[Federal Register Volume 88, Number 166 (Tuesday, August 29, 2023)]
[Notices]
[Pages 59561-59566]
[FR Doc No: 2023-18617]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2023-0007 (Notice No. 2023-08)]

Hazardous Materials: Information Collection Activities

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
Department of Transportation (DOT).

ACTION: Notice and request for comments.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995, PHMSA
invites comments on information collections pertaining to hazardous
materials transportation for which PHMSA intends to request renewal and
extension from the Office of Management and Budget. PHMSA published a
60-day comment period soliciting comments on these information
collections in the Federal Register on March 22, 2023, and did not
receive any comments.

DATES: Interested persons are invited to submit comments on or before
September 28, 2023.

ADDRESSES: Written comments and recommendations for the information
collections should be sent within 30 days of publication of this notice
to https://www.reginfo.gov/public/do/PRAMain.
    Information collections can be found by selecting ``Currently under
30-day Review--Open for Public Comments'' or by using the search
function.
    We invite comments on: (1) whether the collections of information
are necessary for the proper performance of the functions of the
Department, including whether the information will have practical
utility; (2) the accuracy of the Department's estimate of the burden of
the information collections; (3) ways to enhance the quality, utility,
and clarity of the information to be collected; and (4) ways to
minimize the burden of the collection of information on respondents,
including the use of automated collection techniques or other forms of
information technology.
    Docket: For access to the Dockets to read background documents or
comments received, go to http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Steven Andrews or Nina Vore, Standards
and Rulemaking Division,<PHONE_NUMBER>, Pipeline and Hazardous
Materials Safety Administration, U.S. Department of Transportation,
1200 New Jersey Avenue SE, Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION: Section 1320.8(d), title 5, Code of Federal
Regulations (CFR) requires PHMSA to provide interested members of the
public and affected agencies an opportunity to comment on information
collection and recordkeeping requests. This notice identifies
information collection requests that PHMSA previously published on
March 22, 2023,\1\ in a 60-day Federal Register notice seeking comments
and is now submitting to the Office of Management and Budget (OMB) for
renewal and extension. These information collections are contained in
49 CFR 171.6 of the Hazardous Materials Regulations (HMR; 49 CFR parts
171 through 180). PHMSA has revised burden estimates, where
appropriate, to reflect current reporting levels or adjustments based
on changes in proposed or final rules published since the information
collections were last approved. The following information is provided
for each information collection: (1) title of the information
collection, including former title if a change is being made; (2) OMB
control number; (3) summary of the information collection activity; (4)
description of affected public; (5) estimate of total annual reporting
and recordkeeping burden; and (6) frequency of collection. PHMSA will
request a 3-year term of approval for the information collection
activity and will publish a notice in the Federal Register alerting the
public upon OMB's approval. PHMSA requests comments on the following
information collections:
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    \1\ 88 FR 17295.
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    Title: Inspection and Testing of Portable Tanks and Intermediate
Bulk Containers.
    OMB Control Number: 2137-0018.
    Summary: This OMB control number describes the information
collections in parts 173, 178, and 180 of the HMR pertaining to the
documenting of design qualifications, inspections, tests, and approvals
pertaining to the manufacture and use of portable tanks and
intermediate bulk containers (IBCs) under various provisions of the
HMR. Information collections under this OMB control number include:
    (1) Design Qualification Testing for IBCs: This information
collection consists of the minimum requirements for testing procedures
to ensure that IBCs containing hazardous materials can withstand normal
conditions of transportation. Each packaging must pass the prescribed
tests and conform to Sec.  173.24 while in transportation. The testing
requirements in Sec.  178.801(d) ensure that the packaging manufacturer
achieves successful test results for the design qualification testing
at the start of production of each new or different IBC design type.
    (2) Periodic Design Requalification Testing of IBCs: This
information collection consists of the requirements for periodic design
re-qualification of each qualified IBC design type to maintain
authorization for continued production. IBC manufacturers must conduct
successful tests at sufficient frequency to ensure each packaging
produced is capable of passing the design qualification tests, which
must be conducted at least once every 12 months.
    (3) Applications for Approval of Equivalent Packaging: This
information collection consists of the requirements for approval of
equivalent packaging applications submitted by the regulated community
to PHMSA, which allows the use of an IBC differing from the standards
outlined in the HMR if it is shown to be equally effective and if the
testing methods used are equivalent.
    (4) Reporting Requirements for Retest and Inspection of IBCs: This
information collection consists of the requirements for the continuing
qualification, maintenance, or periodic retesting of an IBC by any
person responsible for it. Each IBC constructed in accordance with a
United Nations (UN) standard for which a test or inspection is required
may not be filled and offered for transportation or transported until
the testing and inspection have been successfully completed. The
information collection also reflects the creation of a report that
identifies the testing and inspection of IBCs.
    (5) Recordkeeping for IBC Testing: This information collection
consists of the recordkeeping requirements associated with IBC testing
specified in Sec. Sec.  178.801 and 180.352. The IBC owner or lessee
must keep records of periodic retests, initial and periodic
inspections, and test performance on the IBC if it has been repaired.
Records must be kept for each packaging at each location where periodic
tests are conducted and must be available for inspection by a DOT
representative upon request.
    (6) Manufacturers Data Report (ASME) for Portable Tanks: This
information collection consists of the requirements for tanks designed
and constructed in accordance with, and that fulfill all the
requirements of, the American Society of Mechanical Engineers (ASME)
Code. In addition to the markings required by the ASME Code, every tank
must bear permanent

marks that include the information specified in Sec.  178.255-14, which
must be stamped into the metal near the center of one of the tank heads
or stamped into a plate permanently attached to the tank by means of
brazing or welding or other suitable means.
    (7) Approval Applications for Specification UN Portable Tank
Design: This information collection requires an owner or manufacturer
of a portable tank to apply for an approval to a designated approval
agency authorized to approve new portable tanks designs.
    (8) Applications for Modifications to Portable Tank Designs: This
information collection requires an owner or manufacturer of a portable
tank to apply for an approval to a designated approval agency
authorized to approve the modifications to portable tanks designs.
    (9) Portable Tanks--Approval Agency Retention of Documents: This
information collection consists of the requirement for approval
agencies to review all drawings and calculations to ensure that the
design is compliant with the relevant specification. The approval
agency must maintain the drawings and approval records for as long as
the portable tank remains in service and provide this information to
the DOT upon request.
    (10) Portable Tanks--Manufacturers Retention of Documents: This
information collection requires that qualification records for
specification portable tanks be retained for at least five (5) years by
the tank manufacturer and made available to duly identified
representatives of the DOT or the owner of the tank.
    (11) Recordkeeping for the Testing of Portable Tank: This
information collection requires that the owner of the portable tank or
his/her authorized agent will retain a written record indicating the
date and results of all required tests, as well as the name and address
of the tester, until the next retest has been satisfactorily completed
and recorded. This information must be provided to the DOT upon
request.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

