporary Exemptions for
Eligible Credit Default Swaps to Facilitate Operation of Central
Counterparties to Clear and Settle Credit Default Swaps, Release No.
33-9063 (Sep. 14, 2009), 74 FR 47719 (Sep. 17, 2009); and Extension
of Temporary Exemptions for Eligible Credit Default Swaps to
Facilitate Operation of Central Counterparties to Clear and Settle
Credit Default Swaps, Release No. 33-9158 (Nov. 19, 2010), 75 FR
72660 (Nov. 26, 2010).
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    As a result, because security-based swaps will become securities on
the Effective Date, absent the action we take in this release,
counterparties entering into transactions in security-based swaps that
are not within the scope of the Temporary CDS Rules will either need to
rely on other available exemptions from the requirements of the
Securities Act, the Exchange Act, and, if applicable, the Trust
Indenture Act, or to consider whether to register such transactions or
class of security.\29\
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    \29\ See SBS Exemptions Proposing Release, supra note 27.
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    We note that under current law, certain security-based swaps--
specifically those within the pre-Dodd-Frank Act definition of
``security-based swap agreement'' entered into between eligible
contract participants and subject to individual negotiation--are
outside the scope of the federal securities laws, other than the anti-
fraud and certain other provisions.\30\ Up until now, these security-
based swaps have been traded or otherwise transacted without concerns
about complying with the registration requirements of the Securities
Act, the registration requirements of the Exchange Act applicable to
classes of securities, or the indenture provisions of the Trust
Indenture Act. We understand that there are several types of trading
platforms currently being used to effect transactions in security-based
swaps that would likely register as security-based SEFs,\31\ and that
this activity would continue after the Effective Date.\32\ We
understand that if parties continue to engage in the same types of
trading activities after the Effective Date that they may be engaging
in currently with respect to security-based swap agreements that may be
security-based swaps on the Effective Date, such activities may raise
concerns about the availability of an exemption from the registration
requirements of the Securities Act, such as the private placement
exemption in Securities Act Section 4(2).\33\
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    \30\ See Section 2A of the Securities Act (15 U.S.C. 77b(b)-1)
and Section 3A of the Exchange Act (15 U.S.C. 78c-1). The definition
of ``security-based swap agreement'' includes the definition of
``swap agreement,'' which requires that the agreement, contract or
transaction be ``subject to individual negotiation'' and be between
eligible contract participants.
    \31\ See Security-Based SEF Proposing Release, supra note 17. As
we note above, we recently addressed certain issues relating to
these trading platforms pending adoption of rules relating to
security-based SEFs. See Effective Date Order, supra note 19.
    \32\ We requested comment on these issues in the SBS Exemptions
Proposing Release. See SBS Exemptions Proposing Release, supra note
27.
    \33\ 15 U.S.C. 77d(2). Section 4(2) provides an exemption from
registration for transactions by an issuer not involving any public
offering.
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    We have recognized that implementation of the Title VII provisions
raises issues in a number of contexts. As we noted in our recent
action, in furtherance of the Dodd-Frank Act's stated objective of
promoting financial stability in the U.S. financial system, we intend
to move forward expeditiously with the implementation of the new
security-based swap requirements in an efficient manner, while
minimizing unnecessary disruption and costs to the markets.\34\ We
recognize that many market participants will find compliance with Title
VII to be a substantial undertaking. Security-based swap markets
already exist, are global in scope, and have generally grown in the
absence of regulation in the United States and elsewhere. In addition,
the security-based swap markets are interconnected with other financial
markets, including the traditional securities markets. In order to
comply with Title VII provisions and related rules, we recognize that
market participants will need additional time to acquire and configure
necessary systems or to modify existing practices and systems, engage
and train necessary staff, and develop and implement necessary policies
and procedures. Furthermore, some of these changes cannot be undertaken
until certain rules are finalized.
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    \34\ See Effective Date Order, supra note 19.
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    We are concerned about disrupting the operation of the security-
based swap markets until the compliance date for final rules that we
may adopt further defining the terms ``security-based swap'' and
``eligible contract participant.'' In our view, it is appropriate to
permit those security-based swap transactions that, prior to the
Effective Date, would be transactions in security-based swap agreements
between eligible contract participants (and, therefore, not subject to
the registration requirements of the Securities Act, the registration
requirements of the Exchange Act applicable to classes of securities,
and the indenture provisions of the Trust Indenture Act) to continue to
be entered into as they are today until the compliance date for such
final rules. Thus, we believe that it is necessary and appropriate in
the public interest and consistent with the protection of investors,
pending the compliance date for final rules that we may adopt further
defining the terms ``security-based swap'' and ``eligible contract
participant,'' to provide interim exemptions from all provisions of the
Securities Act (other than the Section 17(a) antifraud provisions), the
registration requirements of the Exchange Act relating to classes of
securities, and the indenture provisions of the Trust Indenture Act for
those security-based swaps that would have been, prior to the Effective
Date, within the definition of ``security-based swap

agreement'' under Securities Act Section 2A \35\ and Exchange Act
Section 3A \36\ and are entered into solely between eligible contract
participants (as defined prior to the Effective Date).
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    \35\ 15 U.S.C. 77b(b)-1.
    \36\ 15 U.S.C. 78c-1.
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II. Discussion of the Interim Final Rules

    We are adopting interim final rules to provide certain conditional
exemptions under the Securities Act, the Exchange Act and the Trust
Indenture Act.

