[Federal Register Volume 84, Number 112 (Tuesday, June 11, 2019)]
[Notices]
[Pages 27109-27112]
[FR Doc No: 2019-12300]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9995-01-OMS]

Privacy Act of 1974; System of Records

AGENCY: Office of Mission Support, Environmental Protection Agency.

ACTION: Notice of a new system of records.

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SUMMARY: In accordance with the Privacy Act of 1974, as amended
(Privacy Act), the U.S. Environmental Protection Agency (EPA) is
providing notice of a new system of records, EPA ServiceNow (SNOW).
SNOW is a Cloud-Based Software as a Service (SaaS) Information
Technology Service Management platform used for agency incident and
problem management.

DATES: Persons wishing to comment on this system of records notice must
do so by July 11, 2019. New routine uses for this new system of records
will be effective July 11, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OEI-2018-0218, by one of the following methods:
     Regulations.gov: www.regulations.gov Follow the online
instructions for submitting comments.
     Email<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: OMS Docket, Environmental Protection Agency, Mail
Code: 2822T, 1200 Pennsylvania Ave. NW, Washington, DC 20460.
     Hand Delivery: OMS Docket, EPA/DC, WJC West Building, Room
3334, 1301 Constitution Ave. NW, Washington, DC. Such deliveries are
only accepted during the Docket's normal hours of operation, and
special arrangements should be made for deliveries of boxed
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OEI-
2018-0218. The EPA's policy is that all comments received will be
included in the public docket without change and may be made available
online at www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Controlled Unclassified Information (CUI) or other information for
which disclosure is restricted by statute. Do not submit information
that you consider to be CUI or otherwise protected through
www.regulations.gov. The www.regulations.gov website is an ``anonymous
access'' system for EPA, which means the EPA will not know your
identity or contact information unless you provide it in the body of
your comment. Each agency determines submission requirements within
their own internal processes and standards. EPA has no requirement of
personal information. If you send an email comment directly to the EPA
without going through www.regulations.gov your email address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the internet. If you
submit an electronic comment, the EPA recommends that you include your
name and other contact information in the body of your comment. If the
EPA cannot read your comment due to technical difficulties and cannot
contact you for clarification, the EPA may not be able to consider your
comment. Electronic files should avoid the use of special characters,
any form of encryption, and be free of any defects or viruses. For
additional information about the EPA's public docket visit the EPA
Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CUI or other information
for which disclosure is restricted by statute. Certain other material,
such as copyrighted material, will be publicly available only in hard
copy. Publicly available docket materials are available either
electronically in www.regulations.gov or in hard copy at the OMS
Docket, EPA/DC, WJC West Building, Room 3334, 1301 Constitution Ave.
NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday excluding legal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone

number for the OMS Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Gloria Meriweather at
<EMAIL_ADDRESS>(202) 566-0652.

SUPPLEMENTARY INFORMATION: EPA ServiceNow is a FedRAMP approved
(FedRAMP Package ID: F1305072116) Cloud Based Software as a Service
(SaaS) incident and problem management solution that will be replacing
the current EPA Remedy solution.

SYSTEM NAME AND NUMBER:
    EPA ServiceNow (SNOW), EPA-78.

SECURITY CLASSIFICATION:
    Unclassified.

SYSTEM LOCATION:
    Office of Environmental Information, Environmental Protection
Agency, 1301 Constitution Ave., Washington, DC 20460.
    SAIC Inc. 12010 Sunset Hills Road, Reston, VA 20190.

SYSTEM MANAGER(S):
    Willie J. Abney, Division Director of Desktop Support Services
Division (DSSD), Office of Environmental Information, Office of
Information Technology Operations, 1301 Constitution Ave., Washington,
DC 20460 Email Address<EMAIL_ADDRESS>Phone Number: 202-566-
1366.

AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
    5 U.S.C. 301 ``Departmental Regulations'', 8 U.S.C 1101, 1103,
1104, 1201, 1255, 1305, 1360; 44 U.S.C. 3101 ``Records Management by
Federal Agency Heads.''

PURPOSE(S) OF THE SYSTEM:
    This system will collect limited personally identifiable
information (PII) from requestors (i.e., EPA employees, EPA
contractors, non-EPA government personnel, state and local government
personnel and/or private citizens), such as first and last name, that
will help EPA technical support teams provide individualized support
and other service-oriented activities in support of both internal
(i.e., EPA employees, EPA contractors) and external (i.e., non-EPA
government personnel, state and local government personnel and/or
private citizens) requestors. EPA technical support teams will also use
the information to provide support for EPA information technology (IT)
systems, assets, and other service-oriented activities including the
following:
     Managing service request tickets
     Retrieving incident information;
     Troubleshooting issues
     Managing IT assets
     Conveying outage information across the enterprise
    All PII associated with the activities listed are only available
and presented to internal (i.e., EPA employees, EPA contractors)
stakeholders who have a valid need-to-know. PII captured from external
requestors (i.e., non-EPA government personnel, state and local
government personnel and/or private citizens) is required and only used
for opening a trouble ticket on their behalf.

CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
    Categories of individuals covered by this system include EPA
employees, EPA contractors, non-EPA government personnel, state and
local government personnel and/or private citizens (i.e., requestors)
who request technical support by directly contacting the EPA Enterprise
IT Service Desk or EPA employees and contractors requesting support
using ServiceNow's self-help portal for opening support tickets,
external requestors requesting trouble tickets be opened for externally
facing EPA applications, EPA Enterprise IT Service Desk personnel or
EPA IT System Administrators (SA) working trouble or incident tickets,
and ServiceNow Administrators.

CATEGORIES OF RECORDS IN THE SYSTEM:
    Information collected in system are First and Last Name; Work/
Business Address; Date; Work Number; Work Email Address; External Email
Address (for non-EPA government personnel including state and local
government personnel and/or private citizens); Employee LAN ID;
Employee Number.

RECORD SOURCE CATEGORIES:
    Information contained in this system is obtained from data provided
directly from EPA employees and contractors via the EPA ServiceNow
self-help portal, from Enterprise IT Service Desk personnel who have
received technical support calls from requestors or pre-populated
fields captured from EPA Active Directory.

ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING CATEGORIES
OF USERS AND PURPOSES OF SUCH USES:
    The following new routine uses apply to this system because the use
of the record is necessary for the efficient conduct of government. The
routine uses are related to and compatible with the original purpose
for which the information was collected. The last two routine uses are
required under OMB M-17-12. Records in this system may be disclosed to
the following entities:
     Disclosure for Law Enforcement Purposes.
    Information may be disclosed to the appropriate Federal, State,
local, tribal, or foreign agency responsible for investigating,
prosecuting, enforcing, or implementing a statute, rule, regulation, or
order, if the information is relevant to a violation or potential
violation of civil or criminal law or regulation within the
jurisdiction of the receiving entity.
     Disclosure Incident to Requesting Information.
    Information may be disclosed to any source from which additional
information is requested (to the extent necessary to identify the
individual, inform the source of the purpose of the request, and to
identify the type of information requested,) when necessary to obtain
information relevant to an agency decision concerning retention of an
employee or other personnel action (other than hiring,) retention of a
security clearance, the letting of a contract, or the issuance or
retention of a grant, or other benefit.
     Disclosure to Congressional Offices.
    Information may be disclosed to a congressional office from the
record of an individual in response to an inquiry from the
congressional office made at the request of the individual.
     Disclosure to Department of Justice.
    Information may be disclosed to the Department of Justice, or in a
proceeding before a court, adjudicative body, or other administrative
body before which the Agency is authorized to appear, when:
    [check] The Agency, or any component thereof;
    [check] Any employee of the Agency in his or her official capacity;
    [check] Any employee of the Agency in his or her individual
capacity where the Department of Justice or the Agency have agreed to
represent the employee; or
    [check] The United States, if the Agency determines that litigation
is likely to affect the Agency or any of its components, is a party to
litigation or has an interest in such litigation, and the use of such
records by the Department of Justice or the Agency is deemed by the
Agency to be relevant and necessary to the litigation provided,
however, that in each case it has been determined that the disclosure
is compatible with the purpose for which the records were collected.
     Disclosure to the National Archives.
    Information may be disclosed to the National Archives and Records
Administration in records management inspections.