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                                                                   Total  annual     Hours per     Total  annual
             Information collection                 Respondents      responses       response      burden  hours
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Design Qualification Testing for IBCs--                       13             494               3           1,482
 Applications for the Certification Mark........
Periodic Design Requalification Testing of IBCs--             13             494               3           1,482
 Submission of Changes to Test Frequency to the
 Associate Administrator........................
Applications for Approval of Equivalent                        5               5               3              15
 Packaging--IBCs................................
Reporting Requirements for Retest and Inspection            1000         100,000            0.25          25,000
 of IBCs........................................
Recordkeeping for IBC Testing...................             150             150            0.25              38
Manufacturers Data Report (ASME) for Portable                 50          50,000            0.25          12,500
 Tanks..........................................
Approval Applications for Specification UN                    13             494               3           1,482
 Portable Tank Design...........................
Applications for Modifications to Portable Tank               13             494               3           1,482
 Designs........................................
Portable Tanks--Approval Agency Retention of                  13             494            0.25             124
 Documents......................................
Portable Tanks--Manufacturers Retention of                    50          50,000            0.25          12,500
 Documents......................................
Recordkeeping for the Testing of Portable Tanks.             150             150            0.25              38
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    Affected Public: Manufacturers and owners of portable tanks and
intermediate bulk containers.
    Annual Reporting and Recordkeeping Burden:
    Number of Respondents: 1,470.
    Total Annual Responses: 202,775.
    Total Annual Burden Hours: 56,143.
    Frequency of Collection: On occasion.
    Title: Hazardous Materials Shipping Papers & Emergency Response
Information.
    OMB Control Number: 2137-0034.
    Summary: This OMB control number describes the information
collections in parts 172, 173, 174, 175, 176 and 177 of the HMR
pertaining to the requirement to provide a shipping paper and emergency
response information with shipments of hazardous materials. Shipping
papers are considered to be a basic communication tool relative to the
transportation of hazardous materials. The definition of a shipping
paper in Sec.  171.8 includes a shipping order, bill of lading,
manifest, or other shipping document serving a similar purpose and
containing the information required by Sec. Sec.  172.202, 172.203, and
172.204 of the HMR. A shipping paper with emergency response
information must accompany most hazardous materials shipments and be
readily available at all times during transportation.
    Shipping papers serve as the principal source of information
regarding the presence of hazardous materials, identification,
quantity, and emergency response procedures. They also serve as the
source of information for compliance with other requirements, such as
the placement of rail cars containing different hazardous materials in
trains; prevent the loading of poisons with foodstuffs; maintain the
separation of incompatible hazardous materials; and limit the amount of
radioactive materials that may be transported in a vehicle or aircraft.
Shipping papers and emergency response information also serve as a
means of notifying transport workers that hazardous materials are
present. Most importantly, shipping papers serve as a principal means
of identifying hazardous materials during transportation emergencies.
Firefighters, police, and other emergency response personnel are
trained to obtain the DOT shipping papers and emergency response
information when responding to hazardous materials transportation
emergencies. The availability of accurate information concerning
hazardous materials being transported significantly improves response
efforts in these types of emergencies. In addition to the shipping
paper and emergency response information, this OMB control number also
includes the following information collections:
    (1) Notice of Pilot in Command: This information collection
consists of the additional time required for the pilot-in-command to
complete the confirmation process for the loading of hazardous
materials on aircraft. The confirmation process includes obtaining a
signature or other appropriate indication from the person responsible
for loading the aircraft and from the pilot-in-command.
    (2) Lithium Battery Test Summary Document: This information
collection requires the creation of a lithium battery test summary
document for lithium cells and batteries manufactured after January 1,
2008. This information collection includes both a reporting and
recordkeeping component.
    (3) Air Transportation Discrepancy Reports: This information
collection

requires that each person who discovers an improperly described,
certified, labeled, marked, or packaged hazardous material during air
transportation, including passenger baggage (known as a passenger (PAX)
discrepancy), must notify the nearest Federal Aviation Administration
(FAA) Regional Office by telephone or electronically. Electronic
notifications may be submitted by email or through the Safety Assurance
System (SAS) External Portal.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

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                                                                   Total annual      Hours per     Total annual
             Information collection                 Respondents      responses       response      burden hours
----------------------------------------------------------------------------------------------------------------
Hazardous Materials Shipping Papers & Emergency          260,000     175,262,735             .03       4,599,426
 Response Information...........................
Notice of Pilot in Command......................             150       2,004,717            .003           5,961
Lithium Battery Test Summary--Reporting.........              73           2,336             0.5           1,168
Lithium Battery Test Summary--Recordkeeping.....           5,790          19,596           0.116           2,286
Air Transportation Discrepancy Reports..........              58          15,529           .0833           1,294
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    Affected Public: Shippers and carriers of hazardous materials in
commerce.
    Annual Reporting and Recordkeeping Burden:
    Total Number of Respondents: 266,071.
    Total Annual Responses: 177,304,913.
    Total Annual Burden Hours: 4,610,135.
    Frequency of Collection: On occasion.
    Title: Approval for Hazardous Materials.
    OMB Control Number: 2137-0557.
    Summary: This OMB control number describes the information
collections in parts 107, 173, 175, 176, 178, and 180 of the HMR
pertaining to approvals issued by the Office of Hazardous Materials
Safety (OHMS) within PHMSA. Without these requirements there is no
means to: (1) determine whether applicants who apply to become
designated approval agencies are qualified to evaluate package design,
test packages, classify hazardous materials, etc.; (2) verify that
various containers and special loading requirements for vessels meet
the requirements of the HMR; and (3) assure that regulated hazardous
materials pose no danger to life and property during transportation.
    There are several approval provisions contained in the HMR and
associated procedural regulations. Responses to these collections of
information are required to obtain benefits, such as becoming an
approval or certification agency, or to obtain a variance from
packaging or handling requirements based on information provided by the
respondent. These benefits and variances involve areas, for example,
such as UN third-party certification; authorization to examine and test
lighters; authorization to examine and test explosives; and
authorization to re-qualify DOT cylinders. Specifically, the
information collections under this OMB control number include:
    (1) Designated approval agencies, independent cylinder testing
agencies, and prospective foreign manufacturers of cylinders: This
information collection consists of the requirement for parties to
obtain approval from the Associate Administrator in order to become
designated approval agencies, independent cylinder testing agencies, or
prospective foreign manufacturers of cylinders. These designated
approval agencies evaluate the design of packagings used for the
shipments of hazardous materials.
    (2) Approval of Cylinder and Pressure Receptacle Requalifiers: This
information collection pertains to the requirement for approval by the
Associate Administrator to inspect, test, certify, repair, or rebuild a
DOT specification cylinder or a UN pressure receptacle under certain
circumstances. These circumstances include a special permit issued
under this part or a cylinder manufactured in accordance with Transport
Canada's Transportation of Dangerous Good (TDG) Regulations.
    (3) M-Numbers: This information collection consists of assigning M-
numbers to companies involved in the manufacturing, reconditioning,
repairing, or testing of DOT specification containers or cylinders used
for transporting hazardous materials.
    (4) RIN Approval for Cylinders (International Shipments): This
information collection consists of an application that RIN holders can
submit under Sec.  107.805(f)(2), which includes required information
and certifications related to the inspection and requalification of
certain cylinder specifications.
    (5) Competent Authority Approvals: This information collection
consists of additional approval and classification requirements for
transporting certain hazardous materials, such as tear gas devices and
certain organic peroxides. Tear gas devices require additional approval
for transport in closed environments, while certain organic peroxides
require special refrigeration and PHMSA approval to prevent self-
accelerated decomposition.
    (6) Lithium Battery State of Charge Approval: This information
collection consists of an approval process that allows for the
transportation of lithium-ion cells and batteries on cargo aircraft
with a state of charge exceeding 30 percent of their rated capacity.
This is in contrast to the general requirement that such transportation
must occur with a state of charge not exceeding 30 percent of their
rated capacity.
    (7) Alternative Packagings or Test Methods: This information
collection consists of an approval process that allows a person to
offer a hazardous material in transportation with alternative packaging
or test methods, which are not currently authorized in the HMR. The
approvals provide flexibility to the industry by allowing packagings
that are not constructed as per the HMR and permitting specific
testing, test methods, and intervals.
    (8) Infectious Substances: This information collection consists of
a requirement to obtain approval for the transportation of live animals
containing or contaminated with genetically modified micro-organisms,
including those that also meet the Division 6.2 material definition, to
comply with approved terms and conditions set by the Associate
Administrator for Hazardous Materials Safety.
    (9) Testing and Assignment of the Classification of Explosive
Materials: This information collection consists of an approval process
for the testing and assignment of hazard classifications for the
transportation of explosives and explosive devices, including
fireworks, which pose significant technical difficulties and hazards.
Proper hazard classification is crucial for the safe packaging and
handling of these materials during transportation via all modes, as an
incorrect classification could result in improper packaging or

handling and cause damage to property, loss of life, or both.
    (10) Packaging Exception/Exceptions for Division 1.4G Consumer
Fireworks: This information collection consists of an application
process for manufacturers of consumer fireworks to obtain approval and
classification of their products. The process requires the submission
of a complete application containing all relevant information, test
results, and certifications.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