A. Securities Act Rule 240

    We are adopting interim final Securities Act Rule 240 to exempt
from all provisions of the Securities Act, except the anti-fraud
provisions of Section 17(a), subject to certain conditions, the offer
or sale of those security-based swaps that under current law are
security-based swap agreements (which under that definition must be
entered into between eligible contract participants and subject to
individual negotiation) and that will be defined as ``securities''
under the Securities Act on the Effective Date due solely to the
provisions of Title VII. Securities Act Rule 240 will permit the offer
or sale of these security-based swaps between eligible contract
participants without requiring compliance with Securities Act Section
5.
    The definition of ``security-based swap'' in Title VII and
``security-based swap agreement'' in Securities Act Section 2A are not
identical.\37\ In addition, the amendments to the definition of
``eligible contract participant'' in Title VII narrow in some respects
the definition of ``eligible contract participant'' in the Commodity
Exchange Act.\38\ In addition, we note that because certain persons may
be eligible contract participants today but as a result of the narrower
definition may no longer be eligible contract participants after the
Effective Date, without an exemption, certain counterparties may not be
able to offer or sell such security-based swaps without compliance with
the registration requirements of the Securities Act.\39\ As a result of
such differences, to avoid uncertainty as to the applicability of the
Securities Act registration requirements pending the compliance date
for final rules that we may adopt further defining the terms
``security-based swap'' and ``eligible contract participant'' and to
allow transactions between persons who are eligible contract
participants today, we believe it is appropriate to provide an
exemption that will allow market participants to continue to enter into
transactions that come within the pre-Dodd-Frank Act definition of
``security-based swap agreements.''
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    \37\ See Section 2A of the Securities Act (15 U.S.C. 77b(b)-1).
    \38\ See Section 1a(12) of the Commodity Exchange Act (7 U.S.C.
1a(12)) (prior to July 16, 2011) and Commodity Exchange Act Section
1a(18) (as re-designated and amended by Section 721 of the Dodd-
Frank Act. See Public Law 111-203, Sec.  761(a) (adding Exchange Act
Section 3(a)(65), which refers to the definition of eligible
contract participant in the CEA). The definition of eligible
contract participant contained in the Commodity Exchange Act (as
amended by the Dodd-Frank Act) includes: financial institutions;
insurance companies; investment companies; other entities and
employee benefit plans; State and local municipal entities; market
professionals, such as broker dealers, futures commission merchants,
floor brokers, and investment advisors; and natural persons with a
specified dollar amount invested on a discretionary basis. For
purposes of the eligible contract participant definition after the
Effective Date, certain of the entities, market professionals, and
natural persons must meet certain conditions relating to the amount
of assets or amount of monies invested on a discretionary basis. The
Dodd-Frank Act amendments to the eligible contract participant
definition increased the dollar threshold for certain persons and,
with respect to natural persons, replaced a ``total assets'' test
with an ``amounts invested on a discretionary basis'' test.
    \39\ See Public Law 111-203 Sec.  768(b) (adding Section 5(d) of
the Securities Act). Under Section 5(d), no offers or sales of
security-based swaps may be made to non-eligible contract
participants unless there is an effective registration statement
under the Securities Act covering transactions in such security-
based swap and any security-based swap transaction with a non-
eligible contract participant must be effected on a national
securities exchange. In our Effective Date Order, we have provided
an exemption, under certain circumstances, to allow transactions to
continue with persons who today are eligible contract participants.
See Effective Date Order, supra note 19.
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    Under Securities Act Rule 240, a security-based swap will be exempt
from the registration requirements of the Securities Act if it would
have been a ``security-based swap agreement'' under the Securities Act
prior to the Effective Date and is entered into between eligible
contract participants (as that term was defined prior to the Effective
Date).\40\ The purpose of these conditions is to allow those types of
security-based swaps that were not defined as a ``security'' under the
Securities Act prior to the Effective Date to continue to be transacted
following the Effective Date until the compliance date for final rules
that we may adopt further defining the terms ``security-based swap''
and ``eligible contract participant.'' \41\
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    \40\ See 7 U.S.C. 1a(12). As we note above, the exemption
applies only to those persons who are within the definition of
``eligible contract participant'' contained in the definition of
``swap agreement'' under Securities Act Section 2A. See 15 U.S.C.
77b(b)-1 and Public Law 106-554, 114 Stat. 2763, 2763A-378 (2001).
    \41\ We note that the exemption will not cover credit-default
swaps that are covered by the Temporary CDS Rules, as such cleared
credit default swaps may not come within the definition of
``security-based swap agreement'' because of the absence of the
condition that they be subject to individual negotiation.
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B. Exchange Act Rule 12a-11 and Rule 12h-1(i)

    We also are adopting two interim final rules relating to Exchange
Act registration of security-based swaps. We are adopting interim final
Exchange Act Rule 12a-11 to exempt any security-based swap offered and
sold in reliance on Securities Act Rule 240 from the provisions of
Exchange Act Section 12(a). As with our recent exemption affecting
persons who are eligible contract participants, this exemption is
intended to allow trading activities relating to those security-based
swaps that under current law are security-based swap agreements with
eligible contract participants to continue, provided the parties rely
on the Rule 240 Securities Act exemption with respect to such security-
based swaps. We also are adopting an interim final amendment to
Exchange Act Rule 12h-1 to exempt any security-based swap offered and
sold in reliance on Securities Act Rule 240 from the provisions of
Exchange Act Section 12(g). While we do not know whether there will be
a class of security-based swaps that otherwise would satisfy the
registration threshold under Exchange Act Section 12(g), we believe it
is appropriate to provide this exemption while we continue to learn
about and evaluate the type of security-based swap transactions that
have been and will be transacted.

C. Trust Indenture Act Rule 4d-12

    We are adopting an interim final rule under Trust Indenture Act
Section 304(d) that will exempt any security-based swap offered or sold
in reliance on Securities Act Rule 240 from having to comply with the
provisions of the Trust Indenture Act. We believe an exemption from the
Trust Indenture Act is appropriate in this situation.
    The Trust Indenture Act is aimed at addressing problems that
unregulated debt offerings pose for investors and the public, and
provides a mechanism for debt holders to protect and enforce their
rights with respect to the debt. We do not believe that the protections
contained in the Trust Indenture Act are needed at this time to protect
eligible contract participants to whom a sale of security-based swaps
is made in reliance on Securities Act Rule 240. At this point, we
believe that the identified problems that the Trust Indenture Act is
intended to address do not occur in the offer and sale of these
security-based swaps. For example, these security-based swaps are
contracts between two

parties and, as a result, do not raise the same problem regarding the
ability of parties to enforce their rights under the instruments as
would, for example, a debt offering to the public. Moreover,
enforcement of contractual rights and obligations under these security-
based swaps would occur directly between such parties, and it appears
that the Trust Indenture Act provisions would not provide any
additional meaningful substantive or procedural protections.
    Accordingly, due to the nature of those security-based swaps that
may be sold in reliance on Securities Act Rule 240, we do not believe
the protections contained in the Trust Indenture Act are currently
needed with respect to those instruments. Therefore, we believe the
exemption is necessary and appropriate in the public interest,
consistent with the protection of investors and the purposes fairly
intended by the Trust Indenture Act.

