EPA REGISTRATION DIVISION COMPANY NOTICE OF FILING FOR PESTICIDE PETITIONS PUBLISHED IN THE FEDERAL REGISTER

EPA Registration Division contact: Kathryn Montague,<PHONE_NUMBER>

Syngenta Crop Protection, LLC

PP# [2E8098]

      EPA has received a pesticide petition PP# ([2E8098]) from Syngenta Crop Protection, LLC, P.O. Box 18300, Greensboro, NC 27419-8300 requesting, pursuant to section 408(d) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), to amend 40 CFR part 180

      1. by establishing an import tolerance for residues of

      Bicyclopyrone:  4-hydroxy-3-{2-[(2-methoxyethoxy)methyl}-6-(trifluoromethyl)-3-pyridylcarbonyl}bicyclo[3.2.1]oct-3-en-2-one, in or on the raw agricultural commodities: sugarcane, stalks at 0.01 parts per million (ppm). EPA has determined that the petition contains data or information regarding the elements set forth in section 408 (d) (2) of  FDDCA; however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data supports granting of the petition. Additional data may be needed before EPA rules on the petition.

A. Residue Chemistry

   	1. Plant metabolism.
      Syngenta believes the studies supporting this bicyclopyrone petition well characterize metabolism in plants.  The metabolism profile supports the use of an analytical enforcement method that accounts for parent bicyclopyrone. The metabolism and distribution of NOA449280 has been investigated in corn and sugarcane.   For this study, NOA449280 radiolabelled with 14C in either the pyridine or the bicyclooctenone ring was used. The uptake, distribution and degradation of NOA449280 were investigated in sugarcane by a single treatment at a nominal rate of 300 g ai/ha post emergence to the cane at the 7-8 leaf stage (BBCH 17-18). Foliage samples were taken 42 days after treatment (BBCH 23-24) to facilitate determination of the biotransformation pathway.  Foliage (all leaves) and cane were collected at maturity, 301 days after treatment (BBCH 39).  The total radioactive residues (TRR) of the harvested commodities and the percentages of the TRR (%TRR) are summarized below.

                           Radiolabelled experiment
                               Relative Maturity
                                    Sample/
                                   Commodity
                                      TRR
                                     mg/kg
                                     % TRR
                                  Extracted1
                               Bicycloocetenone
                                    42 DAT
                                    Foliage
                                     0.778
                                     85.4

                              Maturity (301 DAT)
                                    Foliage
                                     0.004
                                Not extracted2

                                   Sugarcane
                                     0.002
                                Not extracted2
                                   Pyridine
                                    42 DAT
                                    Foliage
                                     0.888
                                     88.5

                              Maturity (301 DAT)
                                    Foliage
                                     0.003
                                Not extracted2

                                   Sugarcane
                                     0.004
                                Not extracted2
1Extractable radioactivity prior to aqueous extraction and hydrolysis
2The maturity samples were not extracted or analyzed since the TRR was < 0.01 mg/kg

Due to the low residues of the mature samples, the 42 DAT samples for both radiolabels were used to elucidate the biotransformation of NOA449280 in sugarcane.  Analysis of these samples shows an absence of parent NOA449280 and that extensive metabolism has occurred with the principle biotransformations as follows:
      *       hydroxylation of the bicyclooctenone ring in at least two positions to produce isomers of monohydroxylated and dihydroxylated NOA449280
      *       cleavage between the bicyclooctenone and pyridine ring systems of NOA449280
      *       O-demethylation, and successive oxidation of the methoxyethoxymethyl side chain of  NOA449280 to produce desmethyl, carboxyl and alcohol metabolites
      *       conjugation of some of the above metabolites to form their O-glycosides
The largest percentage of the residue contained metabolites where the bicyclooctenone ring of NOA449280 had undergone mono-hydroxylation or mono-hydroxylation and  O-demethylation of the methoxyethoxymethyl side chain.  These combined metabolites accounted for 50-55% of the TRR.  Di-hydroxylation of the bicyclooctenone ring coupled with demeththylation of the side chain was present to a lesser extent.  Cleavage between the rings also made a significant contribution to the residue by the presence of CSCD686480 which is the pyridine specific metabolite formed by cleavage of NOA449280.  The results are summarized below:

                              Bicyclooctenone-14C
                                 Pyridine -14C
                               Sugarcane Sample
                                   Component
                                     % of
                                      TRR
                                Residue (mg/kg)
                                     % of
                                      TRR
                                Residue (mg/kg)
                                42 DAT Foliage
CSCD6864801
                                      ND
                                      ND
                                     19.7
                                     0.175