     Disclosure to Contractors, Grantees, and Others.
    Information may be disclosed to contractors, grantees, consultants,
or volunteers performing or working on a contract, service, grant,
cooperative agreement, job, or other activity for the Agency and who
have a need to have access to the information in the performance of
their duties or activities for the Agency.
     Disclosures for Administrative Claims, Complaints and
Appeals.
    Information from this system of records may be disclosed to an
authorized appeal grievance examiner, formal complaints examiner, equal
employment opportunity investigator, arbitrator or other person
properly engaged in investigation or settlement of an administrative
grievance, complaint, claim, or appeal filed by an employee, but only
to the extent that the information is relevant and necessary to the
proceeding. Agencies that may obtain information under this routine use
include, but are not limited to, the Office of Personnel Management,
Office of Special Counsel, Merit Systems Protection Board, Federal
Labor Relations Authority, Equal Employment Opportunity Commission, and
Office of Government Ethics.
     Disclosure in Connection With Litigation.
    Information from this system of records may be disclosed in
connection with litigation or settlement discussions regarding claims
by or against the EPA, including public filing with a court, to the
extent that disclosure of the information is relevant and necessary to
the litigation or discussions and except where court orders are
otherwise required under section (b)(11) of the Privacy Act of 1974, 5
U.S.C. 552a(b)(11).
     Disclosure to Persons or Entities in Response to an actual
of Suspected Breach of Personally Identifiable Information.
    To appropriate agencies, entities, and persons when (1) the Agency
suspects or has confirmed that there has been a breach of the system of
records, (2) the Agency has determined that as a result of the
suspected or confirmed breach there is a risk of harm to individuals,
the Agency (including its information systems, programs, and
operations), the Federal Government, or national security; and (3) the
disclosure made to such agencies, entities, and persons is reasonably
necessary to assist in connection with the Agency's efforts to respond
to the suspected or confirmed breach or to prevent, minimize, or remedy
such harm.
     Disclosure to Assist Another Agency in its Efforts to
Respond to a Breach
    To another Federal agency or Federal entity, when the Agency
determines that information from this system of records is reasonably
necessary to assist the recipient agency or entity in (1) responding to
a suspected or confirmed breach or (2) preventing, minimizing, or
remedying the risk of harm to individuals, the recipient agency or
entity (including its information systems, programs, and operations),
the Federal Government, or national security, resulting from a
suspected or confirmed breach.

POLICIES AND PRACTICES FOR STORAGE OF RECORDS:
    SNOW records are stored in a controlled access facility, inside of
a controlled area, using self-encrypting hard drives. ServiceNow, Inc.
has deployed a High-Availability architecture to ensure continuous
business operations for the ServiceNow platform. There are two data
centers supporting Government customers with one configured as the
active and the other as the standby. The active and standby facilities
are mirrored, which enables the standby to become the active site in
the event of a disaster. Both data centers are mirrors of each other,
and therefore they act as both an active and a standby facility. In
addition to the mirror backup between the two instances, a local backup
is kept at each site. Each local backup acts as the offsite backup for
their counterpart dedicated data center cage. Backups are performed on
disk through network-attached storage and are never written to tape. In
addition to backups within each dedicated data center cage facility, a
backup of each internal production instance is copied over to the
standby site (Disaster Recovery site).

POLICIES AND PRACTICES FOR RETRIEVAL OF RECORDS:
    Records for EPA ServiceNow will be retrieved by customer first and
last name, email address or by ticket reference number.

POLICIES AND PRACTICES FOR RETENTION AND DISPOSAL OF RECORDS:
    SNOW follows the EPA Records Policy for retention and disposal, per
schedule 1012 (Information and Technology Management) and schedule 1049
(Information Access and Protection Records). https://www.epa.gov/records/epa-records-policy-and-guidance

ADMINISTRATIVE, TECHNICAL, AND PHYSICAL SAFEGUARDS:
    ServiceNow is a Cloud-Based Software as a Service (SaaS) solution
designed to be accessed over the internet. As such, all remote
communication must be encrypted, use for non-business purposes is
prohibited and all users are required to be authorized. To verify that
a user is authorized, EPA ServiceNow customers and staff must have a
current valid EPA Active Directory account. External requestors (i.e.
non-EPA government personnel, state and local government personnel and/
or private citizens) will not have access to, as they are not
authorized, nor will be granted access to EPA ServiceNow. The records
in EPA ServiceNow are maintained in a secure, password-protected
computer system behind a network firewall. This system is located in a
controlled facility that requires the ServiceNow cloud providers to
have an authorized badge and biometrics prior to accessing the data
centers. ServiceNow users must log in with an authorized user ID and
password or Personal Identity Verification (PIV) card to access the
system. Group or shared accounts are not used by EPA ServiceNow
customers and support personnel. EPA ServiceNow customers and personnel
are prohibited from sharing accounts. Each user has a unique identifier
within Active Directory used for authentication. In addition to the
lock screen setting enforced by EPA on the desktop, EPA ServiceNow
implements session timeout period after 30 minutes of user inactivity.

RECORD ACCESS PROCEDURES:
    Individuals seeking access to information in this system of records
about themselves should make a written request to the Agency Privacy
Officer, 1200 Pennsylvania Ave., Mailcode 2831T, Washington, DC 20460.
Requesters are required to provide adequate identification (e.g.,
driver's license, military identification card, employee badge or
identification card). Additional identity verification procedures may
be required, as warranted. Requests must meet the requirements of EPA
regulations that implement the Privacy Act of 1974, at 40 CFR part 16.

CONTESTING RECORD PROCEDURES:
    Requests for correction or amendment must identify the record to be
changed and the corrective action sought to the Agency Privacy Officer,
1200 Pennsylvania Ave., Mailcode 2831T, Washington, DC 20460;
<EMAIL_ADDRESS>Complete EPA Privacy Act

procedures are set out in EPA's Privacy Act regulations at 40 CFR part
16.

NOTIFICATION PROCEDURE:
    Any individual who wants to know whether this system of records
contains a record about themselves should submit a request to the
Agency Privacy Officer, MC 2831T, 1200 Pennsylvania Avenue NW,
Washington, DC 20460 or<EMAIL_ADDRESS>
EXEMPTIONS PROMULGATED FOR THE SYSTEM:
    None.

HISTORY:
    None.

    Dated: April 12, 2019.
Vaughn Noga,
Senior Agency Official for Privacy.
[FR Doc. 2019-12300 Filed 6-10-19; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register: November 16, 2007 (Volume 72, Number 221)]
[Rules and Regulations]
[Page 64532-64533]
[DOCID:fr16no07-4]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2007-0076; Directorate Identifier 2007-NM-241-AD;
Amendment 39-15246; AD 2007-22-10]
RIN 2120-AA64

Airworthiness Directives; Airbus Model A330-200, A330-300, A340-
200, A340-300, A340-500, and A340-600 Series Airplanes

AGENCY: Federal Aviation Administration (FAA), Department of
Transportation (DOT).

ACTION: Final rule; correction.

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SUMMARY: The FAA is correcting a typographical error in an existing
airworthiness directive (AD) that was published in the Federal Register
on November 1, 2007 (72 FR 61796). The error resulted in an error in an
airplane series number identified in Table 2 of the AD. This AD applies
to all Airbus Model A330-200, A330-300, A340-200, A340-300, A340-500,
and A340-600 series airplanes. This AD requires repetitive detailed
visual inspections for cracking of the LH (left hand) and RH (right
hand) wing MLG (main landing gear) rib 6 aft bearing lugs, and repair
or replacement of the MLG rib 6 fitting, if necessary.

DATES: Effective November 16, 2007.

ADDRESSES: You may examine the AD docket on the Internet at http://www.regulations.gov
; or in person at the Docket Operations office

between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this AD, the regulatory evaluation,
any comments received, and other information. The street address for
the Docket Operations office (telephone<PHONE_NUMBER>) is the Document
Management Facility, U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
227-2797; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: On October 24, 2007, the FAA issued AD 2007-
22-10, amendment 39-15246 (72 FR 61796, November 1, 2007), for all
Airbus Model A330-200, A330-300, A340-200, A340-300, A340-500, and
A340-600 series airplanes. The AD requires repetitive detailed visual
inspections for cracking of the LH (left hand) and RH (right hand) wing
MLG (main landing gear) rib 6 aft bearing lugs, and repair or
replacement of the MLG rib 6 fitting, if necessary.
    As published, Table 2 of the AD states that certain repetitive
inspection intervals apply to Model ``A300-300 series airplanes, except
WV27.'' That sentence contains a typographical error and, instead,
should state that those repetitive inspection intervals apply to Model
``A340-300 series airplanes, except WV27.''
    No other part of the regulatory information has been changed;
therefore, the final rule is not republished in the Federal Register.
    The effective date of this AD remains November 16, 2007.