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                                                                   Total annual      Hours per     Total annual
             Information collection                 Respondents      responses       response      burden hours
----------------------------------------------------------------------------------------------------------------
Designated approval agencies, independent                     15              15            4.75              71
 cylinder testing agencies, and prospective
 foreign manufacturers of cylinders.............
Approval of Cylinder and Pressure Receptacle               3,000           3,000           1.105           3,315
 Requalifiers...................................
M Numbers (New Application).....................              30              30            4.75             143
M Numbers (Modifications/Renewals)..............             150             150               1             150
RIN Approval for Cylinders (International                  3,500           3,500           0.852           2,982
 Shipments).....................................
Competent Authority Approvals--Safety                         50             250            4.75           1,188
 Determinations as to the Adequacy of the
 Packagings for Materials with Special Hazards
 (New Applications).............................
Competent Authority Approvals--Safety                        120             480               1             480
 Determinations as to the Adequacy of the
 Packagings for Materials with Special Hazards--
 (Renewals/Modifications/Corrections)...........
Lithium Battery State of Charge Approval........              10              10              40             400
Alternative Packagings or Test Methods..........              24              24            4.75             114
Infectious Substances...........................               5               5            4.75              24
Testing and Assignment of the Classification of              330             330            4.75           1,568
 Explosive Materials--New Applications..........
Testing and Assignment of the Classification of              700             700               1             700
 Explosive Materials--Modifications.............
Packaging Exception/Exceptions for Division 1.4G           3,200           6,400            4.75          30,400
 Consumer Fireworks.............................
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    Affected Public: Business and other entities who must meet the
approval requirements in the HMR.
    Annual Reporting and Recordkeeping Burden:
    Total Number of Respondents: 11,134.
    Total Annual Responses: 14,894.
    Total Annual Burden Hours: 41,535.
    Frequency of Collection: On occasion.
    Title: Rail Carrier and Tank Car Tanks Requirements, Rail Tank Car
Tanks--Transportation of Hazardous Materials by Rail.
    OMB Control Number: 2137-0559.
    Summary: This information collection consolidates and describes the
information provisions in parts 172, 173, 174, 179, and 180 of the HMR
pertaining to the transportation of hazardous materials by rail and the
manufacture, qualification, maintenance, and use of tank cars. The
types of information collected include:
    (1) Tank Car Approvals: This information collection consists of
special provisions that mandate the approval of the Associate
Administrator or the Association of American Railroads (AAR) Committee
on Tank Cars before certain hazardous material packaging or packaging
components can be used for transportation of hazardous materials by
rail.
    (2) AAR approval required when a tank car is proposed for commodity
service other than specified on a certificate of construction: This
information collection consists of requirements for obtaining AAR Tank
Car Committee approval for the use of a tank car for commodities other
than those specified in part 173 and the certificate of construction.
It also includes requirements for AAR approval of tank car design,
materials, construction, conversion, alteration, or construction to a
new specification. This information is used to ensure that tank cars
are suitable for transporting specific commodities and that tank car
design, construction, and modification comply with the relevant
regulations.
    (3) Annual tank car owner progress report to FRA: This information
collection consists of the requirement for tank car owners to submit
progress reports to the Federal Railroad Administration (FRA) if their
tank cars need to be modified to meet the requirements specified in
Sec.  173.31. The FRA uses this information to track progress and
ensure that all affected tank cars are modified before the regulatory
compliance date.
    (4) Compressed Gases and Cryogenic Liquids in Tank Cars and Multi
Unit Tank Cars Reporting: This information collection requires the
shipper to notify the FRA whenever a tank car transporting hydrogen
chloride, refrigerated liquids, or vinyl fluoride, stabilized is not
received by the consignee within 20 days from the date of shipment.
    (5) Reporting to the Bureau of Explosives regarding any
restrictions over any portion of its lines: This information collection
requires each rail carrier to report to the Bureau of Explosives (BOE),
for publication, all information as to any restrictions which it
imposes against the acceptance, delivery, or transportation of any
hazardous materials, over any portion of its lines.
    (6) Nonconforming bulk packages must be repaired or approved from
movement by the FRA: This information collection requires that a bulk
packaging, such as a tank car tank, that no longer conforms to
applicable HMR requirements may not be forwarded by rail unless
repaired or approved for movement by the Associate Administrator for
Safety, FRA. Notification and approval must be furnished in writing or
through telephonic or electronic means, with subsequent written
confirmation provided within two weeks.
    (7) FRA Approval for transportation of bulk packages containing a
hazardous material in COFC or TOFC service: This information collection
requires that the Associate Administrator for Safety, FRA approve the
transportation of bulk packages, such as portable tanks and cargo
tanks, containing a hazardous material in container-on-flatcar (COFC)
or trailer-on-flatcar (TOFC) service if not otherwise authorized for
transportation.
    (8) Division 1.1 or 1.2 explosive material inspection and Car
Certificate requirements: This information collection requires that
before a Division 1.1 or 1.2 explosive materials may be loaded into a
rail car, the car must have

been inspected and certified to be in compliance with the requirements
of Sec.  174.104(b) by a qualified person designated under 49 CFR
215.11.
    (9) Initial marking, requalification marking, and requalification
reporting requirements: This information collection consist of the
requirements for the detail marking of a newly manufactured tank car,
requalification tank car marking requirements, and reporting of details
for a requalified tank car.
    (10) Quality Assurance Program: This information collection
requires facilities that build, repair, and ensure the structural
integrity of tank cars are required to develop and implement a quality
assurance program. This information is used by the facility and DOT
compliance personnel to ensure that each tank car is constructed or
repaired in accordance with the applicable requirements.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

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                                                                   Total annual      Hours per     Total annual
             Information collection                 Respondents      responses       response      burden hours
----------------------------------------------------------------------------------------------------------------
Tank Car Approvals..............................               2               2             6.5              13
AAR approval required when a tank car is                      25            1200           0.167             200
 proposed for commodity service other than
 specified on a certificate of construction.....
Annual tank car owner progress report to FRA....             100             100               1             100
Compressed Gases and Cryogenic Liquids in Tank                 6             141            0.25              35
 Cars and Multi Unit Tank Cars Reporting........
Reporting to the Bureau of Explosives regarding               34              51           0.333              17
 any restrictions over any portion of its lines.
Nonconforming bulk packages must be repaired or              388           4,308             0.4           1,695
 approved from movement by the FRA..............
FRA Approval for transportation of bulk packages               6               6             0.5               3
 containing a hazardous material in COFC or TOFC
 service........................................
Division 1.1 or 1.2 explosive material                        25             600           0.333             200
 inspection and Car Certificate requirements....
Record when a car seal is changed when the car                34             170           0.166              28
 is placarded with Division 1.1 or 1.2 explosive
 materials......................................
Initial marking, requalification marking, and                100          15,000           0.116           1,768
 requalification reporting requirements.........
Quality assurance program.......................              75              75             5.5             413
----------------------------------------------------------------------------------------------------------------

    Affected Public: Manufacturers, owners, and rail carriers of tank.
    Annual Reporting and Recordkeeping Burden:
    Total Number of Respondents: 795.
    Total Annual Responses: 21,653.
    Total Annual Burden Hours: 4,472.
    Frequency of Collection: Annually.
    Title: Testing Requirements for Non-Bulk Packaging.
    OMB Control Number: 2137-0572.
    Summary: These OMB control number describes the information
collections in parts 173 and 180 of the HMR pertaining to the testing
requirements for non-bulk packagings. This OMB control number covers
performance-oriented packaging standards and allows packaging
manufacturers and shippers more flexibility in selecting more
economical packagings for their products. These information collections
also allow customizing the design of packagings to better suit the
transportation environment that they will encounter and encourages
technological innovations, decreases packaging costs, and significantly
reduces the need for special permits. These information collections
specifically include:
    (1) Testing Requirements for Non-Bulk Packaging (Reporting): This
information collection consists of various testing requirements that
must be met by non-bulk packaging, depending on the type of material it
will contain. These include thermal resistance tests for packaging
transporting oxygen cylinders, leakproofness tests for liquid hazardous
materials, hydrostatic pressure tests for metal, plastic, and composite
containers, cooperage tests for bung-type wooden barrels, and
additional testing for packaging intended to contain infectious
substances. The specific tests required may vary based on the outer and
inner packaging material used.
    (2) Additional Test Reports (Reporting): This information
collection consists of the requirement to prepare and maintain a test
report after each design qualification test or periodic retest of a
packaging. The test report must be available to the user of the
packaging or a representative of the DOT upon request and includes
details such as the date, name, and address of the testing facility,
packaging design type, maximum capacity, characteristics of test
contents, and test descriptions and results.
    (3) Test Reports (Recordkeeping): This information collection
requires that test report must be made available to a user of a
packaging or a representative of the DOT, upon request. The test report
includes information such as the date, name, and address of the testing
facility, a description of the packaging design type, the maximum
capacity, characteristics of test contents, and test descriptions and
results.
    (4) Closure Instructions (Reporting): This information collection
consists of the requirement for the manufacturer or certifier of non-
bulk packaging to create closure instructions in accordance with Sec.
178.2(c). These instructions indicate the means of closure with which
the package was tested and ensure that any subsequent shipper maintains
the same level of safety when the package is closed for transportation
of hazardous materials.
    (5) Closure Instructions (Recordkeeping): This information
collection requires that the manufacturer or other person certifying
compliance, along each subsequent distributor of the packaging, provide
closure instructions to each person to whom the packaging is
transferred, as well as any representative of the DOT, for inspection.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