CSCD686481
                                      ND
                                      ND
                                      6.4
                                     0.057

CSCD677692
                                      5.5
                                     0.043
                                      6.5
                                     0.058

Total desmethyl monohydroxy NOA449280 isomers1
                                     37.1
                                     0.289
                                     33.9
                                     0.301

Total monohydroxy NOA449280 isomers1
                                     25.8
                                     0.201
                                     20.7
                                     0.184
ND = not detected, 1Total of all isomers with these structural characteristics including specific metabolites, metabolites of undefined substitution specificity, and conjugates
       Metabolism studies conducted in corn and sugarcane have provided a detailed understanding of the biotransformation of NOA449280 in these crops.  The metabolic pathways in these crops are similar.  NOA449280 was found only in corn forage and was absent in all other samples examined.  The majority of the metabolites were formed by hydroxylation on one or more sites on the bicyclic ring or demethylation of the methoxyethoxymethyl side chain followed by hydroxylation.  Some conjugation to glycosides was observed with the hydroxyl derivatives and some cleavage between the two ring systems was also observed.
      2. Analytical method. For data submitted with this petition, the following analytical methods were utilized:
Method Identification
Analyte
                         Limit of Quantification (ppm)
                              In Sugarcane Stalks
POPIT MET.116
(based on GRM030.03A)
NOA449280 (Parent)
                                     0.01

SYN503780
                                     0.01
POPT MET.117
(based on GRM030.05A1)
Common Moiety SYN503780
                                     0.01

Common Moiety CSCD686480
                                     0.01

CSAA806573
                                     0.01
POPIT MET.114
Ametryn
                                     0.01
1	Analysis covers parent and all other structures similar to parent.

      The analytical methods are available for enforcement purposes with limits of detection that allows monitoring of food with residues at or above the levels set in these tolerances.  Residues of NOA449280 and SYN503780 were by two different methods, direct analysis and common moiety method. Additionally, residues of CSAA915194, CSCD686480 and CSAA806573 were also determined.  CSAA806573 and ametryn were analysed via a direct method.  CSAA915194 was analysed by a common moiety method.
      A method validation was conducted in the laboratory via recoveries of samples fortified with the compounds being quantified in the study.  The overall confidence intervals of recovery means at a 95% confidence level for NOA449280 and its metabolites were as follows:  NOA449280 (POPIT MET 116) was 108+-1, SYN503780 (POPIT MET 116) was 107+-1, NOA449280 (POPIT MET 117) was 75+3 to 82 +-3, CSAA915194 (POPIT MET 117) was 93+-5, CSAA806573 (POPIT MET 117) was 87+-5 to 95+5 and ametryn (POPIT MET 114) was 84+-7.  These data indicate acceptable performance of the methods used to support this study.  The LOQ for all analytes in all sample matrices, including processed fractions, was 0.01 ppm.
      The mean recoveries were all between 70 and 120% for all analytes using both methods.  The percent relative standard deviations (%RSD) were all <= 20%.  These data indicate acceptable performance by the two methods used to support this study. Analytical methods GRM030.03A and GRM030.05A have also undergone independent laboratory validation (ILV) to demonstrate the suitability of the methods for the monitoring of residues of NOA449280 in crops and animal tissues. All study methods and validation reports will be submitted with this data package.
      3. Magnitude of residues. A residue study was conducted to support the registration of NOA449280 on sugarcane in Australia and an import tolerance in the US.  Studies were also conducted in Brazil and are included herein as additional support for import tolerances for the United States.
      The maximum label rate per year will be 300 g ai/ha.  The number of allowed applications will be up to 2 applications/year but not exceeding 300 g ai/ha.
      The product will be applied pre-emergent to cane and weeds and/or early post emergent to cane and weeds (as a directed spray) up to the out-of-hand stage of sugarcane.  Shortest interval between applications would be 4 weeks. The proposed PHI or harvest withholding period is "not required when used as directed" since the interval between the last possible application (out-of-hand stage or prior to row closure as indicated in the residue report) and harvest is very long (at least 112 days).