Sec.  39.13  [Corrected]

0
In the Federal Register of November 1, 2007, on page 61799, Table 2 of
AD 2007-22-10 is corrected to read as follows:
* * * * *

                Table 2.--Repetitive Inspection Intervals
------------------------------------------------------------------------
                                           Interval  (whichever occurs
                 Model                                first)
------------------------------------------------------------------------
A330-200 series airplanes..............  300 flight cycles or 1,500
                                          flight hours.
A330-300 series airplanes..............  300 flight cycles or 900 flight
                                          hours.
A340-200 series airplanes..............  200 flight cycles or 800 flight
                                          hours.
A340-300 Series airplanes, except WV27.  200 flight cycles or 800 flight
                                          hours.
A340-300 series airplanes, WV27........  200 flight cycles or 400 flight
                                          hours.
A340-500 and -600 series airplanes.....  100 flight cycles or 500 flight
                                          hours.
------------------------------------------------------------------------

* * * * *

    Issued in Renton, Washington, on November 7, 2007.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E7-22305 Filed 11-15-07; 8:45 am]

BILLING CODE 4910-13-P


[Federal Register Volume 77, Number 239 (Wednesday, December 12, 2012)]
[Rules and Regulations]
[Pages 73934-73937]
[FR Doc No: 2012-29903]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2011-0669; FRL-9369-3]

Bacillus subtilis Strain QST 713 Variant Soil; Amendment to an
Exemption From the Requirement of a Tolerance for Bacillus subtilis
Strain QST 713 To Include Residues of Bacillus subtilis Strain QST 713
Variant Soil

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation amends the existing exemption from the
requirement of a tolerance for residues of the Bacillus subtilis strain
QST 713 in or on all food commodities by including residues of Bacillus
subtilis strain QST 713 variant soil. Agraquest, Inc. submitted a
petition to the EPA under the Federal Food, Drug, and Cosmetic Act
(FFDCA), requesting an amendment to an existing exemption from the
requirement of a tolerance for Bacillus subtilis strain QST 713 to
include residues of products containing Bacillus subtilis strain QST
713 variant soil in or on all agricultural commodities. This regulation
eliminates the need to establish a maximum permissible level for
residues of Bacillus subtilis strain QST 713 variant soil under the
FFDCA.

DATES: This regulation is effective December 12, 2012. Objections and
requests for hearings must be received on or before February 11, 2013,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2011-0669, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), EPA West Bldg., Rm. 3334, 1301 Constitution
Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the OPP Docket is (703) 305-
5805. Please review the visitor instructions and additional information
about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael Glikes, Biopesticides and
Pollution Prevention Division (7511P), Office of Pesticide Programs,
Environmental Protection Agency, 1200 Pennsylvania Ave. NW.,
Washington, DC 20460-0001; telephone number:<PHONE_NUMBER>; email
address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

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

    You may access a frequently updated electronic version of 40 CFR
part 180 through the Government Printing Office's e-CFR site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the OCSPP test guidelines referenced in this
document electronically, please go to http://www.epa.gov/ocspp and
select ``Test Methods and Guidelines.''

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

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by the EPA, you must
identify docket ID number EPA-HQ-OPP-2011-0669 in the subject line on
the first page of your submission. All objections and requests for a
hearing must be in writing, and must be received by the Hearing Clerk
on or before February 11, 2013. Addresses for mail and hand delivery of
objections and hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any CBI) for inclusion in the public docket.
Information not marked confidential pursuant to 40 CFR part 2 may be
disclosed publicly by the EPA without prior notice. Submit the non-CBI
copy of your objection or hearing request, identified by docket ID
number EPA-HQ-OPP-2011-0669, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please

follow the instructions at http://www.epa.gov/dockets/contacts.htm.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Background and Statutory Findings

    In the Federal Register of September 7, 2011 (76 FR 55329) (FRL-
8886-7), the EPA issued a notice pursuant to FFDCA section 408(d)(3),
21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance
petition (PP 1F7896) by Agraquest, Inc., 1540 Drew Ave., Davis, CA
95618. The petition requested that 40 CFR part 180.1209 be amended by
including residues of Bacillus subtilis strain QST 713 variant soil.
This notice referenced a summary of the petition prepared by the
petitioner, Agraquest, Inc., which is available in the docket, http://www.regulations.gov. There were no comments received in response to the
notice of filing.
    Section 408(c)(2)(A)(i) of FFDCA allows the EPA to establish an
exemption from the requirement for a tolerance (the legal limit for a
pesticide chemical residue in or on a food) only if the EPA determines
that the exemption is ``safe.'' Section 408(c)(2)(A)(ii) of FFDCA
defines ``safe'' to mean that ``there is a reasonable certainty that no
harm will result from aggregate exposure to the pesticide chemical
residue, including all anticipated dietary exposures and all other
exposures for which there is reliable information.'' This includes
exposure through drinking water and in residential settings, but does
not include occupational exposure. Pursuant to FFDCA section
408(c)(2)(B), in establishing or maintaining in effect an exemption
from the requirement of a tolerance, EPA must take into account the
factors set forth in FFDCA section 408(b)(2)(C), which require EPA to
give special consideration to exposure of infants and children to the
pesticide chemical residue in establishing a tolerance and to ``ensure
that there is a reasonable certainty that no harm will result to
infants and children from aggregate exposure to the pesticide chemical
residue * * *.'' Additionally, FFDCA section 408(b)(2)(D) requires that
the Agency consider ``available information concerning the cumulative
effects of a particular pesticide's residues'' and ``other substances
that have a common mechanism of toxicity.''
    The EPA performs a number of analyses to determine the risks from
aggregate exposure to pesticide residues. First, the EPA determines the
toxicity of pesticides. Second, the EPA examines exposure to the
pesticide through food, drinking water, and through other exposures
that occur as a result of pesticide use in residential settings.

III. Toxicological Profile

    Consistent with FFDCA section 408(b)(2)(D), the EPA has reviewed
the available scientific data and other relevant information in support
of this action and considered its validity, completeness and
reliability, and the relationship of this information to human risk.
The EPA has also considered available information concerning the
variability of the sensitivities of major identifiable subgroups of
consumers, including infants and children.
    Bacillus subtilis is a rod-shaped, gram-positive, aerobic flagellar
bacterium that is ubiquitous in nature and has been recovered from
water, soil, air, and decomposing plant residues (Ref 1.). The
bacterium produces an endospore that allows it to endure extreme
conditions of heat and desiccation in the environment (Ref. 1).
Bacillus subtilis is not considered toxic or pathogenic to humans,
animals, or plants (Ref. 2). Several strains of Bacillus subtilis are
used predominantly as fungicidal active ingredients in various
pesticides registered with the EPA.
    In 2000, the EPA first registered Bacillus subtilis strain QST 713
as a pesticide active ingredient. EPA described the nature and
toxicological profile of Bacillus subtilis strain QST 713 in the
Federal Register of July 5, 2000 (65 FR 41365) (FRL-6555-3) as the
basis for establishing the tolerance exemption for Bacillus subtilis
strain QST 713 in or on all food commodities at 40 CFR 180.1209. A
battery of tests, as described in that Federal Register citation,
determined that Bacillus subtilis strain QST 713 is not pathogenic and
has no significant toxicity. The petitioner is now requesting that this
tolerance be amended to include residues of Bacillus subtilis strain
QST 713 variant soil. Bacillus subtilis strain QST 713 variant soil is
a naturally occurring variant of Bacillus subtilis strain QST 713 and
is present in products containing the active ingredient Bacillus
subtilis strain QST 713, although at low levels (Ref. 3). The variant
strain is distinguished from the parent strain by the presence of the
swrA gene, which is an essential gene for Bacillus to move over solid
substances, and by a phenotype associated with enhanced biofilm
formation, growth promotion and disease protection (Ref. 3). Based on
its review of the variant and studies submitted by the petitioner, EPA
concludes that the variant and the parent strain are substantially
similar for the purposes of assessing toxicity, pathogenicity and
infectivity (Ref. 3).
    The applicant, Agraquest, Inc., cited or submitted adequate
mammalian toxicology data and information to support the exemption from
the requirement of a tolerance for residues of Bacillus subtilis strain
QST 713 variant soil in or on all raw agricultural commodities. These
data are cited and described in the EPA's March 2012 Bacillus subtilis
Final Registration Review Decision (Ref. 1). In addition, Agraquest
submitted an acute injection toxicity/pathogenicity study (OCSPP
Guideline 885.3200; MRID 48530909) that showed that Bacillus subtilis
strain QST 713 variant soil TGAI was not toxic, infective, or
pathogenic to rats when injected intravenously at a dose of 6.6 x 10\8\
colony forming units.
    The applicant reported that no hypersensitivity incidents occurred
during research, development, or testing of Bacillus subtilis strain
QST 713 variant soil. Acceptable Tier I mammalian toxicology data and
information support registration of the proposed end-use product,
Serenade Soil DPZ. In light of the results of the acute toxicity/
pathogenicity data and the absence of hypersensitivity incidents, the
EPA did not require testing at higher tiers (i.e., Tiers II and III).