----------------------------------------------------------------------------------------------------------------
                                                                   Total annual      Hours per     Total annual
             Information collection                 Respondents      responses       response      burden hours
----------------------------------------------------------------------------------------------------------------
Testing Requirements for Non-Bulk Packaging--              5,000          15,000           2.016          30,250
 Reporting......................................
Additional Test Reports--Reporting..............              10              30               2              60
Test Reports--Recordkeeping.....................             100           1,000             0.1             100
Closure Instructions--Reporting.................             500             500               2           1,000
Closure Instructions--Recordkeeping.............          16,080          16,080           0.083           1,340
----------------------------------------------------------------------------------------------------------------

    Affected Public: Each non-bulk packaging manufacturer that tests
packagings to ensure compliance with the HMR.
    Annual Reporting and Recordkeeping Burden:
    Total Number of Respondents: 21,690.
    Total Annual Responses: 32,610.
    Total Annual Burden Hours: 32,750.
    Frequency of Collection: On occasion.
    Title: Hazardous Materials Public Sector Training and Planning
Grants.
    OMB Control Number: 2137-0586.
    Summary: This OMB control number describes the information
collections in parts 110 of the HMR pertaining to the procedures for
reimbursable grants for public sector planning and training in support
of the emergency planning and training efforts of States, Indian
tribes, and local communities to manage hazardous materials
emergencies, particularly those involving transportation. Sections in
this part address information collection and recordkeeping with regard
to applying for grants, monitoring expenditures, and reporting and
requesting modifications.
    The following is a list of the information collections and burden
estimates associated with this OMB Control Number:

----------------------------------------------------------------------------------------------------------------
                                                                 Total annual      Hours per       Total annual
           Information collection               Respondents       responses         response       burden hours
----------------------------------------------------------------------------------------------------------------
Hazardous Materials Grants Applications.....              62               62            83.26            5,162
----------------------------------------------------------------------------------------------------------------

    Affected Public: State and local governments, Indian Tribes.
    Annual Reporting and Recordkeeping Burden:
    Total Annual Respondents: 62.
    Annual Responses: 62.
    Annual Burden Hours: 5,162.
    Frequency of Collection: On occasion.

    Issued in Washington, DC, on August 23, 2023.
T. Glenn Foster,
Chief, Regulatory Review and Reinvention Branch, Office of Hazardous
Materials Safety, Pipeline and Hazardous Materials Safety
Administration.
[FR Doc. 2023-18617 Filed 8-28-23; 8:45 am]
BILLING CODE 4910-60-P


[Federal Register Volume 82, Number 27 (Friday, February 10, 2017)]
[Notices]
[Pages 10422-10428]
[FR Doc No: 2017-02736]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79976; File No. SR-NYSEArca-2017-02]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Certain
Rules Related to Flexible Exchange Options

February 6, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on January 25, 2017, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend certain rules related to Flexible
Exchange (``FLEX'') Options. The proposed rule change is available on
the Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

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

1. Purpose
    The purpose of this filing is to amend certain rules related to
FLEX Options, as described below.
    FLEX Options are customized equity or index contracts that allow
investors to tailor contract terms for exchange-listed equity and index
options.\4\ The Exchange is proposing to allow FLEX Options in ByRDs,
make available additional settlement styles, modify how exercise prices
and premiums are expressed, change certain provisions relating to
floor-based trading, and modify other related provisions pertaining to
FLEX Options.
---------------------------------------------------------------------------

    \4\ See Rule 5.30(b)(4) (defining ``FLEX option''). See
generally Section 4, Flexible Exchange Options, Rules 5.30-5.44.
---------------------------------------------------------------------------

FLEX Options for Binary Return Derivatives Contracts (``ByRDs'')
    The Exchange proposes to modify its rules to enable market
participants to trade FLEX options contracts in ByRDs.\5\ Specifically,
the Exchange proposes to add a new definition of ``FLEX ByRDs,'' which
would be a ``Binary Return Derivatives contract on any ByRD-eligible
underlying security that is subject to the rules in this Section.'' \6\
The Exchange also proposes to revise Rule 5.30(b)(15) to include FLEX
ByRDs in the definition of ``Series of FLEX Options.'' \7\ Because FLEX
ByRDs would have to be settled in cash, based on the Volume-Weighted
Average Price (or VWAP) of the underlying security, market participants
could not modify these terms.\8\ However, market participants may trade
FLEX ByRDs with non-standard strike prices and/or non-standard
expiration dates. Regarding position limits, the Exchange proposes to
add paragraph (b)(ii) to Rule 5.35 to provide that positions in FLEX
ByRDs shall be the same as Non-FLEX ByRDs, as set forth in Rule
5.86(a), except that positions in FLEX ByRDs shall be aggregated with
positions in Non-FLEX ByRDs on the same or similar underlying for the
purpose of calculating position limits.\9\ The Exchange also proposes
to include in proposed Rule 5.35(b)(ii) that ``[f]or purposes of the
position limits established under this Rule, long positions in `Finish
Low' and short positions in `Finish High' Binary Return Derivatives
shall be considered to be on the same side of the market; and short
positions in `Finish Low' and long positions in `Finish High' Binary
Return Derivatives shall be considered to be on the same side of the
market.'' \10\ Consistent with these changes, the Exchange also
proposes to define Non-FLEX ByRDs as ``a Non-FLEX Option that is a
Binary Return Derivatives contract,'' in new paragraph (b)(22) to Rule
5.30. The Exchange believes that FLEX ByRDs would enable market
participants to negotiate terms that differ from standardized ByRDs,
which would, in turn, provide greater opportunities for investors to
manage risk through the use of FLEX Options.\11\ The Exchange notes
that the proposed rules related to FLEX ByRDs are materially identical
to rules recently approved on another options exchange.\12\
---------------------------------------------------------------------------

    \5\ ByRDs are European-style option contracts on individual
stocks, exchange-traded funds (``ETFs'') and Index-Linked Securities
that have a fixed return in cash based on a set strike price;
satisfy specified listing criteria; and may only be exercised at
expiration pursuant to the Rules of the Options Clearing Corporation
(the ``OCC''). See Rules 5.82(b), 5.90. For a description of
``Exchange-Traded Fund Shares'' and ``Index-Linked Securities,'' see
also Rule 5.3(g) and (j).
    \6\ See proposed Rule 5.30(b)(19).
    \7\ See proposed Rule 5.30(b)(15) (proposing to add that a
``Series of FLEX Options'' would include, in the case of FLEX ByRDs,
all such option contracts of the same class having the same
expiration date, strike price, and exercise settlement amount).
    \8\ See ``Statutory Basis'' section herein (in the second
paragraph) for further discussion.
    \9\ The Exchange also proposes to re-format Rule 5.35 to make
clear the position limits that apply to each of FLEX Index Options
and FLEX Equity Options. In this regard, the Exchange proposes to
modify the title of the Rule 5.35 to remove reference to ``Index''
and re-titled it as ``Position Limits for FLEX Options.'' Further,
the Exchange proposes reformatting changes to clarify that Rule
5.35(a), with proposed sub-parts (i) and (ii), refers to FLEX Index
Options and proposed Rule 5.35(b), refers to FLEX Equity Options.
Finally, the Exchange proposes to re-locate current paragraph (d) to
Rule 5.35 regarding the aggregation of position limits for FLEX
Index Options to proposed paragraph (a)(iii), which would add
clarity and consistency to Exchange rules. See proposed Rule 5.35(a)
and (b).
    \10\ See ``Statutory Basis'' section herein (in the third
paragraph) for further discussion.
    \11\ The Exchange also proposes to modify Rule 5.32(f)(3)(ii) to
provide that FLEX ByRDs must be settled the same as non-FLEX ByRDs.
See proposed Rule 5.32(f)(3)(ii) (discussed herein under
``Additional Updates to Reflect Trading in FLEX Options''); see also
Rule 5.89 (Determination of the Settlement Price of ByRDs).
    \12\ See Securities Exchange Act Release Nos. 79125 (October 19,
2016), 81 FR 73452 (October 25, 2016) (``MKT Approval Order '')
(order approving modifications to FLEX Options, including adding
FLEX ByRDs); 78348 (July 15, 2016), 81 FR 47469 (July 21, 2016)
(``MKT Notice'') (SR-NYSEMKT-2016-48). See also NYSE MKT Rules
900G(b)(16),(17), (22); 903G(c)(3)(i)-(ii); 906G(b)(ii).
---------------------------------------------------------------------------