	AUSTRALIA

      Eight crop residue trials were conducted with NOA449280 in 2009 and 2010 in Australia.
                                  Site Number
Location
Treatment
                                       1
Tweed Valley, New South Wales
Split Application (Ratoon crop  -  no trash)
                                       2
Proserpine, Queensland
Split Application
                                       3
El Arish, Queensland
Split Application
                                       4
Mareeba, Queensland
Split Application
                                       5
Gunalda, Queensland
Single Application
                                       6
Garget, Queensland
Single Application
                                       7
McDesme, Queensland
Single Application (Ratoon crop  -  no trash)
                                       8
Gordonvale, Queensland
Single Application

      Formulation A16003E, a soluble concentrate (SL), containing 200 g/kg NOA449280 was applied to the sugarcane.  Application scenarios are presented below.   A non-ionic surfactant (NIS) was included in each of the spray applications.
                                     Sites
                                   Treatment
                      Nominal Application Rate (g ai/ha)
Nominal Application Timings
                      1, 2, 3, and 4
(Split Application)
                                  1 (Control)
                                      --
Not Applicable

                                      2
                                  App 1:  150
                                  App 2:  150
App 1:  4 weeks prior to Timing 2 (approx. 60-80 cm)
App 2:  Just before row closer (out of hand stage)

                                       3
                                  App 1:  300
                                  App 2:  300
App 1:  4 weeks prior to Timing 2 (approx. 60-80 cm)
App 2:  Just before row closer (out of hand stage)
                      5, 6, 7, and 8
(Single Application)
                                  1 (Control)
                                      --
Not Applicable

                                       2
                                      300
Just before row closer (out of hand stage)

                                       3
                                      600
Just before row closer (out of hand stage)

      In the split application trials, sugarcane billets and tops were collected immediately before the last application, immediately after the last application and at nominal timings of 7, 16, 28, 56 and 112 days after last application (DALA).   For the single application trials, samples were collected at 0, 7, 14, 18, 56 and 112 DALA.
      No residues of NOA449280 (parent), SYN503780, the common moiety SYN503780, the common moiety CSCD686480 or CSAA589691 were found in any untreated control samples of any sugarcane billets or tops in this study (all <LOQ).  In the treated samples, the residues decrease quickly with increasing time between spray and harvest, i.e. 1 day after application to 28 days after application.   No residues at or above the LOQ were found at harvest (112 DAA).
	BRAZIL

      Five crop residue trials were performed across Brazil in Itápolis (SP), Rio das Pedras (SP), Bandeirantes (PR), Jaboticabal (SP) and in Uberlândia (MG). Formulation A16003E, a soluble concentrate (SL), containing 200 g/kg NOA449280 was applied to the sugarcane.  A non-ionic surfactant (NIS) was included in the post-emergent application.
                                   Treatment
                           Nominal Application Rate
Nominal Application Timings
                                  1 (Control)
--
Not Applicable
                                       2
                       300 g ai/ha
(1.5 L product /ha)
Pre-emergence, soon after the crop was cut and cultivated
BBCH 00
                                       3
                       300 g ai/ha
(1.5 L product /ha)
Post-emergence, when the sugarcane plants already had 5 leaves
BBCH 15-16

      Sugarcane stalks were sampled at normal harvest. No residues of NOA449280 or any of its other metabolites were found in any of the mature sugarcane stalks samples after the treatment of plots with 300 g as NOA449280 /ha (1.5 L product/ha) either pre-emergent (BBCH 00) or post-emergent (BBCH 15-16).
      Four crop residue trials were performed across Brazil in the cities of Rio das Pedras (SP), Bandeirantes (PR), Jaboticabal (SP) and Tupaciguara (MG). Formulation A16361B, a soluble concentrate (SL) containing 57 g/L NOA449280 and 434 g/L of ametryn, was applied to the sugarcane.  A non-ionic surfactant (NIS) was included in the post-emergent application.
                                   Treatment
                               Application Rate
Nominal Application Timings
                                  1 (Control)
                                      --
Not Applicable
                                       2
          286 g NOA449280/ha + 2143 g ametryn/ha
(5.0 L product /ha)
Pre-emergence, soon after the crop was cut and cultivated
BBCH 00
                                       3
                    171 g NOA449280/ha + 1286 g ametryn/ha
                              (3.0 L product /ha)
Post-emergence, when sugarcane plants already had 5 leaves
BBCH 15-16

      Sugarcane stalks were sampled at normal harvest. When A16361 was applied at the maximum intended use rates for both pre-emergence and post-emergence, there was no quantifiable residues of the analysed compounds in samples of sugarcane collected at normal harvest time.
      In Brazil, two crop residue trials were performed at exaggerated rates in Carpina (PE) and Ares (RN) to generate samples for processing into sugar, molasses and bagasse.
      Formulation A16003E, a soluble concentrate (SL), containing 200 g/kg NOA449280 was applied to the sugarcane.  Treatment scenarios included pre-emergent application soon after the crop was cut at 900 h ai/ha (3X label rate) and at 1500 g ai/ha (5X label rate).
                                   Treatment
                           Nominal Application Rate
Nominal Application Timings
                                  1 (Control)
--
Not Applicable
                                       2
                       900 g ai/ha
(4.5 L product /ha)
Pre-emergence, soon after the crop was cut and cultivated
BBCH 00
                                       3
                       1500 g ai/ha
(7.5 L product /ha)
Pre-emergence, soon after the crop was cut and cultivated
BBCH 00