D. Request for Comment

    We request and encourage any interested person to submit comments
regarding the interim final rules. In particular, we solicit comment on
the following questions:
    1. How will the exemptions affect, if at all, the manner in which
security-based swaps are transacted today and are expected to be
transacted following the Effective Date?
    2. Will the counterparties to security-based swaps be able to rely
on other available exemptions from registration under the Securities
Act and the Exchange Act? If not, why? Is further guidance or rules
needed in this regard? If so, what type of guidance or rules would be
helpful?
    3. Are security-based swaps transacted today or expected to be
transacted following the Effective Date in a manner that would not
permit the parties to rely on existing exemptions under the Securities
Act and the Exchange Act? If so, please explain in detail why existing
exemptions would not be available.
    4. Should we consider additional exemptions under the Securities
Act and the Exchange Act for security-based swaps traded on a national
securities exchange or security-based SEF with eligible contract
participants? Should an exemption from Exchange Act registration be
provided if all holders of the class of security-based swap are
eligible contract participants? Why or why not? What conditions to any
such exemption would be appropriate, if any?
    5. Should we consider providing an exemption under the Securities
Act that would allow a public offering of uncleared security-based
swaps to eligible contract participants on a registered security-based
SEF or national securities exchange? Why or why not? What conditions to
any such exemption would be appropriate, if any?
    6. We are interested in understanding what type of security-based
swaps might not be eligible for the interim final exemptions. Are there
security-based swaps transactions today that would not be encompassed
within the scope of the interim final exemptions and that should be
covered?
    7. Do the interim final exemptions apply to all security-based
swaps that should be exempted from the Securities Act, the Exchange Act
and the Trust Indenture Act as of the Effective Date? If not, how
should the interim final exemptions be revised such that these other
security-based swaps would be included within the interim final
exemptions?
    8. The interim final Securities Act exemption contains particular
conditions. Should the Securities Act exemption in Securities Act Rule
240 be conditioned in this manner? If not, why not?
    9. Are the exemptions from the Securities Act, the Exchange Act and
the Trust Indenture Act appropriate? If not, why not? Should we take a
different approach?

III. Transition and Expiration Date of Interim Final Rules

    The interim final rules will remain in effect until the compliance
date for final rules that we may adopt further defining the terms
``security-based swap'' and ``eligible contract participants.'' We
anticipate that this term of the exemptions will provide us with time
to evaluate the market for security-based swaps, and consider whether
there are other exemptions that we should consider regarding security-
based swap transactions between eligible contract participants.
    Adoption of the interim final rules, which will be effective on
July 11, 2011, will minimize disruptions and costs to the security-
based swap markets that could occur on the Effective Date as a result
of the effectiveness of the definitions of ``security-based swap'' and
``eligible contract participant'' on the Effective Date prior to the
completion of rulemakings to further define these terms. We have
included several requests for comment in this release. We will consider
the public comments we receive in determining whether we should revise
the interim final rules in any respect, as well as other actions we
should take with respect to such exemptions.

IV. Other Matters

    The Administrative Procedure Act generally requires an agency to
publish notice of a proposed rulemaking in the Federal Register.\42\
This requirement does not apply, however, if the agency ``for good
cause finds * * * that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest.'' \43\ Further, the
Administrative Procedure Act also generally requires that an agency
publish an adopted rule in the Federal Register 30 days before it
becomes effective.\44\ This requirement does not apply, however, if the
agency finds good cause for making the rule effective sooner.\45\ We,
for good cause, find that notice and solicitation of comment before
adopting the new rules is impracticable, unnecessary, or contrary to
the public interest.
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    \42\ See 5 U.S.C. 553(b).
    \43\ Id.
    \44\ See 5 U.S.C. 553(d).
    \45\ Id.
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    For the reasons we discussed throughout this release, we believe
that we have good cause to act immediately to adopt the new rules on an
interim final basis. The interim final rules are intended to minimize
disruptions and costs to the security-based swap markets that could
occur on the Effective Date as a result of the effectiveness of the
definitions of ``security-based swap'' and ``eligible contract
participant'' on the Effective Date prior to the completion of
rulemakings to further define these terms. In addition, we had
previously anticipated that additional exemptions would not be needed
to preserve the status quo because we assumed that existing exemptions
under the Securities Act would be available to participants in
security-based swap transactions after the Effective Date. We have
become aware, however, due to comments we have recently received, that
there may be questions as to whether such exemptions may be available
for all types of trading activities that may occur today involving
instruments that will or may be encompassed in the definition of
``security-based swap.'' \46\ Moreover, we have requested comment on
trading activities in our recent SBS Exemption Proposing Release.\47\
We emphasize that we are requesting comments on the interim final rules
and will carefully consider any comments that we receive in determining
whether we should revise the interim final rules in any respect, as
well as other actions we

should take with respect to such exemptions.
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    \46\ See Trade Association Letter, supra note 22.
    \47\ See SBS Exemption Proposing Release, supra note 27.
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    The interim final rules will remain in effect until the compliance
date for final rules that we may adopt further defining the terms
``security-based swap'' and ``eligible contract participant.'' We find
that there is good cause to have the new rules effective as interim
final rules and that notice and public procedure in advance of
effectiveness of the interim final rules is impracticable, unnecessary
and contrary to the public interest.\48\
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    \48\ This finding also satisfies the requirements of 5 U.S.C.
808(2), allowing the rule amendment to become effective
notwithstanding the requirement of 5 U.S.C. 801 (if a federal agency
finds that notice and public comment are ``impractical, unnecessary
or contrary to the public interest,'' a rule ``shall take effect at
such time as the federal agency promulgating the rule determines'').
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V. Paperwork Reduction Act

    The interim final rules do not impose any new ``collections of
information'' within the meaning of the Paperwork Reduction Act of 1995
(``PRA''),\49\ nor do they create any new filing, reporting,
recordkeeping, or disclosure reporting requirements. Accordingly, we
are not submitting the interim final rules to the Office of Management
and Budget for review in accordance with the PRA.\50\ We request
comment on whether our conclusion that there are no collections of
information is correct.
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    \49\ 44 U.S.C. 3501 et seq.
    \50\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

VI. Cost-Benefit Analysis

    We are adopting interim final rules that will provide exemptions
for those security-based swaps that under current law are ``security-
based swap agreements'' between ``eligible contract participants''
(each as defined today) and that will be defined as ``securities''
under the Securities Act and the Exchange Act as of the Effective Date
due solely to the provisions of Title VII. The interim final rules will
exempt these security-based swaps from all provisions of the Securities
Act, other than the Section 17(a) anti-fraud provisions, as well as
exempt these security-based swaps from Exchange Act registration
requirements and from the provisions of the Trust Indenture Act,
provided certain conditions are met.