IV. Aggregate Exposures

    In examining aggregate exposure, FFDCA section 408 directs EPA to
consider available information concerning exposures from the pesticide
residue in food and all other non-occupational exposures, including
drinking water from ground water or surface water and exposure through
pesticide use in gardens, lawns, or buildings (residential and other
indoor uses).

A. Dietary Exposure

    1. Food exposure. Due to the ubiquitous nature of the Bacillus
subtilis and the concentrations of Bacillus subtilis and other closely
related Bacillus species that already exist in the environment, the EPA
expects human exposure to Bacillus subtilis strain QST 713 variant soil
resulting from the proposed pesticidal uses will be no greater than
existing human exposure to background levels of Bacillus subtilis. The
EPA in its registration review decision (Ref. 1) concluded ``the risk
posed to adults, infants, and children is likely to be minimal because
of the low acute oral toxicity/pathogenicity

potential of Bacillus subtilis strain QST 713.'' Based on the EPA's
evaluation of the Bacillus subtilis strain QST 713 data and the EPA's
conclusion that Bacillus subtilis strain QST 713 and Bacillus subtilis
strain QST 713 variant soil are substantially similar for the purposes
of assessing toxicity, pathogenicity, and infectivity (Ref. 3), no
adverse effects from dietary exposure to Bacillus subtilis strain QST
713 variant soil from its pesticidal uses are expected (see Unit III.).
    2. Drinking water exposure. Because Bacillus subtilis is ubiquitous
in the environment, exposure to the microbe through drinking water may
already be occurring and likely will continue (Ref. 3). EPA expects
exposures to Bacillus subtilis strain QST 713 variant soil to be not
much greater than background levels because the proposed use patterns
are soil directed and/or soil incorporated, thereby limiting contact
with surface water by drift and runoff. Furthermore, ground water is
not expected to have significant exposure to Bacillus subtilis strain
QST 713 variant soil since, like other microorganisms, this microbial
pesticide would likely be filtered out by the particulate nature of
many soil types. If residues of Bacillus subtilis strain QST 713
variant soil were to be transferred to surface or ground waters that
are intended for eventual human consumption (e.g., through spray drift
or runoff) and directed to wastewater treatment systems or drinking
water facilities, Bacillus subtilis strain QST 713 variant soil likely
would not survive the conditions water is subjected to in such systems
or facilities, including chlorination, pH adjustments, filtration, and/
or occasional high temperatures. As discussed in the EPA's Bacillus
subtilis Case 6012, Final Registration Review Decision (Ref. 1), intake
of low levels of ubiquitous Bacillus subtilis in drinking water may
occur, but exposure would represent a minimal risk due to the low
toxicity of the strain. Similarly, exposure to other strains of
Bacillus subtilis would not represent a greater risk. It is reasonable
to conclude, based on the similarity in product composition and
production, measured physical/chemical, and pathogenicity/infectivity
toxicity data, that the risk from any potential exposure to Bacillus
subtilis strain QST 713 variant soil resulting from the proposed
pesticidal use would be minimal and equivalent to the risk from
exposure to Bacillus subtilis strain QST 713.

B. Other Non-occupational Exposures

    The use sites proposed for products containing Bacillus subtilis
strain QST 713 variant soil include both agricultural and residential
garden sites, so the EPA expects there to be some non-occupational
exposure as a result of the application of this pesticide. Given
Bacillus subtilis strain QST 713 variant soil's natural occurrence in
soil, the EPA determined that non-occupational exposure to the
bacterium likely is already occurring (Ref. 3). Additional exposure to
the microorganism, due to pesticidal applications, is likely to occur
but is not expected to exceed EPA's level of concern, particularly in
light of available data that demonstrate Bacillus subtilis strain QST
713 is not toxic (acute dermal toxicity and acute pulmonary toxicity/
pathogenicity), non-irritating (primary dermal irritation), and not
pathogenic (acute pulmonary toxicity/pathogenicity) and the EPA's
conclusion that Bacillus subtilis strain QST 713 and Bacillus subtilis
strain QST 713 variant soil are substantially similar for the purposes
of assessing toxicity, pathogenicity, and infectivity (Ref. 3). Based
on the toxicity information submitted to the EPA, aggregate exposure to
Bacillus subtilis strain QST 713 variant soil would be below the levels
in the safety testing conducted on Bacillus subtilis strain QST 713 and
would not represent an undue risk due to the lack of residues of
toxicological concern and the low toxicity of the active ingredient.
The EPA concluded that non-dietary exposures to the general population,
including infants and children, would not be expected to pose any
quantifiable risk due to a lack of residues of toxicological concern.

V. Cumulative Effects From Substances With a Common Mechanism of
Toxicity

    Section 408(b)(2)(D)(v) of FFDCA requires that, when considering
whether to establish, modify, or revoke a tolerance, the Agency
consider ``available information'' concerning the cumulative effects of
a particular pesticide's residues and ``other substances that have a
common mechanism of toxicity.''
    Bacillus subtilis strain QST 713 variant soil does not operate via
a toxic mode of action and thus does not share a common mechanism of
toxicity with any other substances. Therefore, section 408(b)(2)(D)(v)
does not apply.

VI. Determination of Safety for U.S. Population, Infants and Children

    FFDCA section 408(b)(2)(C) provides that, in considering the
establishment of a tolerance or tolerance exemption for a pesticide
chemical residue, EPA shall assess the available information about
consumption patterns among infants and children, special susceptibility
of infants and children to pesticide chemical residues, and the
cumulative effects on infants and children of the residues and other
substances with a common mechanism of toxicity. In addition, FFDCA
section 408(b)(2)(C) provides that EPA shall apply an additional
tenfold (10X) margin of exposure (safety) for infants and children in
the case of threshold effects to account for prenatal and postnatal
toxicity and the completeness of the database on toxicity and exposure
unless EPA determines that a different margin of exposure (safety) will
be safe for infants and children. This additional margin of exposure
(safety) is commonly referred to as the Food Quality Protection Act
Safety Factor. In applying this provision, EPA either retains the
default value of 10X or uses a different additional safety factor when
reliable data available to EPA support the choice of a different
factor.
    Based on the information discussed in Unit III.B., EPA concludes
that there are no threshold effects of concern to infants, children, or
adults when Bacillus subtilis strain QST 713 variant soil is used as
labeled in accordance with good agricultural practices. As a result,
EPA concludes that no additional margin of exposure (safety) is
necessary to protect infants and children and that not adding any
additional margin of exposure (safety) will be safe for infants and
children.
    Moreover, based on the same data and EPA analysis as presented
directly above, the Agency is able to conclude that there is a
reasonable certainty that no harm will result to the U.S. population,
including infants and children, from aggregate exposure to the residues
of Bacillus subtilis strain QST 713 variant soil when it is used as
labeled and in accordance with good agricultural practices. Such
exposure includes all anticipated dietary exposures and all other
exposures for which there is reliable information. As discussed
previously, there appears to be no potential for harm from this
bacterium in its use as an antifungal agent via dietary exposure since
the microorganism is non-toxic, non-pathogenic, and not infective. This
conclusion is supported by the data on the substantially similar strain
Bacillus subtilis strain QST 713, public literature and EPA's Bacillus
subtilis Case 6012, Final Registration Review Decision (Ref. 1). EPA
concludes that there is a reasonable certainty of no harm to infants
and children from aggregate exposure to Bacillus subtilis strain QST
713 variant soil.