Additional Settlement Styles for FLEX Options: Asian and Cliquet Style
    The Exchange proposes to permit parties to FLEX Index Options on

Broad-Based Index Options to designate Asian style settlement and
Cliquet style settlement, both of which are currently offered on
another options exchange.\13\
---------------------------------------------------------------------------

    \13\ See e.g., Chicago Board Options Exchange, Inc. (``CBOE'')
Rules 24A.1 (Definitions), 24A.4 (Terms of FLEX Options), 24B.1
(Definitions) and 24B.4 (Terms of FLEX Options). See also NYSE MKT
Rules 900G(b)(18), (19); 903G(b)(4),(5). FLEX ByRDs could not be
settled using Asian or Cliquet settlement. See, e.g., supra note 11.
---------------------------------------------------------------------------

    As proposed in new paragraph (e)(5) of Rule 5.32 and new paragraph
(b)(20) of Rule 5.30, FLEX Index Options on Broad-Based Index Options
with Asian style settlement would be cash-settled call \14\ option
contracts for which the final payout would be based on an arithmetic
average of specified closing prices of an underlying Broad-Based Index
taken on twelve predetermined monthly observation dates, including the
expiration date (``Asian option''). The monthly observation dates would
be determined by working backwards from the farthest out observation
date prior to the expiration date. When the scheduled observation date
for an Asian option occurs on a holiday or a weekend, the observation
would occur on the immediately preceding business day. The exercise
settlement amount for Asian options would be calculated similarly to
other options (i.e., the difference between the strike price and the
averaged settlement value would determine the value, or ``moneyness''
of the contract at expiration). Asian options would have a term of
approximately one year and would expire anytime from 350 to 371 days
(i.e., approximately 50 to 53 calendar weeks) from the date of initial
listing. The contract multiplier (or Index Multiplier) for an Asian
option that settles in U.S. dollars would be $100, for example.\15\
Finally, because settlement value is determined by observations taken
over a 12-month period, Asian style settlement requires European-style
exercise. An example of an Asian FLEX call option expiring in-the-money
follows. On January 21, 2015, an investor hedging the value of XYZ
Index over a year purchases a call option expiring on January 22, 2016
with a strike price of 2000 and a contract multiplier of $100. The
option has monthly observation dates occurring on the 23rd of each
month.
---------------------------------------------------------------------------

    \14\ Puts would not be permitted.
    \15\ See Rule 5.30(b)(9) providing that Index Multiplier means
the monetary amount, stated in terms of the settlement currency
specified in the contract, by which the current index value is to be
multiplied to arrive at the value required to be delivered to the
holder of a call or by the holder of a put upon valid exercise of
the option and setting forth the established Index Multipliers for
FLEX Index Options on domestic indices.

------------------------------------------------------------------------
       Monthly observation date              XYZ index closing value
------------------------------------------------------------------------
23-Feb-15.............................  2025.36.
23-Mar-15.............................  2049.34.
23-Apr-15.............................  2019.77.
22-May-15*............................  1989.65.
23-Jun-15.............................  2005.64.
23-Jul-15.............................  2035.10.
21-Aug-15*............................  2032.15.
23-Sep-15.............................  2076.18.
23-Oct-15.............................  2099.01.
23-Nov-15.............................  2109.32.
23-Dec-15.............................  2085.42.
22-Jan-16.............................  2084.81.
                                       ---------------------------------
  Exercise (Averaged) Settlement Value  24,611.75/12 = 2050.98.
------------------------------------------------------------------------
\*\ Because Asian FLEX options use the ``preceding business day
  convention,'' the dates of May 23, 2015 and August 23, 2015, were not
  used in the above example because those dates will fall on a weekend
  or a holiday. Instead the business days immediately preceding those
  dates were used as the monthly observation date.

    If, in the above example, the strike price for the Asian FLEX call
option was 2060, that contract would have expired out-of-the-money.
This is because the exercise settlement value for this 2060 call option
is equal to 2050.98 (when rounded). Since the strike price of 2060 is
more than the 2050.98 exercise settlement value, this option would not
be exercised and would expire worthless.
    As proposed in new paragraph (e)(6) of Rule 5.32 and new paragraph
(b)(21) of Rule 5.30, FLEX Index Options on Broad-Based Index Options
with Cliquet style settlement would be cash-settled call \16\ option
contracts for which the final payout would be based on the sum of
monthly returns (i.e., percent changes in the closing value of the
underlying Broad-Based Index from one month to the next), subject to a
monthly return ``cap'' (e.g., 3%), applied over twelve monthly
observation dates (``Cliquet option''). Cliquet options would have a
term of approximately one year and would expire anytime from 350 to 371
days (which is approximately 50 to 53 calendar weeks) from the date of
initial listing. The contract multiplier for a Cliquet option that
settles in U.S. dollars, for example, would be $100.\17\
---------------------------------------------------------------------------

    \16\ Puts would not be permitted.
    \17\ See id.
---------------------------------------------------------------------------

    The parties to a Cliquet option would designate a set of monthly
observation dates for each contract and an expiration date for each
contract. The monthly observation date would be the date each month on
which the price of the underlying broad-based index would be observed
for the purpose of calculating the exercise settlement value for
Cliquet FLEX Options. Each Cliquet FLEX Option would have 12
consecutive monthly observation dates (which includes an observation on
the expiration date) and each observation would be based on the closing
price of the underlying broad-based index. The specific monthly
observation dates would be determined by working backwards from the
farthest out observation date prior to the expiration date. When the
scheduled observation date for a Cliquet option occurs on a holiday or
a weekend, the observation would occur on the immediately preceding
business day. The parties may not designate a subsequent business day
convention for Cliquet options.
    The parties to a Cliquet option would designate a capped monthly
return (percent change in the closing values of the underlying broad-
based index from one month to the next month) for the contract, which
would be the maximum monthly return that would be included in the
calculation of the exercise settlement value for the contract. On each
monthly observation date, the Exchange would determine the actual
monthly return (the percent change of the underlying broad-based index)
using the closing value of the broad-based index on the current monthly
observation date and the closing value of the broad-based index on the
previous monthly observation date. The Exchange would then compare the
actual monthly return to the capped monthly return. The value to be
included as the monthly return for a Cliquet option would be the lesser
of the actual monthly return or the capped monthly return.
    For example, if the actual monthly return of the underlying broad-
based index was 1.75% and the designated capped monthly return for a
Cliquet option was 2%, the 1.75% value would be included (and not the
2%) as the value for the observation date to determine the exercise
settlement value. Using this same example, if the actual monthly return
of the underlying broad-based index was 3.30%, the 2% value would be
included (and not the 3.30%) as the value of the observation date to
determine the exercise settlement value. This latter example
illustrates that Cliquet options have a capped upside. Cliquet options
do not, however, have a capped downside for the monthly return that
would be included in determining the exercise settlement value. Drawing
on this same example, if the actual monthly return of the underlying
broad-based index was -4.07%, the -4.07% value would be included as the
value for the observation date to determine the exercise settlement
value. There would be, however, be a global floor for Cliquet