A. Benefits

    The interim final rules are intended to minimize disruptions and
costs to the security-based swap markets that could occur on the
Effective Date until the compliance date for final rules that we may
adopt further defining the terms ``security-based swap'' and ``eligible
contract participant.'' The purpose of the exemptions is to allow
market participants to continue to enter into those security-based
swaps that under current law are defined as security-based swap
agreements as they do today without concern that such security-based
swap transactions may not comply with the provisions of the Securities
Act, the registration provisions of the Exchange Act applicable to a
class of security-based swaps, or the indenture provisions of the Trust
Indenture Act. The exemptions will minimize the uncertainty as to the
applicability of the Securities Act, the Exchange Act and the Trust
Indenture Act that could occur on the Effective Date with respect to
those security-based swaps that under current law are defined as
security-based swap agreements as a result of the effectiveness of the
definitions of ``security-based swap'' and ``eligible contract
participant'' on the Effective Date prior to the completion of
rulemakings to further define these terms.
    Absent the exemptions, following the Effective Date, the offer and
sale of those security-based swaps that under current law are defined
as security-based swap agreements may have to be registered under the
Securities Act, certain of those security-based swaps may have to be
registered as a class under the Exchange Act, and the provisions of the
Trust Indenture Act may need to be complied with. We believe that
requiring compliance with these provisions likely would disrupt and
impose unnecessary costs on this segment of the security-based swap
markets. Absent the exemptions, we believe that certain market
participants would incur additional costs due to compliance with the
registration requirements of the Securities Act and the Exchange Act,
as well as compliance with the provisions of the Trust Indenture Act.
It also is possible that without the exemptions, a market participant
may not continue to participate in these types of transactions if
compliance with these provisions were infeasible (economically or
otherwise).
    A market participant will benefit from the exemptions because it
will not have to file a registration statement covering the offer and
sale of these security-based swaps or evaluate the availability of
another existing exemption from such registration requirements. If the
market participant is not required to register the offer and sale of
these security-based swaps, it will not have to incur the additional
costs of such registration, including legal and accounting costs. The
availability of the exemptions under the Securities Act, the Exchange
Act, and the Trust Indenture Act also would mean that market
participants would not incur the costs of preparing disclosure
documents describing these security-based swaps and from preparing
indentures and arranging for the services of a trustee.

B. Costs

    The interim final rules are exemptions, and thus do not impose new
requirements on market participants. We recognize that a consequence of
the exemptions would be the unavailability of certain remedies under
the Securities Act and the Exchange Act and certain protections under
the Trust Indenture Act for an interim period to the extent that any of
these security-based swap transactions otherwise would be subject to
the registration requirements of the Securities Act and the Exchange
Act. Absent the exemptions, a market participant may have to file a
registration statement covering the offer and sale of the security-
based swaps, may have to register the class of security-based swaps
that it has issued under the Exchange Act, which would provide
investors with civil remedies in addition to antifraud remedies, and
may have to satisfy the applicable provisions of the Trust Indenture
Act. A registration statement covering the offer and sale of security-
based swaps may provide certain information about the market
participants, the security-based swap contract terms, and the
identification of the particular reference securities, issuers, or
loans underlying the security-based swap. As a result of the interim
final rules, while an investor would be able to pursue an antifraud
action in connection with the purchase and sale of security-based swaps
under Exchange Act Section 10(b), it would not be able to pursue civil
remedies under Securities Act Sections 11 or 12. We could still pursue
an antifraud action in the offer and sale of security-based swaps under
Securities Act Section 17(a).

VII. Consideration of Impact on the Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation

    Exchange Act Section 23(a)(2) \51\ requires us, when adopting rules
under the Exchange Act, to consider the impact that any new rule would
have on competition. Section 23(a)(2) prohibits us from adopting any
rule that would impose a burden on competition not necessary or
appropriate in furtherance

of the purposes of the Exchange Act. In addition, Securities Act
Section 2(b) \52\ and Exchange Act Section 3(f) \53\ require us, when
engaging in rulemaking where we are required to consider or determine
whether an action is necessary or appropriate in the public interest,
to also consider, in addition to the protection of investors, whether
the action will promote efficiency, competition, and capital formation.
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    \51\ 15 U.S.C. 78w(a)(2).
    \52\ 15 U.S.C. 77b(b).
    \53\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    We are adopting interim final rules that would provide exemptions
under the Securities Act, the Exchange Act, and the Trust Indenture Act
for those security-based swaps that under current law are security-
based swap agreements and will be defined as ``securities'' under the
Securities Act and the Exchange Act as of the Effective Date due solely
to the provisions of Title VII. Because these exemptions would maintain
the status quo with respect to the ability of market participants to
engage in transactions in these security-based swaps, we do not believe
that our actions today will impose a burden on competition. We also
believe that the interim final rules will promote efficiency by
minimizing disruptions and costs to the security-based swap markets
that could occur as a result of the effectiveness of the definitions of
``security-based swap'' and ``eligible contract participant'' on the
Effective Date prior to the completion of rulemakings to further define
these terms. By allowing transactions in security-based swaps that
under current law are security-based swap agreements to continue to be
entered into between eligible contract participants as they are today
until the compliance date for final rules that we may adopt further
defining the terms ``security-based swap'' and ``eligible contract
participant,'' and to the extent that such security-based swaps are
used to hedge risks, including those related to the issuance of the
referenced securities (as occurs with equity swaps and the issuance of
convertible bonds, for example), the interim final rules will prevent
potential impairment of the capital formation process.
    The Commission requests comment on all aspects of this analysis
and, in particular, on whether the interim final rules will place a
burden on competition, as well as the effect of the proposal on
efficiency, competition, and capital formation. Commenters are
requested to provide empirical data and other factual support for their
views, if possible.