VII. Other Considerations

A. Analytical Enforcement Methodology

    An analytical method is not required for enforcement purposes since
the Agency is establishing an exemption from the requirement of a
tolerance without any numerical limitation.

B. International Residue Limits

    In making its tolerance decisions, the EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. The EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint United Nations
Food and Agriculture Organization/World Health Organization food
standards program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. The EPA may establish a tolerance that is different
from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA
explain the reasons for departing from the Codex level.
    The Codex has not established a MRL for Bacillus subtilis strain
QST 713 variant soil.

VIII. Conclusions

    The EPA concludes that there is a reasonable certainty that no harm
will result to the U.S. population, including infants and children,
from aggregate exposure to residues of Bacillus subtilis strain QST 713
variant soil. Therefore, the EPA is amending the tolerance exemption
for Bacillus subtilis strain QST 713 to include residues of Bacillus
subtilis strain QST 713 variant soil in or on all food commodities when
used in accordance with good agricultural practices.

IX. References

    1. U.S. EPA. 2010. Bacillus subtilis Final Registration Review
Decision. Case 6012. March 2010.
    2. U.S. EPA. 1997. Bacillus subtilis Final Risk Assessment.
    3. U.S. EPA. July 11, 2012. Memorandum from Dr. Ibrahim S. Barsoum
and Dr. John L. Kough to Michael Glikes: Review of Product Chemistry
and Acute Toxicity Studies for Section 3 Registration of a new TGAI,
Bacillus subtilis strain QST variant soil, and a new EP, Serenade soil
DPZ (EPA Reg. No. 69592-EI).

X. Statutory and Executive Order Reviews

    This final rule amends an exiting tolerance under FFDCA section
408(d) in response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this final rule has
been exempted from review under Executive Order 12866, this final rule
is not subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children From Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997). This final rule does not contain
any information collections subject to OMB approval under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et seq., nor does it require any
special considerations under Executive Order 12898, entitled ``Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the exemption from
tolerance in this final rule, do not require the issuance of a proposed
rule, the requirements of the Regulatory Flexibility Act (RFA) (5
U.S.C. 601 et seq.), do not apply.
    This final rule directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this final rule. In addition,
this final rule does not impose any enforceable duty or contain any
unfunded mandate as described under Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA) (15 U.S.C. 272 note).

XI. Congressional Review Act

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

List of Subjects in 40 CFR Part 180

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

    Dated: November 26, 2012.
Steven Bradbury,
Director, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. Revise Sec.  180.1209 to read as follows:

Sec.  180.1209  Bacillus subtilisstrain QST 713 and strain QST 713
variant soil; exemption from the requirement of a tolerance.

    An exemption from the requirement of a tolerance is established for
residues of the microbial pesticides Bacillus subtilis strain QST 713
and strain QST 713 variant soil when used in or on all food
commodities.

[FR Doc. 2012-29903 Filed 12-11-12; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 79, Number 127 (Wednesday, July 2, 2014)]
[Notices]
[Pages 37822-37825]
[FR Doc No: 2014-15477]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72484; File No. SR-FINRA-2014-027]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Options Exercise Procedures

June 26, 2014.
    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 June 17, 2014, Financial Industry Regulatory Authority, Inc.
(``FINRA'') 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 FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of

this filing by the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    FINRA is proposing to amend FINRA Rule 2360(b)(23) regarding
procedures for expiring standardized equity options to harmonize its
rules with the rules of The Options Clearing Corporation (``OCC'') and
the options exchanges regarding the change to the expiration date for
most standardized option contracts to the third Friday of the
expiration month instead of the Saturday following the third Friday.
    Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *

2000. DUTIES AND CONFLICTS

* * * * *

2300. SPECIAL PRODUCTS

* * * * *

2360. Options

    (a) No Change.
(b) Requirements
    (1) through (22) No Change.
(23) Tendering Procedures for Exercise of Options
(A) Exercise of Options Contracts
    (i) No Change.
    (ii) Special procedures apply to the exercise of standardized
equity options on the business day of their expiration, or, in the case
of standardized equity options expiring on a day that is not a business
day, on the last business day before their expiration (``expiring
options''). Unless waived by The Options Clearing Corporation, expiring
standardized equity options are subject to the Exercise-by-Exception
(``Ex-by-Ex'') procedure under The Options Clearing Corporation Rule
805. This Rule provides that, unless contrary instructions are given,
standardized equity option contracts that are in-the-money by specified
amounts shall be automatically exercised. In addition to The Options
Clearing Corporation rules, the following FINRA requirements apply with
respect to expiring standardized equity options. Option holders
desiring to exercise or not exercise expiring standardized equity
options must either:
    a. through b. No Change.
    (iii) Exercise cut-off time. Option holders have until 5:30 p.m.
Eastern Time (``ET'') on the business day of expiration, or, in the
case of a standardized equity option expiring on a day that is not a
business day, on the business day immediately prior to the expiration
date to make a final exercise decision to exercise or not exercise an
expiring option. Members may not accept exercise instructions for
customer or non-customer accounts after 5:30 p.m. ET.
    (iv) through (vii) No Change.
    (viii) In the event a national options exchange or The Options
Clearing Corporation provides advance notice on or before 5:30 p.m. ET
on the business day immediately prior to the business day of
expiration, or, in the case of a standardized equity option expiring on
a day that is not a business day, the business day immediately prior to
the last business day before the expiration date, indicating that a
modified time for the close of trading in standardized equity options
on such business day of expiration, or, in the case of a standardized
option expiring on a day that is not a business day, such last business
day before expiration will occur, then the deadline for an option
holder to make a final decision to exercise or not exercise an expiring
option shall be 1 hour 30 minutes following the time announced for the
close of trading on that day instead of the 5:30 p.m. ET deadline found
in subparagraph (iii) above. However, members have until 7:30 p.m. ET
to deliver a Contrary Exercise Advice or Advice Cancel to the places
specified in subparagraphs (iv)a. through d. above for customer
accounts and non-customer accounts where such member firm employs an
electronic submission procedure with time stamp for the submission of
exercise instructions. For non-customer accounts, members that do not
employ an electronic procedure with time stamp for the submission of
exercise instructions are required to manually deliver a Contrary
Exercise Advice or Advice Cancel within 1 hour and 30 minutes following
the time announced for the close of trading on that day instead of the
5:30 p.m. ET deadline found in subparagraph (iv) above.
    (ix) through (xi) No Change.
    (B) through (D) No Change.
    (24) No Change.
    (c) No Change.
       Supplementary Material: ----------
    .01 through .03 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, FINRA 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. FINRA 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
    Most option contracts (``Standard Expiration Contracts'') currently
expire on the Saturday following the third Friday of the specified
expiration month (``expiration date''). However, the OCC is
streamlining its options expiration procedures to change the expiration
date for most option contracts to the third Friday of the expiration
month instead of the Saturday following the third Friday.\4\ The OCC
rule change applies only to Standard Expiration Contracts expiring
after February 1, 2015. After February 1, 2015, virtually all Standard
Expiration Contracts will expire on Friday.\5\ In order to start the
transition to Friday night expiration processing, the OCC began on June
21, 2013, to move the expiration exercise process to Friday for all
Standard Expiration Contracts even though the contracts will continue
to expire on Saturday.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 69772 (June 17,
2013), 78 FR 37645 (June 21, 2013) (Order Approving File No. SR-OCC-
2013-04).
    \5\ The only Standard Expiration Contracts that will expire on a
Saturday after February 1, 2015 will be certain options that were
listed prior to the effectiveness of the OCC rule change, and a
limited number of options that may be listed prior to necessary
systems' changes of the options exchanges. The exchanges agreed that
once these systems' changes are made they will not open for trading
any new series of options contracts with Saturday expiration dates
falling after February 1, 2015.
---------------------------------------------------------------------------

    The rules of the options exchanges \6\ and FINRA Rule 2360(b)(23)
\7\ set forth

special procedures that apply to the exercise of expiring options.\8\
The options exchanges have amended their rules to remain consistent
with the OCC amendments.\9\ Accordingly, FINRA proposes to similarly
amend Rule 2360(b)(23) to address the OCC amendments.
---------------------------------------------------------------------------