options so that if the sum of the monthly returns is negative, a
Cliquet option would expire worthless.
    Unlike other options, Cliquet options would not have a traditional
exercise (strike) price. Rather, the exercise (strike) price field for
a Cliquet option would represent the designated capped monthly return
for the contract and would be expressed in dollars and cents. For
example, a capped monthly return of 2.25% would be represented by the
dollar amount of $2.25. The ``strike'' price for a Cliquet option may
only be expressed in a dollar and cents amount and the ``strike'' price
for a Cliquet option may only span a range between $0.05 and $25.95. In
addition, the ``strike'' price for a Cliquet option may only be
designated in $0.05 increments, e.g., $1.75, $2.50, $4.15. Increments
of $0.01 in the ``strike'' price field (representing the capped monthly
return) would not be permitted.
    The first ``monthly'' return for a Cliquet option would be based on
the initial reference value, which would be the closing value of the
underlying broad-based index on the date a new Cliquet option is
listed. The time period measured for the first ``monthly'' return would
be between the initial listing date and the first monthly observation
date. For example, if a Cliquet option was opened on January 1 and the
parties designated the 31st of each month as the monthly observation
date, the measurement period for the first monthly return would span
the time period from January 1 to January 31. The time period measured
for the second monthly return, and all subsequent monthly returns,
would run from the 31st of one month to the 31st of the next month (or
the last Exchange business day of each month depending on the actual
number of calendar days in each month covered by the contract).
    Cliquet options would have European-style exercise and may not be
exercised prior to the expiration date. The exercise settlement value
for Cliquet options would be equal to the initial reference price of
the underlying broad-based index multiplied by the sum of the monthly
returns (with the cap applied) on the 12 consecutive monthly
observation dates, which include the expiration date of the option,
provided that the sum is greater than 0. If the sum of the monthly
returns (with the applied cap) is 0 or a less, the option would expire
worthless.
    An example of a Cliquet option follows. On January 21, 2015, an
investor hedging the value of the S&P 500 Index over a year purchases a
Cliquet FLEX call option expiring on January 22, 2016 with a capped
monthly return of 2% and a contract multiplier of $100. The initial
reference price of the S&P 500 Index (closing value) on January 21,
2015 is 2000. The option has monthly observation dates occurring on the
23rd of each month.

----------------------------------------------------------------------------------------------------------------
                                                                                Capped
                                                  S&P 500  index      Actual          monthly         Sum of
            Monthly observation date               closing value      monthly     return  (CMRi)      monthly
                                                       (Si)          return %            %           returns %
----------------------------------------------------------------------------------------------------------------
23-Feb-15.......................................         2025.36            1.27            1.27            1.27
23-Mar-15.......................................         2049.34            1.18            1.18            2.45
23-Apr-15.......................................         2019.77           -1.44           -1.44            1.01
22-May-15*......................................         1989.65           -1.49           -1.49           -0.48
23-Jun-15.......................................         2005.64            0.80            0.80            0.32
23-Jul-15.......................................         2035.10            1.47            1.47            1.79
21-Aug-15*......................................         2032.15           -0.14           -0.14            1.65
23-Sep-15.......................................         2076.18            2.17          **2.00            3.65
23-Oct-15.......................................         2099.01            1.10            1.10            4.75
23-Nov-15.......................................         2109.32            0.49            0.49            5.24
23-Dec-15.......................................         2085.42           -1.13           -1.13            4.11
22-Jan-16.......................................         2084.81           -0.03           -0.03            4.08
                                                 ---------------------------------------------------------------
Exercise Settlement Value.......................                  [(4.08% * 2000.00)] + 2 = 83.60
----------------------------------------------------------------------------------------------------------------
\*\ Because Cliquet FLEX options use the ``preceding business day convention,'' the dates of May 23, 2015, and
  August 23, 2015, were not used in the above example because those dates fall on a weekend or a holiday.
  Instead the business days immediately preceding those dates were used as the monthly observation dates.
\**\ Monthly capped return applied.

    The exercise settlement amount for this January 22, 2016 Cliquet
option, with a capped monthly 2% return (``strike price'') and a
contract multiplier of $100 would be equal to $8,360. This value would
be calculated by summing the monthly capped returns (equal to 4.08%)
and multiplying that amount by the initial reference price (equal to
2000), which equals 81.60. The ``strike price'' (2%) amount would then
be added to that amount (81.60) to arrive at an exercise settlement
value of 83.60. Because the ``strike price'' field for a Cliquet option
would be the manner in which the designated capped monthly return would
be identified for the contract and because the designated monthly
return for the contract would have been already substantively applied
to determine the exercise settlement value, the ``strike price'' of 2.0
would be subtracted from the exercise settlement value before the
contract multiplier ($100) would be applied [(83.60--2) * 100].
Accordingly, resulting payout for this contract would be $8,160.
    If the sum of the monthly capped returns had been negative, this
option would have expired worthless.
    Regarding the proposed settlement styles, the Exchange would use
the same surveillance procedures currently utilized for the Exchange's
other FLEX Options, including FLEX Index Options.\18\ The Exchange
further represents that these surveillance procedures will be adequate
to monitor trading in these option products. For surveillance purposes,
the Exchange would have access to information regarding trading
activity in the pertinent underlying securities.
---------------------------------------------------------------------------

    \18\ See ``Statutory Basis'' section herein (in the fourth
paragraph) for further discussion.
---------------------------------------------------------------------------

FLEX Exercise Prices and Premiums
    The Exchange also proposes to modify how exercise prices and
premiums for FLEX Options may be expressed, which would reflect recent
changes in the marketplace. The Exchange notes that when it adopted
rules for FLEX Options,

strike prices were designated in one-eighth of a dollar, and options
were priced in fractions of a dollar.\19\ Now that decimalization has
been applied to options trading, including trading in FLEX Options,
certain exchange rules have been revised to reflect the decimal
equivalent of a previously approved fractional term. Thus, the Exchange
proposes to collapse current Rules 5.32(f)(2) and (f)(5) into a revised
Rule 5.32(f)(2), to provide that exercise prices and premiums may be
stated in terms of:
---------------------------------------------------------------------------

    \19\ See Rule 5.32(f)(2) (providing that exercise prices may be
rounded to the nearest .10 or one-eighth of a dollar) and (f)(5)
(providing that exercise prices may be rounded to the nearest .10).
---------------------------------------------------------------------------

    (i) A dollar amount; (ii) a method for fixing such a number at the
time a FLEX Request for Quote or FLEX Order is traded; or (iii) a
percentage of the price of the underlying security at the time of the
trade or as of the close of trading on the Exchange on the trade date.
    The Exchange notes that this change would align with the Exchange's
treatment of FLEX Index Options as well as the rules of other
exchanges.\20\ In addition, the Exchange proposes to modify Rule 5.32
by adding new paragraph (e)(2)(C) and modifying paragraph (f)(2) to
provide that:
---------------------------------------------------------------------------

    \20\ See, e.g., Rule 5.32(e)(2); CBOE Rule 24A.4(b)(2) and
(c)(2); NYSE MKT Rules 903G(b)(1), (c)(2).

    Exercise prices may be rounded to the nearest minimum tick or
other decimal increment determined by the Exchange on a class-by-
class basis that may not be smaller than $0.01. Premiums will be
rounded to the nearest minimum tick. For exercise prices and
premiums stated using a percentage-based methodology, such values
may be stated in a percentage increment determined by the Exchange
on a class-by-class basis that may not be smaller than 0.01% and
will be rounded as provided above.\21\
---------------------------------------------------------------------------

    \21\ See proposed Rule 5.32(e)(2)(C) and (f)(2). The proposed
rule removes reference to exercise prices being rounded to the
nearest tenth or one-eighth of a dollar. See id.