VIII. Regulatory Flexibility Act Certification

    The Commission hereby certifies that pursuant to 5 U.S.C. 605(b)
that the interim final rules contained in this release will not have a
significant economic impact on a substantial number of small
entities.\54\ The interim final rules apply only to counterparties that
may engage in security-based swap transactions in reliance on the
interim final rule providing an exemption under the Securities Act. The
interim final exemption under the Securities Act provides that the
exemption is available only to security-based swaps that are entered
into between eligible contract participants, as that term is defined in
Section 1a(12) of the Commodity Exchange Act prior to the Effective
Date, and other than with respect to persons determined by the CFTC to
be eligible contract participants pursuant to Section 1a(12)(C) of the
Commodity Exchange Act (7 U.S.C. 1a(12)). Based on our existing
information about the participants in the security-based swap markets,
the Commission believes that the interim final rules would apply to
few, if any, small entities.\55\ For this reason, the interim final
rules should not have a significant economic impact on a substantial
number of small entities. We encourage written comments regarding this
certification.
---------------------------------------------------------------------------

    \54\ See Securities Act Rule 157 (17 CFR 230.157), Exchange Act
Rule 0-10(a) (17 CFR 240.0-10(a)) and Trust Indenture Act Rule 0-7
(17 CFR 260.0-7).
    \55\ For example, as revealed in a current survey conducted by
Office of the Comptroller of the Currency, 99.9% of credit default
swap positions by U.S. Commercial Banks and Trusts are held by those
with assets over $10 billion. See Office of the Comptroller of the
Currency, ``Quarterly Report on Bank Trading and Derivatives
Activities First Quarter 2011'' (2011).
---------------------------------------------------------------------------

IX. Statutory Authority and Text of the Rules and Amendments

    The rules described in this release are being adopted under the
authority set forth in Sections 19 and 28 of the Securities Act;
Sections 12(h), 23(a) and 36 of the Exchange Act; and Section 304(d) of
the Trust Indenture Act.

List of Subjects in 17 CFR Parts 230, 240 and 260

    Reporting and recordkeeping requirements, Securities.

Text of the Rules and Amendments

    For the reasons set out in the preamble, the Commission amends
Title 17, Chapter II, of the Code of Federal Regulations as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

0
1. The authority citation for part 230 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r,
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w,
78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37,
unless otherwise noted.
* * * * *

0
2. Section 230.240 is added to read as follows:

Sec.  230.240  Exemption for certain security-based swaps.

    (a) Except as expressly provided in paragraph (b) of this section,
the Act does not apply to the offer or sale of any security-based swap
that is:
    (1) A security-based swap agreement, as defined in Section 2A of
the Act (15 U.S.C. 77b(b)-1) as in effect prior to July 16, 2011; and
    (2) Entered into between eligible contract participants (as defined
in Section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(12)) as in
effect prior to July 16, 2011, other than a person who is an eligible
contract participant under Section 1a(12)(C) of the Commodity Exchange
Act as in effect prior to July 16, 2011).
    (b) The exemption provided in paragraph (a) of this section does
not apply to the provisions of Section 17(a) of the Act (15 U.S.C.
77q(a)).
    (c) This rule will expire on the compliance date for final rules
that the Commission may adopt further defining both the terms security-
based swap and eligible contract participant. In such event, the
Commission will publish a rule removing this section from 17 CFR part
230 or modifying it as appropriate.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
3. The authority citation for part 240 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78p, 78q,
78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37,
80b-3, 80b-4, 80b-11, and 7201 et seq., 18 U.S.C. 1350, and 12
U.S.C. 5221(e)(3), unless otherwise noted.
* * * * *

0
4. Section 240.12a-11 is added to read as follows:

Sec.  240.12a-11  Exemption of security-based swaps sold in reliance on
Securities Act of 1933 Rule 240 (Sec.  230.240) from section 12(a) of
the Act.

    (a) The provisions of Section 12(a) of the Act (15 U.S.C. 78l(a))
do not apply to any security-based swap offered and sold in reliance on
Rule 240 under the Securities Act of 1933.
    (b) This rule will expire on the compliance date for final rules
that the Commission may adopt further defining both the terms security-
based swap and eligible contract participant. In such event, the
Commission will publish a rule removing this section from 17 CFR part
240 or modifying it as appropriate.

0
5. Section 240.12h-1 is amended by adding paragraph (i) to read as
follows:

Sec.  240.12h-1  Exemptions from registration under section 12(g) of
the Act.

* * * * *
    (i) Any security-based swap offered and sold in reliance on Rule
240 under the Securities Act of 1933. This rule will expire on the
compliance date for final rules that the Commission may adopt further
defining both the terms security-based swap and eligible contract
participant. In such event, the Commission will publish a rule removing
this paragraph (i) from 17 CFR part 240 or modifying it as appropriate.

PART 260--GENERAL RULES AND REGULATIONS, TRUST INDENTURE ACT OF
1939

0
6. The authority citation for Part 260 continues to read as follows:

    Authority:  15 U.S.C. 77eee, 77ggg, 77nnn, 77sss, 78ll(d), 80b-
3, 80b-4, and 80b-11.

0
7. Section 260.4d-12 is added to read as follows:

Sec.  260.4d-12  Exemption for security-based swaps offered and sold in
reliance on Securities Act of 1933 Rule 240 (Sec.  230.240).

    Any security-based swap offered and sold in reliance on Rule 240 of
this chapter (17 CFR 230.240), whether or not issued under an
indenture, is exempt from the Act. This rule will expire on the
compliance date for final rules that the Commission may adopt further
defining both the terms security-based swap and eligible contract
participant. In such event, the Commission will publish a rule removing
this section from 17 CFR part 260 or modifying it as appropriate.

    By the Commission.

    Dated: July 1, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-17039 Filed 7-8-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Notices]
[Pages 61050-61051]
[FR Doc No: 2019-24565]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IC19-40-000]

Commission Information Collection Activities (FERC-516a); Comment
Request; Extension

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of information collection and request for comments.

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SUMMARY: In compliance with the requirements of the Paperwork Reduction
Act of 1995, the Federal Energy Regulatory Commission (Commission or
FERC) is soliciting public comment on the currently approved
information collection FERC-516A (Standardization of Small Generator
Interconnection Agreements and Procedures) and submitting the
information collection to the Office of Management and Budget (OMB) for
review. Any interested person may file comments directly with OMB and
should address a copy of those comments to the Commission as explained
below. On September 4, 2019, the Commission published a Notice in the
Federal Register (84 FR 46506) in Docket No. IC19-40-000 requesting
public comments. The Commission received no public comments.

DATES: Comments on the collection of information are due December 12,
2019.