    \6\ See ISE Rule 1100; BOX Rule 9000; PHLX Rule 1042; NYSE Arca
Options Rule 6.24; NYSE MKT Rule 980; CBOE Rule 11.1; BX Chapter
VIII Section 1; NASDAQ Chapter VIII Section 1; BATS Rule 23.1; and
MIAX Rule 700 (each an ``options exchange'').
    \7\ The provisions of FINRA Rule 2360(b)(23) apply only to
members that are not also members of the exchange on which the
standardized option is traded (so called ``access'' members) in
order to subject such firms and customers of such firms to the same
requirements for options exercise procedures as customers that are
members of an options exchange.
    \8\ The procedures provide that an option holder with an
expiring standardized equity option may: (1) take no action and
allow automatic exercise determinations to be made in accordance
with the OCC exercise by exception (``Ex-by-Ex'') procedures
(whereby an option will be automatically exercised if the option
contract is in the money by a requisite amount) or (2) submit a
Contrary Exercise Advice (``CEA'') (or Expiring Exercise Declaration
(``EED'') as referenced in the OCC rules) to communicate an option
holder's intent not to exercise an option that would be
automatically exercised under the OCC's Ex-by-Ex procedures or to
exercise an option that would not be automatically exercised under
the OCC's Ex-by-Ex procedures.
    \9\ See the options exchanges' filings to conform to the OCC
amendments in Securities Exchange Act Release No. 70372 (September
11, 2013), 78 FR 57186 (September 17, 2013) (Notice of Filing and
Immediate Effectiveness of File No. SR-NYSEARCA-2013-88); Securities
Exchange Act Release No. 70373 (September 11, 2013), 78 FR 57198
(September 17, 2013) (Notice of Filing and Immediate Effectiveness
of File No. SR-NYSEMKT-2013-73); Securities Exchange Act Release No.
70745 (October 23, 2013), 78 FR 64559 (October 29, 2013) (Notice of
Filing and Immediate Effectiveness of File No. SR-PHLX-2013-104);
Securities Exchange Act Release No. 70747 (October 23, 2013), 78 FR
64556 (October 29, 2013) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASDAQ-2013-133); Securities Exchange
Act Release No. 70746 (October 23, 2013), 78 FR 64563 (October 29,
2013) (Notice of Filing and Immediate Effectiveness of File No. SR-
BX-2013-055); Securities Exchange Act Release No. 69996 (July 17,
2013), 78 FR 44183 (July 23, 2013) (Notice of Filing and Immediate
Effectiveness of File No. SR-MIAX-2013-32); Securities Exchange Act
Release No. 70488 (September 24, 2013), 78 FR 59998 (September 30,
2013) (Notice of Filing and Immediate Effectiveness of File No. SR-
BOX-2013-45) and Securities Exchange Act Release No. 70900 (November
19, 2013), 78 FR 70382 (November 25, 2013) (Notice of Filing and
Immediate Effectiveness of File No. SR-ISE-2013-58).
---------------------------------------------------------------------------

    Specifically, FINRA proposes to amend Rule 2360(b)(23)(A)(ii) to
provide that special procedures apply to the exercise of standardized
equity options on the business day of their expiration (i.e. for Friday
expirations), or, in the case of standardized equity options expiring
on a day that is not a business day, on the last business day before
their expiration (as is currently the case for Saturday expirations).
    FINRA also proposes to amend Rule 2360(b)(23)(A)(iii) regarding the
exercise cut-off time. Option holders have until 5:30 p.m. Eastern Time
(``ET'') \10\ on the business day of expiration (i.e., for Friday
expiration), or, in the case of a standardized equity option expiring
on a day that is not a business day, on the business day immediately
prior to the expiration date (as is currently the case for Saturday
expirations) to make a final exercise decision to exercise or not
exercise an expiring option.
---------------------------------------------------------------------------

    \10\ The time of day for the exercise cut-off (i.e., 5:30 p.m.
ET) is unchanged from the current requirements.
---------------------------------------------------------------------------

    Finally, FINRA proposes to amend Rule 2360(b)(23)(A)(viii) to
specify in the event a national options exchange or the OCC provides
advance notice on or before 5:30 p.m. ET on the business day
immediately prior to the business day of expiration (i.e., Thursday for
Friday expirations), or in the case of a standardized equity option
expiring on a day that is not a business day, the business day
immediately prior to the last business day before the expiration date
(i.e., Thursday for Saturday expirations as is the case today),
indicating that a modified time for the close of trading in
standardized equity options on such business day of expiration (i.e.,
Friday for Friday expirations), or in the case of an standardized
option expiring on a day that is not a business day, such last business
day before expiration will occur (i.e., Friday for Saturday
expirations), then the deadline for an option holder to make a final
decision to exercise or not exercise an expiring option shall be 1 hour
30 minutes following the time announced for the close of trading on
that day. FINRA believes that keeping its rules consistent with those
of the industry will protect all market participants in the market by
eliminating confusion.
    FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date will be 30 days after the date
of filing, June 17, 2014.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change will
promote consistent regulation by harmonizing FINRA's rules with those
of the options exchanges as such rules have been amended to comply with
recent amendments by OCC. FINRA believes that keeping its rules
consistent with those of the industry will protect all participants in
the market by eliminating confusion.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA believes that the
proposed rule change will promote consistent regulation by harmonizing
FINRA's rules with those of the options exchanges and OCC and will
apply equally to all members with expiring standardized equity options.
FINRA does not believe that the proposed rule change will impose a
burden on competition because it will be applied to all members
equally. In addition, FINRA does not believe the proposed rule change
will impose a burden on competition because it will be applied
industry-wide, apply to all market participants and is designed to
allow the OCC to streamline the expiration process.

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

    Written comments were neither solicited nor 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) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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, along
with a brief description and text of 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.
FINRA 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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

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-FINRA-2014-027 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-FINRA-2014-027. 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 FINRA. 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-FINRA-2014-027 and should be
submitted on or before July 23, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-15477 Filed 7-1-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 75, Number 224 (Monday, November 22, 2010)]
[Notices]
[Pages 71102-71103]
[FR Doc No: 2010-29310]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 13860-000]

Jones Canyon Hydro, LLC; Notice of Preliminary Permit Application
Accepted for Filing and Soliciting Comments, Motions To Intervene, and
Competing Applications

November 12, 2010.
    On October 14, 2010, Jones Canyon Hydro, LLC (Jones Canyon Hydro)
filed an application for a preliminary permit, pursuant to section 4(f)
of the Federal Power Act (FPA), proposing to study the feasibility of
the Jones Canyon Pumped Storage Project (Project) near Grass Valley,
Sherman County, Oregon. The sole purpose of a preliminary permit, if
issued, is to grant the permit holder priority to file a license
application during the permit term. A preliminary permit does not
authorize the permit holder to perform any land-disturbing activities
or otherwise enter upon lands or waters owned by others without the
owners' express permission.
    The proposed project will consist of: (1) Two artificial reservoirs
created by embankments and joined by approximately 6,225 feet of
conduit; (2) one 250-megawatt (MW), one 100-MW, and one 50-MW
reversible pump-turbines, totaling 400 MW of generating capacity, with
up to 100 MW of additional pumping capacity, for a total of 500 MW
pumping capacity; (3) a 4.15-kilovolt, 1,800-foot-long, underground
transmission line connecting to an existing substation; and (4)
appurtenant facilities. The estimated annual energy production for

the Project is approximately 1,226,400 megawatt-hours.
    Applicant Contact: Matthew Shapiro, CEO, Gridflex Energy, LLC, 1210
W. Franklin St., Ste. 2, Boise, ID 83702; phone:<PHONE_NUMBER>.
    FERC Contact: Patrick Murphy<PHONE_NUMBER>.
    Deadline for filing comments, motions to intervene, competing
applications (without notices of intent), or notices of intent to file
competing applications: 60 days from the issuance of this notice.
Competing applications and notices of intent must meet the requirements
of 18 CFR 4.36. Comments, motions to intervene, notices of intent, and
competing applications may be filed electronically via the Internet.
See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's
Web site http://www.ferc.gov/docs-filing/efiling.asp. Commenters can
submit brief comments up to 6,000 characters, without prior
registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information
at the end of your comments. For assistance, please contact FERC Online
Support. Although the Commission strongly encourages electronic filing,
documents may also be paper-filed. To paper-file, mail an original and
seven copies to: Kimberly D. Bose, Secretary, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
    More information about this project, including a copy of the
application, can be viewed or printed on the ``eLibrary'' link of the
Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp.
Enter the docket number (P-13860-000) in the docket number field to
access the document. For assistance, contact FERC Online Support.