    The Exchange notes that this proposed change is consistent with the
rules of another options exchange.\22\ The Exchange believes this
change would provide greater flexibility in terms of describing an
option contract tailored to the needs of the investor.
---------------------------------------------------------------------------

    \22\ See, e.g., CBOE Rule 24A.4(b)(2) (permitting bids and
offers, strikes and premiums to be expressed in increments
determined by the Exchange, which increments may be no smaller than
$0.01). See also NYSE MKT Rules 903G(b)(1), (c)(2).
---------------------------------------------------------------------------

Additional Updates To Reflect Trading in FLEX Options
    The Exchange is also proposing the following modifications to
streamline and update FLEX Options Rules:
     ``FLEX'' Options. The Exchange proposes to define ``FLEX''
as shorthand for Flexible Options in the title of Section 4.\23\
---------------------------------------------------------------------------

    \23\ See proposed Section 4 (Flexible Exchange (``FLEX'')
Options). The Exchange also proposes to revise Rule 5.30(b)(2) to
remove an errant semi-colon from the term ``BBO Improvement
Interval.''
---------------------------------------------------------------------------

     Flex Post Official. The Exchange proposes to modify the
name of ``FLEX Post Official'' to eliminate ``Post'' from the title to
more accurately reflect the position.\24\ When the Exchange first began
trading FLEX Options, it designated FLEX Post Officials to refer to
specially qualified Trading Officials stationed at specific FLEX posts
to address the nuances related to those products (e.g., the method for
announcing a Request for Quotes and appointing FLEX Qualified Market
Makers). However, as trading in FLEX Options gained popularity, it
became apparent that liquidity for FLEX Options was more readily
available at trading posts where the standard options in the underlying
security traded rather than at a specific FLEX post. Thus, the Exchange
proposes to change the name of ``FLEX Post Official'' in Rules
5.30(b)(7) and 5.38 to eliminate the reference to physical FLEX posts
and to refer simply to ``FLEX Officials'', which would better reflect
the realities of trading FLEX Options on the Exchange and clarify and
add transparency to Exchange rules.\25\
---------------------------------------------------------------------------

    \24\ See proposed Rule 5.30(b)(7) and 5.38.
    \25\ See proposed Rules 5.30(b)(7), 5.37(c), and 5.38.
Similarly, because there are no longer physical posts on the Trading
Floor that are solely ``FLEX posts,'' the Exchange proposes to
remove the FLEX modifier from Rule 5.33(b)(1) and Rule 6.78(e)(1)(C)
and (E) (Transactions Off the Exchange), such that the revised rule
text refers only to a ``post.'' See proposed Rules 5.33(b)(1) and
6.78(e)(1)(C), (E).
---------------------------------------------------------------------------

     FLEX Trading Procedures and Principles. The Exchange
proposes to modify Rule 5.33 (FLEX Trading Procedures and Principles)
to likewise update the rule text to accurately reflect trading in FLEX
Options. First, the Exchange proposes to modify paragraphs (a)(1) and
(2) of Rule 5.33, which provide that FLEX Market Makers handle Requests
for Quotes from OTP Holders and OTP Firms when, [sic] to more
appropriately reflect that FLEX Officials conduct this work on the
Exchange. Thus, the Exchange proposes to replace references to FLEX
Market Maker with FLEX Official in Rule 5.33(a)(1)-(2).\26\ The
Exchange notes that FLEX Officials are Exchange employees that report
to the regulatory officer of the Exchange. As such, the Exchange would
ensure that each FLEX Official, or any other designated qualified
employees called in to assist the FLEX Official, are properly qualified
and meet any necessary requirements.\27\ The Exchange believes the
regulatory oversight of FLEX transactions by a properly qualified FLEX
Official could help to ensure that FLEX transactions comply with the
FLEX rules.\28\ The proposal to replace certain duties of a FLEX Market
Maker with respect to FLEX Options transactions with duties assigned to
a FLEX Official, who is an Exchange employee, is consistent with the
FLEX rules of other exchanges.\29\ Second, consistent with the
foregoing changes, the Exchange proposes to modify Rule 5.33(a)(2) and
(c)(1)-(3) to more accurately reflect the handling of FLEX Quotes and
requests for such quotes. When the Exchange introduced FLEX Options,
the Exchange displayed FLEX Request for Quotes and FLEX Quotes at the
FLEX post. However, over time, Floor Participants would ask Floor
Brokers to communicate the existence of trading interest in particular
FLEX Options through various means to their customers and
correspondents. Thus, the Exchange proposes to revise the rules to
reflect that the FLEX Request for Quotes or the FLEX Quotes are
``disseminated'' (rather than displayed), which would add clarity and
transparency to Exchange rules.\30\
---------------------------------------------------------------------------

    \26\ The Exchange notes that reference to FLEX Official is
consistent with proposed Rule 5.30(b)(7).
    \27\ See proposed Rule 5.38 (detailing duties of Exchange
employees designated to act as FLEX Officials).
    \28\ See id.
    \29\ See, e.g., CBOE Rule 24A.5(a)(i) and (ii), 24A.12(b) ; MKT
Rule 900G(21) and 910G [sic].
    \30\ See proposed Rule 5.33(a)(2) and (c)(1)-(3).
---------------------------------------------------------------------------

     Obsolete Foreign Currencies. The Exchange proposes to
modify rule text relating to FLEX Options to remove obsolete references
to foreign currencies that are no longer in circulation, which would
add clarity and transparency to Exchange rules. Specifically, the
Exchange proposes to remove references in the FLEX rules to Deutsche
Marks and French Francs.\31\
---------------------------------------------------------------------------

    \31\ See proposed Rules 5.30(b)(9), 5.32(e)(4), 5.33(g).
---------------------------------------------------------------------------

     FLEX Options Trading. The Exchange proposes to collapse
the two separate current Rules 5.31(a) (Hours of Trading) and 5.31(b)
(Trading Rotations) into a single proposed Rule 5.31, FLEX Option
Trading, with the paragraphs (a) and (b) providing the same headings
and substantive rule text, which would add internal consistency to the
format of Exchange rules.\32\
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    \32\ See proposed Rule 5.31. The Exchange proposes two non-
substantive revisions to existing rule text to add the word
``Options'' after ``FLEX'' and capitalizing the ``o'' in Options at
the end of paragraph (a). Both changes would add clarity to Exchange
rules by consistently referring to the defined term ``FLEX
Options.'' See proposed Rule 5.31(a).