ADDRESSES: Comments filed with OMB, identified by OMB Control No. 1902-
0203, should be sent via email to the Office of Information and
Regulatory Affairs<EMAIL_ADDRESS>Attention: Federal Energy
Regulatory Commission Desk Officer.
    A copy of the comments should also be sent to the Commission, in
Docket No. IC19-40-000, by either of the following methods:
     eFiling at Commission's Website: http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery/Courier: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE,
Washington, DC 20426.
    Instructions: All submissions must be formatted and filed in
accordance with submission guidelines at: http://www.ferc.gov/help/submission-guide.asp. For user assistance, contact FERC Online Support
by email at<EMAIL_ADDRESS>or by phone at:<PHONE_NUMBER>
(toll-free), or<PHONE_NUMBER> for TTY.
    Docket: Users interested in receiving automatic notification of
activity in this docket or in viewing/downloading comments and
issuances in this docket may do so at http://www.ferc.gov/docs-filing/docs-filing.asp.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by email at
<EMAIL_ADDRESS>telephone at<PHONE_NUMBER>, and fax at (202)
273-0873.

SUPPLEMENTARY INFORMATION:
    Title: FERC-516A, Standardization of Small Generator
Interconnection Agreements and Procedures.
    OMB Control No.: 1902-0203.
    Type of Request: Three-year extension of the FERC-516A information
collection requirements with no changes to the current requirements.
    Abstract: Under Sections 205 and 206 of the Federal Power Act
(FPA), the Commission is charged with ensuring just and reasonable
electric transmission rates and charges as well as ensuring that
jurisdictional providers do not subject any person to any undue
prejudice or disadvantage.
    The lack of consistent and readily accessible terms and conditions
for connecting resources to the grid led to a large number of disputes
between jurisdictional transmission providers and small generators in
the late 1990s and early 2000s. In response, the Commission directed
transmission providers to include Commission-approved, standard, pro-
forma interconnection procedures (small generator interconnection
procedures or SGIP) and a single uniformly applicable interconnection
agreement (small generator interconnection agreement or SGIA) in their
open-access transmission tariffs (OATTs). The requirement to create and
file these documents was instituted in August 2005 by Commission Order
No. 2006 and is codified in 18 CFR 35.28(f). This requirement set and
maintained a standard in OATTs for consistent consideration and
processing of interconnection requests by transmission providers.
    Since the issuance of Order No. 2006, many aspects of the energy
industry have changed including the growth of small generator
interconnection requests and the growth in solar photovoltaic (PV)
installations. These changes have been driven, in part, by state
renewable energy goals and policies. For example, approximately 3,300
MW of grid-connected PV capacity were installed in the U.S. in 2012,
compared to 79 MW in 2005, the year Order No. 2006 was issued.
    In February 2012, pursuant to Sections 205 and 206 of the FPA and
Rule 207 of the Commission's Rules of Practice and Procedures,\1\ and
noting that the Commission encouraged stakeholders to submit proposed
revisions to the regulations set forth in Order No. 2006, the Solar
Energy Industries Association (SEIA) filed a Petition to Initiate
Rulemaking (Petition).\2\ The Petition requested the Commission revise
the pro forma SGIA and SGIP set forth in Order No. 2006. SEIA asserted
that the pro forma SGIP and SGIA as applied to small solar generation
were no longer just and reasonable, had become unduly discriminatory,
and presented unreasonable barriers to market entry. SEIA noted that
its Petition would apply exclusively to solar electric generation due
to its unique characteristics.
---------------------------------------------------------------------------

    \1\ 18 CFR 385.207.
    \2\ SEIA Petition at 4 (citing Order No. 2006, FERC Stats. &
Regs. 31,180 at P 118). Docket No. RM12-10-000, https://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12895647.
---------------------------------------------------------------------------

    In 2012 the Commission issued a Notice of Petition for Rulemaking
in Docket No. RM12-10-000 and began a public process to explore SEIA's

Petition through the Commission's formal notice and comment process as
well as technical conferences.
    In November 2013, the Commission issued Order No. 792 to amend the
pro forma Small Generator Interconnection Procedures and pro forma
Small Generator Interconnection Agreement. Order No. 792:
    (1) Incorporated provisions that provided an Interconnection
Customer with the option of requesting from the Transmission Provider a
pre-application report providing existing information about system
conditions at a possible Point of Interconnection;
    (2) revised the 2 megawatt (MW) threshold for participation in the
Fast Track Process included in section 2 of the pro forma SGIP;
    (3) revised the customer options meeting and the supplemental
review following failure of the Fast Track screens so that the
supplemental review is performed at the discretion of the
Interconnection Customer and includes minimum load and other screens to
determine if a Small Generating Facility may be interconnected safely
and reliably;
    (4) revised the pro forma SGIP Facilities Study Agreement to allow
the Interconnection Customer the opportunity to provide written
comments to the Transmission Provider on the upgrades required for
interconnection;
    (5) revised the pro forma SGIP and the pro forma SGIA to
specifically include energy storage devices; and
    (6) clarified certain sections of the pro forma SGIP and the pro
forma SGIA.
    With these modifications, the Commission concluded that the package
of reforms adopted in Order No. 792 would reduce the time and cost to
process small generator interconnection requests for Interconnection
Customers and Transmission Providers, maintain reliability, increase
energy supply, and remove barriers to the development of new energy
resources.
    Type of Respondents: Jurisdictional transmission service providers.
    Estimate of Annual Burden: \3\ The Commission estimates the
following burden and cost.\4\
---------------------------------------------------------------------------

    \3\ Burden is the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. For further
explanation of what is included in the information collection
burden, refer to Title 5 Code of Federal Regulations Part 1320.
    \4\ The hourly estimates for wages plus benefits are derived
from the Bureau of Labor Statistics (at http://bls.gov/oes/current/naics3_221000.htm and http://www.bls.gov/news.release/ecec.nr0.htm).
For wages plus benefits, we are using $84.38 per hour, which is the
average for an attorney (occupation code 23-0000, $142.86/hour), an
electrical engineer (occupation code 17-2071, $68.17/hour), and
administrative staff (occupation code 43-0000, $42.11/hour).