Kimberly D. Bose,
Secretary.
[FR Doc. 2010-29310 Filed 11-19-10; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 79, Number 209 (Wednesday, October 29, 2014)]
[Notices]
[Pages 64461-64462]
[FR Doc No: 2014-25665]

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

Federal Aviation Administration

Twenty Second Meeting: RTCA Special Committee 217--Aeronautical
Databases Joint With EUROCAE WG-44--Aeronautical Databases

AGENCY: Federal Aviation Administration (FAA), U.S. Department of
Transportation (DOT).

ACTION: Notice of RTCA Special Committee 217--Aeronautical Databases
Joint With EUROCAE WG-44--Aeronautical Databases.

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

SUMMARY: The FAA is issuing this notice to advise the public of a
meeting of RTCA Special Committee 217--Aeronautical Databases being
held jointly with EUROCAE WG-44--Aeronautical Databases.

DATES: The meeting will be held December 2-5, 2014 from 9:00 a.m. to
5:00 p.m.

ADDRESSES: The meeting will held at RTCA Headquarters, 1150 18th Street
NW., Suite 910, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Sophie Bousquet<EMAIL_ADDRESS>
202-330-0663 or The RTCA Secretariat, 1150 18th Street NW., Suite 910,
Washington, DC 20036, or by telephone at<PHONE_NUMBER>, fax at (202)
833-9434, or Web site at http://www.rtca.org.

SUPPLEMENTARY INFORMATION: Pursuant to section 10(a)(2) of the Federal
Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is
hereby given for a meeting of RTCA Special Committee 217--Aeronautical
Databases held jointly with EUROCAE WG-44--Aeronautical Databases. The
agenda will include the following:

Tuesday, December 2, 2014, Opening Plenary

     Co-Chairmen's remarks and introductions
     Housekeeping
     Approve minutes from 21th meeting
     Review and approve meeting agenda for 22th meeting
     Schedule and working arrangements for this week
     Review of joint WG-1/WG-2 Action Items
     Closing Plenary Schedule

Tuesday Through Thursday, December 2nd to 4th (WG1) and (WG2) Session

     WG1--Final work and review before FRAC
     WG1--Schedule for FRAC release and associated actions
     WG2--Action Item Status Review
     WG2--Review of Working Papers, Discussion Papers,
Information Papers

Friday Morning, December 5th, Closing Plenary Session (9:00 a.m. to
Noon)

     Presentation of WG1 and WG2 conclusions
     Approval to release DO-200A/ED-76 Revision for FRAC
     Working arrangements for the remaining work
     Review of action items
     Next meetings, dates and locations
     Any other business
     Adjourn
    Attendance is open to the interested public but limited to space
availability. With the approval of the chairman, members of the public
may present oral statements at the meeting.
    Persons wishing to present statements or obtain information should
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section. Members of the public may present a written statement to the
committee at any time.

    Issued in Washington, DC, on October 23 2014.
Mohannad Dawoud,
Management Analyst, Program Oversight and Administration, ANG-A15,
Federal Aviation Administration.
[FR Doc. 2014-25665 Filed 10-28-14; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 80, Number 136 (Thursday, July 16, 2015)]
[Notices]
[Pages 42139-42141]
[FR Doc No: 2015-17400]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75427; File No. SR-OCC-2015-010]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Granting Approval of Proposed Rule Change Concerning the
Implementation of New Risk Models in Order To Support the Clearance and
Settlement of Asian-Style Flexibly Structured Options and Flexibly
Structured Cliquet Options

July 10, 2015.

I. Introduction

    On May 1, 2015, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2015-010 pursuant to section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on May 22, 2015.\3\ The Commission received no
comment letters regarding the proposed change. For the reasons
discussed below, the Commission is granting approval of the proposed
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-74966 (May 14, 2015),
80 FR 29784 (May 22, 2015) (SR-OCC-2015-010). The proposed rule
change was published in the Federal Register on May 22, 2015, but
was deemed published on May 1, 2015, pursuant section 19b(2)(E) of
the Act.
---------------------------------------------------------------------------

II. Description

    OCC is proposing to implement new risk models to support the
clearance and settlement of Asian-style and Cliquet flexibly structured
options \4\ (``Asian Options'' and ``Cliquet Options,'' respectively).
OCC already clears other flexibly structured options (``Current Index
Flex Options'') \5\ on various securities indices \6\ and risk manages
clearing member positions (i.e., computes margin requirements) through
its STANS methodology.\7\
---------------------------------------------------------------------------

    \4\ Flexibly structured options permit the buyer and seller to
negotiate and customize certain variable terms pursuant to exchange
rules. See OCC By-Laws Article 1, section 1(F)(5). For example,
parties may select from a variety of underlying indices, pick a
strike price and expiration date as well as pick the exercise-style
of the option--i.e., American or European exercise. Options with an
American style exercise may be exercised at any time prior to, and
including, expiration. Options with a European style exercise may
only be exercised at expiration.
    \5\ The exercise settlement amount for Current Index Flex
Options is determined based entirely on the strike price of a given
option and the current underlying interest value on the day of
exercise, in the case of American style Current Index Flex Options,
or final day of trading, in the case of European style Current Index
Flex Options.
    \6\ OCC clears Current Index Flex Options on the S&P 500 Index,
S&P 100 Index, Nasdaq 100 Index and Russell 2000 Index, among other
underlying indexes.
    \7\ See http://www.theocc.com/risk-management/margins/ for a
description of OCC's margin methodology. See also OCC Rule 601.
---------------------------------------------------------------------------

    Asian Options use an ``Asian-style'' methodology for determining
the exercise settlement amount of an option, which is the difference
between the aggregate exercise price and the aggregate current
underlying interest value, which is based on the average of twelve
monthly price ``observations.'' OCC states that traders of Asian
Options will select an observation date as well as an expiration
date.\8\
---------------------------------------------------------------------------

    \8\ OCC provides that, since Expiration dates must be within 50
to 53 calendar weeks from the date of listing, all Asian Options
that it will clear will have a term of approximately one year. OCC
explains that if the expiration date precedes the observation date
in the final month, then the final ``observation'' will be the
current underlying interest value on expiration date and not the
observation date, and if one of the observation dates falls on a
weekend or holiday, the value used will be from the previous
business day.
---------------------------------------------------------------------------

    Cliquet Options use a cliquet \9\ method for determining the
exercise settlement amount of the option, which is the greater of: (i)
Zero (i.e., the underlying index had negative returns during the
option's tenor); and, (ii) the difference between the aggregate
exercise price and the aggregate current underlying interest value,
which is based on the sum of the Capped Returns of the underlying index
on 12 predetermined ``observation dates'' \10\ (each an ``Observation
Date,'' and the computed value an ``Observation'').\11\
---------------------------------------------------------------------------

    \9\ Cliquet style settlement provides for payout based on the
(positive) sum of ``capped'' returns of an index on pre-determined
dates over a specified period of time.
    \10\ OCC states that the parties to a Cliquet Option will
designate a set of Observation Dates for each contract as well as an
expiration date. According to OCC, Observation Dates will generally
be a given date each month for the twelve months preceding the
expiration date, with the last Observation Date being the expiration
date. If the Observation Date chosen by the parties to a Cliquet
Option precedes the expiration date then OCC states that there will
be two Observation Dates in the final month (i.e., the expiration
date will always be an Observation Date) and ten other Observation
Dates; one date in each of the ten months preceding the expiration
month that will coincide with the Observation Date that was chosen
by the parties to a Cliquet Option (not the expiration date). OCC
explains that expiration dates must be within 50 to 53 calendar
weeks from the date of listing, and that if one of the Observation
Dates falls on a weekend or holiday, the previous business day will
be deemed to be the Observation Date.
    \11\ OCC explains that, on each Observation Date, the exchange
on which the Cliquet Options is listed will determine the actual
return of the underlying index from observation period-to-
observation period, which will be compared to the observation cap,
an amount designated the parties to the Cliquet Option. OCC further
states that the Capped Return for a given Observation Date will be
the lesser of the actual observation period-to-observation period
return or the observation cap. For example, if the actual return of
the underlying index was 1.75% and the designated capped return for
a Cliquet Option was 2%, the 1.75% value will be included (and not
the 2%) as the value for the Observation Date. Using this same
example, if the actual return of the underlying index was 3.30%, the
2% value will be included (and not the 3.30%) as the value for the
Observation Date.