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     Terms of FLEX Options. The Exchange proposes to modify
several aspects of Rule 5.32 (Terms of FLEX Options). First, the
Exchange proposes to clarify that each FLEX Request for Quote and FLEX
contract must contain the underlying security in the case of FLEX
Equity Options or (rather than ``and'') underlying index, in the case
of FLEX Index Options.\33\ The Exchange believes this change would add
clarity and transparency to Exchange rules.
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    \33\ See proposed Rule 5.32(b)(1). The Exchange also proposes to
modify the punctuation Rule 5.32(b)(6) from a period to a semi-colon
and to add the word ``and'' to add internal consistency to Exchange
rules.
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    Second, the Exchange proposes to modify Rule 5.32(b)(7) to make
clear that the minimum size of one contract for FLEX Options applies to
both transactions (per current rule text) ``and quotations'' (per
proposed rule text). This proposed change corresponds to the
Commission's approval, in 2014, of the Exchange's proposal to adopt on
a permanent basis its pilot program regarding minimum value sizes for
opening transactions in new series of FLEX Options and FLEX Quotes.\34\
The Exchange believes this change would add clarity and transparency to
Exchange rules.
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    \34\ See Securities and Exchange Act Release No. 72537 (July 3,
2014) 79 FR 39442 (July 10, 2014) (SR-NYSEArca-2014-25). In
addition, the Exchange proposes to eliminate text from Rule 5.36(b)-
(c) (Exercise Limits) that contradicts the approved one contract
minimum size for FLEX transactions.
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    The Exchange is proposing to modify Rule 5.32(f)(3) to address
exercise settlement of FLEX Options that are FLEX ByRDs, as the current
rule only addresses exercise settlement by physical delivery.\35\
Specifically, the Exchange proposes to designate the current
description of exercise settlement by physical delivery as paragraph
(3)(i) and to make clear this provisions applies solely to FLEX Equity
Options other than FLEX ByRDs. Finally, the Exchange proposes paragraph
(3)(ii) to state that exercise settlement and style of FLEX ByRDs would
be the same as Non-FLEX ByRDs, pursuant to the VWAP settlement
provision set forth in Rule 5.89 and pursuant to the European exercise
style set forth in Rule 5.82(b)(1).'' \36\
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    \35\ Rule 5.32(f)(3) currently provides that ``[e]xercise
settlement shall be by physical delivery of the underlying security
or Exchange-Traded Fund Shares.''
    \36\ See proposed Rule 5.32(f)(3)(i)-(ii).
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    Finally, the Exchange also proposes to modify Commentary .01 to
Rule 5.32, to provide that FLEX Options may be permitted in puts and
calls that do not have identical terms, including, as proposed, ``the
same settlement style.'' Commentary .01 to Rule 5.32 is designed to
prevent the trading of a FLEX Option that has the exact same terms
(underlying security, exercise style, expiration date, exercise price
and, as proposed, settlement style) as a Standard or (non-FLEX) Option.
In other words, as long as just one term of the FLEX Option is
different from an existing ``regular'' or ``non-FLEX'' option it may be
traded as a FLEX Option.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\37\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\38\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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    \37\ 15 U.S.C. 78f(b).
    \38\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to add FLEX ByRDs would
remove impediments to and perfect the mechanism of a free and open
market as FLEX ByRDs would enable market participants to negotiate
terms that differ from standardized ByRDs, which would, in turn provide
greater opportunities for investors to manage risk through the use of
FLEX Options to the benefit of investors and the public interest. The
Exchange notes that ByRDs are subject to heightened initial and
continued listing standards and the settlement price based on an all-
day VWAP, which should address any potential manipulation concerns.\39\
The Exchange believes that specifying that FLEX ByRDs can only be
traded on ByRDs-eligible underlying securities that meet the same
heightened initial and continued listing standards as ByRDs, thereby
helping to ensure that only highly capitalized, actively traded stocks
and ETFs will underlie cash-settled FLEX ByRDs, as well as requiring
settlement based on all-day VWAP (as required for standardized ByRDs),
should help to mitigate concerns about manipulation in the underlying
security to benefit a position in FLEX ByRDs.\40\
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    \39\ See Securities Exchange Act Release No. 56251 (August 14,
2007), 72 FR 46523, 46524 (August 20, 2007) (SR-Amex-2004-27)
(``ByRDs Order''). See also Securities Exchange Act Release No.
77044 (February 3, 2016), 81 FR 6908 (February 3, 2016) (SR-Arca-
2016-16) (immediate effectiveness filing adopting rules relating to
ByRDs).
    \40\ See MKT Approval Order, supra note 12, 81 FR at 73457.
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    The Exchange further believes that establishing position limits for
FLEX ByRDs to be the same as Non-FLEX ByRDs position limits, which are
currently 25,000 contracts on the same side of the market,\41\ and
aggregating positions in Flex ByRDs with Non-FLEX ByRDs on the same or
similar underlying security for purposes of calculating position limits
is reasonable and consistent with the Act. In approving position limits
for ByRDs, the Commission noted that these position limits appeared to
reasonably balance the promotion of a free and open market for these
securities with minimization of incentives for market manipulation.\42\
By establishing the same position limits for FLEX ByRDs as for Non-FLEX
ByRDs and, importantly, aggregating such positions on the same side of
the market,\43\ the Exchange similarly believes that the position limit
requirements for FLEX ByRDs should help to ensure that the trading of
FLEX ByRDs would not increase the potential for manipulation and could
help to minimize such incentives. Moreover, as noted above, because
FLEX ByRDs must, like standardized ByRDs, be cash settled, European-
style exercise, with a settlement price based on an all-day VWAP (and
meet heightened listing and continued listing standards), unlike other
FLEX Options, the only non-standardized terms that can be flexed are
strike prices and expiration dates. Further, the Exchange would surveil
trading in FLEX ByRDs utilizing existing surveillance procedures
pertaining to Non-FLEX ByRDs and FLEX Options. Finally, the Exchange
notes that its proposal to offer FLEX ByRDs is consistent with the
rules of another options exchange and therefore raise no novel issues
for the Commission.\44\
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    \41\ The exercise limits for FLEX ByRDs will be equivalent to
the position limits for FLEX ByRDs described in proposed Rule
5.35(b)(ii). See Rule 5.36.
    \42\ See ByRDs Order, supra note 39, 72 FR at 76525.
    \43\ For purposes of these position limits, long positions in
``Finish Low'' and short positions in ``Finish High'' ByRDs would be
considered to be on the same side of the market; and short positions
in ``Finish Low'' and long positions in ``Finish High'' ByRDs would
be considered to be on the same side of the market. See proposed
Rule 5.35 (b)(ii).
    \44\ See MKT Approval Order, supra note 12.
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    The Exchange believes that the proposal to permit additional
settlement types--Asian and Cliquet--would remove impediments to and
perfect the

mechanism of a free and open market because the proposed rule change
would provide OTP Holders with enhanced methods to manage risk by more
finely tailoring a FLEX Option, within specified limits, to the
underlying security or index through a variety of settlement
calculations and styles. In addition, this proposal would promote just
and equitable principles of trade and protect investors and the general
public because the additional settlement styles for FLEX Options would
provide investors with additional trading and hedging tools. The
Exchange also believes that the Exchange's proposal to allow Asian and
Cliquet style settlement for FLEX Index Options on Broad-Based Index
Options may give investors and other market participants the ability to
individually tailor, within specified limits, certain terms of those
options. Furthermore, the Exchange believes that, since both Asian and
Cliquet settlement styles depend on multiple measurements in
determining the settlement value, both settlement styles could to help
mitigate the potential for manipulation in the underlying
security(ies). Further, the Exchange notes that its proposal to offer
Asian and Cliquet-style settlement for FLEX Index Options is consistent
with the rules of another options exchange and therefore raise no novel
issues for the Commission.\45\
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    \45\ See supra note 13.
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    The Exchange believes the proposed changes to FLEX Exercise Prices
and Premiums would remove impediments to and perfect the mechanism of a
free and open market as this change would provide greater flexibility
in terms of describing an option contract tailored to the needs of the
investor. In addition, the Exchange believes that the proposal to
specify how exercise prices and premium for FLEX Index Options and FLEX
Equity Options will be rounded and how they will be stated using a
percentage-based methodology should provide greater clarity and allow
market participants to specify contracts that meet their particular
needs. In addition, the proposed changes would promote internal
consistency in our own rules (including by removing a reference to
fraction pricing to be consistent with the shift to decimal pricing
found elsewhere in Exchange rules) and would align our rules with that
of another options exchange and therefore raise no novel issues for the
Commission.\46\
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    \46\ See supra note 20.
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    Regarding the proposed settlement styles, the Exchange would use
the same surveillance procedures currently utilized for the Exchange's
other FLEX Options, including FLEX Index Options. The Exchange further
represents that these surveillance procedures shall be adequate to
monitor trading in options on these option products. For surveillance
purposes, the Exchange would have complete access to information
regarding trading activity in the pertinent underlying securities.
    The Exchange believes the proposal to provide that FLEX Officials,
and not FLEX Market Makers, would be responsible for assuring that a
Request for Quotes is submitted properly as a FLEX Option and for
displaying the terms and specifications of the Request for Quotes would
remove impediments to and perfect the mechanism of a free and open
market as the regulatory oversight of FLEX transactions by a properly
qualified FLEX Official could help to ensure that FLEX transactions
comply with the FLEX rules.
    Finally, the remaining proposed changes to FLEX Options would
remove impediments to and perfect the mechanism of a free and open
market as the changes correct inaccuracies in rule text and update the
rules to better reflect the Exchange's current practices with respect
to FLEX Options, which have evolved over time. In particular, the
Exchange believes that the proposed changes to refer to FLEX Requests
for Quotes and FLEX Quotes as being disseminated and remove the concept
of a post specific to the trading of FLEX options will align the rules
with current trading practices on the Exchange's floor. The Exchange
believes the proposed changes would provide transparency and internal
consistency within Exchange rules and operate to protect investors and
the investing public by making the Exchange rules easier to navigate
and comprehend.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposal is designed to
increase competition for order flow on the Exchange in a manner that is
beneficial to investors because it is designed to provide investors
seeking to effect FLEX Option orders with the opportunity for different
methods of settling option contracts at expiration. The proposed
changes are also designed to update Exchange rules regarding FLEX
Options, including by removing obsolete references, which should
likewise improve the competitiveness of the Exchange by making it a
more attractive venue for trading.
    The Exchange notes that it operates in a highly competitive market
in which market participants can readily direct order flow to competing
venues who offer similar functionality. The Exchange also believes the
proposed rule change promotes competition because it would enable the
Exchange to provide market participants with FLEX Options transaction
possibilities that are similar to that of other options exchanges. The
Exchange believes the proposed rules encourage competition amongst
market participants to provide tailored FLEX Options contracts.

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

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \47\ and Rule 19b-4(f)(6) thereunder.\48\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \47\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \48\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \49\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \49\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing,

including whether the proposed rule change is consistent with the Act.
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2017-02 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2017-02. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2017-02, and should
be submitted on or before March 3, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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    \50\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02736 Filed 2-9-17; 8:45 am]
 BILLING CODE 8011-01-P