                                                                        FERC-516A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Number of     Annual number   Total number                                Total annual burden  hours &      Cost per
       Requirements \5\           respondents    of responses    of responses     Average burden & cost         total  annual cost ($)        respondent
                                   annually     per respondent     (rounded)         ($) per response                  (rounded)                 ($)
                                           (1)             (2)     (1) * (2) =  (4)......................  (3) * (4) = (5).................    (5) / (1)
                                                                           (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance of Documents--                  46               1              46  1 hr.; $84.38............  46 hrs.; $3,881.................       $84.38
 Transmission Providers.
Filing of Agreements--                      95               1              95  25 hrs.; $2,109.50.......  2,375 hrs.; $200,403............     2,109.50
 Transmission Providers.
Pre-Application Report--                   800               1             800  1 hr.; $84.38............  800 hrs.; $67,504...............        84.38
 Interconnection Customers \6\.
Pre-Application Report--                   142            5.63             800  2.5 hrs.; $210.95........  2,000 hrs.; $168,760............     1,188.45
 Transmission Providers.
Supplemental Review--                      500               1             500  0.5 hr.; $42.19..........  250 hrs.; $21,095...............        42.19
 Interconnection Customers.
Supplemental Review--                      142            3.52             500  20 hrs.; $1,687.60.......  10,000 hrs.; $843,800...........     5,942.25
 Transmission Providers.
Review of Required Upgrades--              250               1             250  1 hr.; $84.38............  250 hrs.; $21,095...............        84.38
 Interconnection Customers.
Review of Required Upgrades--              142            1.76             250  2 hrs.; $168.76..........  500 hrs.; $42,190...............       297.11
 Transmission Providers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total.....................  ..............  ..............           3,241  .........................  16,221 hrs.; $1,368,728.........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Comments:  Comments are invited on: (1) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden and
cost of the collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility and clarity of the information collection; and (4) ways to
minimize the burden of the collection of information on those who are
to respond, including the use of automated collection techniques or
other forms of information technology.
---------------------------------------------------------------------------

    \5\ All requirements for transmission providers are mandatory.
All requirements for interconnection customers are voluntary.
    \6\ We assume each request for a pre-application report
corresponds with one Interconnection Customer.

    Dated: November 5, 2019.
Kimberly D. Bose,
Secretary.
[FR Doc. 2019-24565 Filed 11-8-19; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 79, Number 70 (Friday, April 11, 2014)]
[Notices]
[Page 20196]
[FR Doc No: 2014-08180]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER14-1656-000]

CSOLAR IV West, LLC; Supplemental Notice That Initial Market-
Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
CSOLAR IV West, LLC's application for market-based rate authority, with
an accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR Part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR Part 34, of future issuances of securities and assumptions of
liability, is April 28, 2014.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

    Dated: April 7, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-08180 Filed 4-10-14; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 207 (Tuesday, October 27, 2015)]
[Rules and Regulations]
[Pages 65647-65649]
[FR Doc No: 2015-27304]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2015-0943]
RIN 1625-AA00

Safety Zone; Rich Passage, Manchester, WA

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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SUMMARY: The Coast Guard is establishing a temporary safety zone
encompassing all navigable waters within a designed area in the
vicinity of the Manchester Fuel Piers, Manchester, Washington. This
safety zone is necessary to ensure the safety of the waterway users and
participants of a maritime training exercise. The temporary safety zone
will prohibit any person or vessel not involved in the training
exercise from entering or remaining in the safety zone unless
authorized by the Captain of the Port, Puget Sound (COTP) or his
designated representative.

DATES: This rule is effective from 7 a.m. on November 2, 2015 until 6
p.m. on November 8, 2015. This rule shall be enforced during actual
training operations occurring within the effective period while
exercise participants are present in the safety zone.

ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type USCG-
2015-0943 in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email Lieutenant Kate Haseley, Waterways Management Division,
Coast Guard Sector Puget Sound; telephone<PHONE_NUMBER>, email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR--Code of Federal Regulations
DHS--Department of Homeland Security
E.O.--Executive order
FR--Federal Register
NPRM--Notice of proposed rulemaking
Pub. L.--Public Law
Sec. --Section
U.S.C.--United States Code

II. Background Information and Regulatory History

    The Coast Guard is issuing this temporary rule without prior notice
and opportunity to comment pursuant to authority under section 4(a) of
the Administrative Procedure Act (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
with respect to this rule publishing an NPRM would be impracticable as
delayed promulgation may result in injury or damage to the maritime
public and response vessels prior to conclusion of a notice and comment
period.
    We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for making it effective less than 30
days after publication in the Federal Register. Delaying the effective
date of this rule would be impracticable because immediate action is
needed to minimize the potential impact to the waterway users and
emergency response personnel involved in the training exercise.

III. Legal Authority and Need for Rule

    The Coast Guard has authority to issue a rule under authority in 33
U.S.C. 1231. The Captain of the Port, Puget Sound has determined that
potential hazards associated with the training exercise will be a
safety concern for anyone transiting through the operational location
of the exercise. A safety zone is needed to ensure the safety of the
maritime public and emergency response vessels participating in the
exercise by preventing collisions between exercising vessels and the
maritime public, and by keeping the maritime public a safe distance
away from elements associated with the exercise.

IV. Discussion of the Rule

    The Coast Guard is establishing a temporary safety zone that will
encompass all navigable waters within an area established by the
following points: 47[deg]34'13'' N., 122[deg]32'12'' W., thence
southeast to 47[deg]33'41'' N., 122[deg]31'07'' W., thence southwest to
47[deg]33'15'' N., 122[deg]32'04'' W., thence south to 47[deg]31'49 N.,
122[deg]31'47'' W., thence west to 47[deg]31'55'' N., 122[deg]32'28''
W., thence north to 47[deg]33'20'' N., 122[deg]32'29'' W., thence
northeast to

47[deg]34'08'' N., 122[deg]32'17'' W., located near the Manchester fuel
piers, Manchester, WA and is effective from 7 a.m. on November 2, 2015
until 6 p.m. on November 8, 2015 when vessel exercise participants are
present in the safety zone. Vessels wishing to enter the safety zone
must request permission to do so from the Captain of the Port, Puget
Sound by contacting the Joint Harbor Operations Center at<PHONE_NUMBER>
or the on-scene Law Enforcement patrol craft, if any, via VHF-FM
Channel 16. If permission for entry is granted, vessels must proceed at
a minimum speed for safe navigation.

V. Regulatory Analyses

    We developed this rule after considering numerous statutes and
executive orders (E.O.s) related to rulemaking. Below we summarize our
analyses based on a number of these statutes and E.O.s, and we discuss
First Amendment rights of protestors.