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

    OCC states that both Asian Options and Cliquet Options will be only
available in European style exercises, and will be subject to OCC's
expiration exercise procedures set forth in OCC Rule 805, as
supplemented by OCC Rule 1804. In addition, OCC represents that it will
initially clear Asian Options and Cliquet Options on the S&P 500 Index,
Nasdaq 100 Index, Russell 2000 Index and Dow Jones Industrial Average
Index and it may clear Asian Options and Cliquet Options on other
indices in the future.

New Risk Models

    As noted above, OCC will risk manage clearing member positions in
Asian Options and Cliquet Options through its STANS methodology. Due to
certain features of Asian Options and Cliquet Options described below,
OCC proposed adding new pricing models into its STANS methodology so
that OCC may compute appropriate margin requirements for clearing
members holding positions in Asian Options and Cliquet Options.\12\
---------------------------------------------------------------------------

    \12\ OCC explains that it currently computes the price of
Current Index Flex Options on indices through standard pricing
models (i.e., the Black-Scholes pricing model) that consider: (i)
The value of the option's underlying index, (ii) the implied
volatility of an option's underlying index, (iii) time until
expiration, (iv) risk-free interest rate, and (v) the strike price
of the option.
---------------------------------------------------------------------------

Asian Options
    Asian Options differ from the Current Index Flex Options currently
cleared by OCC due to the option's exercise settlement amount being a
function of the arithmetic average of the underlying index on certain
observation dates, rather than the value of the underlying index of a
given option on the exercise date or expiration date. Based on this
phenomenon, OCC proposed to add a new pricing model for Asian Options
that will be a shifted lognormal model \13\ to accommodate the fact
that Asian Options will have an arithmetic average value of the
underlying index within the final exercise settlement amount
calculation. OCC states that the shifted lognormal model will account
for the fact that the current underlying interest value on the
expiration date of an Asian Option is based on an arithmetic average of
prices, and not the value of the underlying index on the option's
expiration date, which introduces non-normality into the probability
distribution of contract payoffs.
---------------------------------------------------------------------------

    \13\ See Andreasen, J., ``The pricing of discretely sampled
Asian and lookback options: a change of numeraire approach,''
Journal of Computational Finance, September 2000. See also Brigo,
D., Mercurio, F., Rapidsarda, F., Scotti, R., ``Approximated moment-
matching dynamics for basket-options simulation,'' EFMA Lugano
meetings, November 2001. See also Haug, E.G. and Margrabe, W.,
``Asian Pyramid Power,'' Wilmott Magazine, March 2003.
---------------------------------------------------------------------------

    With respect to the Asian Option shifted lognormal pricing model,
OCC proposed to utilize a modified Black-Scholes pricing model with a
shift parameter that employs the first three statistical ``moments.''
In accordance with such model, OCC states that the first moment is the
expected value of an Asian Option's value based on the option's implied
volatility, the second moment accounts for the statistical volatility
of the option's value, and the third moment accounts for the
statistical skewness of the option's value. OCC represents that the
moments are intended to account for variability in the arithmetic
average value of an Asian Option's underlying index. OCC states that
the shifted lognormal distribution (i.e., the lognormal probability
distribution derived using the first through third moments above) is
then priced through the standard Black-Scholes equation.\14\ OCC
further states that the shift parameters are then adjusted out of the
Black-Scholes price in order to derive a price for a given Asian Option
that is appropriate to be utilized within the STANS methodology for the
purposes of computing clearing member margin on Asian Options.
---------------------------------------------------------------------------

    \14\ In connection with using the standard Black-Sholes
equation, OCC will also compute each of the three moments using a
random shifted lognormal variable.
---------------------------------------------------------------------------

Cliquet Options
    Similar to Asian Options, the price of a given Cliquet Options is
based on monthly Observations of an underlying index. OCC states that
while a shifted lognormal model is an appropriate pricing model for
Asian Options, the capped return feature of Cliquet Options makes the
numerical solution to the Black-Scholes Partial Differential Equation
\15\ the appropriate pricing model for Cliquet Options.\16\ OCC
therefore proposed to add a Cliquet Option pricing model to its STANS
methodology that will compute the numerical solution to the Black-
Scholes Partial Differential Equation. OCC represents that such a
solution will provide OCC with the price of a given Cliquet Option that
will be utilized within the STANS methodology for the purposes of
computing clearing member margin requirements.
---------------------------------------------------------------------------

    \15\ OCC represents that the differential equation model
incorporates boundary conditions, which are necessary in order to
solve differential equations, to ensure that the value of a given
Cliquet Option is consistent throughout the equation.
    \16\ See Andreasen, J., ``The pricing of discretely sampled
Asian and lookback options: a change of numeraire approach.''
Journal of Computational Finance (2000). See also Bernard, C., & Li,
W. V., ``Pricing and Hedging of Cliquet Options and Locally Capped
Contracts.'' SIAM Journal on Financial Mathematics, 353-371 (2013).
See also Hagan, P. S., Kumar, D., & Lesniewski, A. S., ``Managing
Smile Risk.'' Wilmott Magazine, 84-108 (2002). See also Hull, John
C., ``Options Futures and other Derivatives.'' McGraw Hill (2000).
See also Kjaer, M., ``Fast pricing of cliquet options with global
floor.'' Journal of Derivatives, 14(2), 47-60 (2006).
---------------------------------------------------------------------------

    With respect to the pricing of a given Cliquet Option, and based on
the capped return feature of Cliquet Options, OCC states that it will
identify the known implied volatility skew of standard options with the
same underlying interest, a similar tenor and a similar amount of
forward moneyness \17\ of the given Cliquet Option. OCC represents that
its calculation of forward moneyness will include an adjustment to
account for any known Observations of the underlying interest for a
given Cliquet Option. OCC further states that the known implied
volatility skew will subsequently be utilized within the Black-Scholes
Partial Differential Equation so that OCC will be able to derive the
price of a given Cliquet Option, which will then be utilized within the
STANS methodology for purposes of computing clearing member margin
requirements on a Cliquet Options.
---------------------------------------------------------------------------

    \17\ OCC describes forward moneyness as the ratio of the strike
to the current value of the implied forward for the index.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \18\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if the
Commission finds that such proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such self-regulatory organization. Section 17A(b)(3)(F)
of the Act \19\ requires, among other things, that the rules of a
clearing agency are designed to assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible. In addition,

Rule 17Ad-22(b)(2) \20\ requires registered clearing agencies, among
other things, to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to use margin requirements
to limit its credit exposures to participants under normal market
conditions and use risk-based models and parameters to set margin
requirements.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2)(C).
    \19\ 15 U.S.C. 78q-1(b)(3)(F).
    \20\ 17 CFR 240.17Ad-22(b)(2).
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent
with Section 17A of the Act \21\ and the rules thereunder applicable to
OCC. The proposal will integrate new pricing models into the STANS
methodology to accommodate the manner in which the exercise settlement
amount for Asian Options and Cliquet Options is determined. The
Commission believes these changes are designed to enable OCC to
accurately compute margin requirements for Asian Option and Cliquet
Option positions through its STANS methodology, therefore reducing the
risk that clearing member margin assets would be insufficient should
OCC need to use such assets to close-out the positions of a defaulted
clearing member. The Commission therefore believes that the proposed
rule change is reasonably designed to limit OCC's credit exposures to
participants under normal market conditions and use risk-based models
and parameters to set margin requirements, consistent with the
requirements of Rule 17Ad-22(b)(2).\22\ Accordingly, the Commission
believes that the proposed rule change is designed to assure the
safeguarding of securities and funds in OCC's custody or control or for
which it is responsible, consistent with section 17A(b)(3)(F) of the
Act.\23\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78q-1.
    \22\ 17 CFR 240.17Ad-22(b)(2).
    \23\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of section 17A of the Act \24\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\25\ that the proposed rule change (File No. SR-OCC-2015-010) be,
and hereby is, approved.\26\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).
    \26\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
Jill M. Peterson,
Assistant Secretary.
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2015-17400 Filed 7-15-15; 8:45 am]
BILLING CODE 8011-01-P