A. Regulatory Planning and Review

    E.O.s 12866 and 13563 direct agencies to assess the costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits.
E.O. 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has not been designated a ``significant
regulatory action,'' under E.O. 12866. Accordingly, it has not been
reviewed by the Office of Management and Budget.
    This regulatory action determination is based on the limited nature
of the size and duration of the temporary safety zone. Moreover, the
Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM
Channel 16 about the safety zone and the rule allows vessels to seek
permission to enter the safety zone.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule
will not have a significant economic impact on a substantial number of
small entities.
    While some owners or operators of vessels intending to transit the
safety zone may be small entities, for the reasons stated in section V
above, this rule will not have a significant economic impact on any
vessel owner or operator, because the zone established in this rule is
limited in nature of size and duration.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

C. Collection of Information

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

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under E.O. 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and have
determined that it is consistent with the fundamental federalism
principles and preemption requirements described in E.O. 13132.
    Also, this rule does not have tribal implications under E.O. 13175,
Consultation and Coordination with Indian Tribal Governments, because
it does not have a substantial direct effect on one or more Indian
tribes, on the relationship between the Federal Government and Indian
tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian tribes. If you believe this rule has
implications for federalism or Indian tribes, please contact the person
listed in the FOR FURTHER INFORMATION CONTACT section above.

E. Unfunded Mandates Reform Act

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

F. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that
this action is one of a category of actions that do not individually or
cumulatively have a significant effect on the human environment. This
rule involves a temporary safety zone lasting less than 29 days that
will prohibit entry into various training exercise operations within
the designated area. It is categorically excluded from further review
under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An
environmental analysis checklist supporting this determination and a
Categorical Exclusion Determination are available in the docket where
indicated under ADDRESSES. We seek any comments or information that may
lead to the discovery of a significant environmental impact from this
rule.

G. Protest Activities

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

List of Subjects in 33 CFR Part 165

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

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

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

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

    Authority: 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1,
6.04-6, and 160.5; Department of Homeland Security Delegation No.
0170.1.

0
2. Add Sec.  165.T13-300 to read as follows:

Sec.  165.T13-300  Safety Zone; Manchester, WA

    (a) Location. The temporary safety zone established in this rule
will encompass all navigable waters within an area established by the
following points: 47[deg]34'13'' N., 122[deg]32'12'' W., thence
southeast to 47[deg]33'41'' N., 122[deg]31'07'' W., thence southwest to
47[deg]33'15'' N., 122[deg]32'04'' W., thence south to 47[deg]31'49 N.,
122[deg]31'47'' W., thence west to 47[deg]31'55'' N., 122[deg]32'28''
W., thence north to 47[deg]33'20'' N., 122[deg]32'29'' W., thence
northeast to 47[deg]34'08'' N., 122[deg]32'17'' W., located near the
Manchester fuel piers, Manchester, WA.
    (b) Regulations. In accordance with the general regulations in 33
CFR 165, Subpart C, no person or vessel may enter or remain in the
safety zone unless authorized by the Captain of the Port, Puget Sound
or his designated representative. To request permission to enter the
safety zone, contact the Joint Harbor Operations Center at 206-217-
6001, or the on-scene Law Enforcement patrol craft, if any, via VHF-FM
Channel 16. If permission for entry into the safety zone is granted,
vessels or persons must proceed at the minimum speed for safe
navigation and in compliance with any other directions given by the
Captain of the Port, Puget Sound or his designated representative.
    (c) Dates. This rule is effective from 7 a.m. on November 2, 2015
until 6 p.m. on November 8, 2015. This rule shall be enforced during
actual training operations occurring within the effective period while
exercise participants are present in the safety zone.

    Dated: October 9, 2015.
M.W. Raymond,
Captain, U.S. Coast Guard, Captain of the Port, Puget Sound.
[FR Doc. 2015-27304 Filed 10-26-15; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 81, Number 70 (Tuesday, April 12, 2016)]
[Notices]
[Pages 21631-21632]
[FR Doc No: 2016-08305]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77545; File No. SR-Phlx-2016-44]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule ChangeTo Amend Rule 1064

April 6, 2016.
    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 April 1, 2016, NASDAQ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to delete two incorrect cross-references in
Rule 1064, Crossing, Facilitation and Solicited Orders.
    The text of the proposed rule change is detailed below: Proposed
new language is in italics and proposed deletions are in brackets.
* * * * *
NASDAQ PHLX Rules
* * * * *
Options Rules
Rules Applicable To Trading of Options on Stocks, Exchange-Traded Fund
Shares and Foreign Currencies (Rules 1000-1095)
* * * * *
Rule 1064. Crossing, Facilitation and Solicited Orders
    (a)-(c) No change.
    (d) No change.
    (i)-(ii) No change.
    (iii) No change.
    (A)-(F) No change.
    (G) prior to entering tied hedge orders on behalf of customers, the
member or member organization must deliver to the customer a written
notification informing the customer that his order may be executed
using the Exchange's tied hedge procedures. The written notification
must disclose the terms and conditions contained [in this Commentary]
herein and be in a form approved by the Exchange. A combination option
and hedging position offered in reliance on this [Commentary .04]
provision shall be referred to as a ``tied hedge'' order.
    (H)-(I) No change.
    (e) No change.
       Commentary: ------------------
    .01-.02 No change.
* * * * *

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

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

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

1. Purpose
    The purpose of the filing is to correct Rule 1064 by deleting two
references to the ``commentary'' to the rule, which no longer exists.
The Exchange recently deleted Commentary .04 \3\ by incorporating its
provisions into paragraph (d)(iii), because it was related to the
anticipatory hedging provisions in paragraph (d). The Exchange
inadvertently omitted the deletion of these two references to
Commentary .04 in new Rule 1064(d)(iii)(G). Accordingly, this provision
refers to a commentary that does not exist.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 76984 (January 28,
2016), 81 FR 5796 (February 3, 2016) (SR-Phlx-2016-07).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \4\ in general, and furthers the objectives of Section
6(b)(5) of the Act \5\ in particular, in that it is designed to promote
just and equitable principles of trade and to protect investors and the
public interest by correcting a provision, which should help prevent
confusion and ensure the accuracy of the rulebook.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).

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

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. This minor correction does not
impact competition.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \6\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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.

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-2016-44 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2016-44. 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-2016-44 and should be
submitted on or before May 3, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08305 Filed 4-11-16; 8:45 am]
BILLING CODE 8011-01-P