      Sugarcane stalks were sampled at normal harvest.  No residues of NOA449280 or any of its other metabolites were found in any of the mature sugarcane stalks samples after the pre-emergent (BBCH 00) treatment of plots with exaggerated rate applications of 900 g ai NOA449280 /ha (4.5 L product/ha) or 1500 g ai/ha NOA449280 (7.5 L product/ha).
	CONCLUSIONS

      NOA449280 is intended for use as an herbicide on sugarcane in Australia and proposed for an import tolerance for the US.  Supporting field residue data from Australia and Brazil are being submitted with this data package.   The data indicate that when NOA449280 is applied at a rate of 300 g ai/ha) either pre-emergent (BBCH 00) or post-emergent (BBCH 14-16), no quantifiable residues will result in raw agricultural sugarcane commodities (billets, tops, stalks).

B. Toxicological Profile

      1. Acute toxicity.  NOA449280 is of low acute toxicity by the oral, dermal and inhalation routes of exposure and is not irritating to the eyes or skin.  Under conditions of a local lymph node assay in the mouse NOA449280 is not considered to have a sensitising potential following contact with the skin.  NOA449280 SL (A16003E) is of low acute toxicity by the oral, dermal and inhalation routes. It is not irritating to the skin and only slightly irritating to the eye. It is a sensitizer in the Buehler test in the guinea pig. NOA449280 ZC (A19707A) is of low acute toxicity by the oral, dermal and inhalation routes. It is moderately irritating to the skin and to the eye. It is a sensitizer in the Buehler test in the guinea pig.  A summary of the acute toxicity studies are cited below:
                                Hazard Indicator
                                (Guideline No.)

                            Bicyclopyrone Technical
                                  (NOA449280)
                                   SYNA16003
                                      (SL)
                                 SYNA19707 (ZC)
                          Tox Category (respectively)
 Acute Oral LD50, Rat
 (870.1100)
                                     LD50
                                 >5000 mg/kg
                              LD 50 >5000mg/kg

                                     LD50
                                  = 1750mg/kg

                                 IV , IV,  III
 Acute Dermal LD50, Rat
 (870.1200)
                                     LD50
                                >5000 mg/kg
                                     LD50
                                 >5000mg/kg

                                     LD50
                                 >5000 mg/kg
                                   IV, IV, IV
  Acute Inhalation LC50, Rat
  (870.1300)

                              LC50 >5.21 mg/L
                              LC50 >5.08 mg/l

                              LC50 >2.59 mg/l

                                   IV,IV, IV
 Eye Irritation, Rabbit
 (870.2400)
                                 Not irritant
                               Slightly irritant

                             Moderately irritating

                                  IV, IV, III
 Skin Irritation, Rabbit
 (870.2500)
                                 Not irritant
                                 Not irritant

                             Moderately irritating

                                  IV, IV, III
 Skin Sensitization
 (LLNA)
 (870.2600)
                                   Negative
                                  Sensitizer

                                  Sensitizer

                                 Not Applicable

            2. Genotoxicity. Bicyclopyrone has been examined in a range of in vitro and in vivo genotoxicity assays, including end points of gene mutation, chromosomal damage and DNA repair.  NOA449280 is not mutagenic to bacterial or mammalian cells in vitro and is not clastogenic in human lymphocytes in vitro. It is not clastogenic and does not induce DNA repair in vivo.  NOA449280 shows no genotoxic potential either in vitro or in vivo.
      3. Reproductive and developmental toxicity.

      Reproductive

            The potential reproductive toxicity of NOA449280 has been studied in a multigeneration study in the rat.  Dose levels of 0, 25, 500 or 5000ppm, selected on the basis on a preliminary range finding study, were administered in the diet to groups of 25 male and 25 female F0 generation  rats. Treated diet was administered continuously throughout pre-mating and mating in both sexes and to females throughout gestation and lactation until pups were weaned at day 21. Selected pups were then maintained on diet, forming the F1 generation, were mated at weeks old and females were maintained until the F2 litters were weaned. NOA449280 had no toxicologically significant effect on reproductive parameters in either generation. In adults, lower bodyweight and bodyweight gain were noted in F0 and F1 animals at 5000ppm and in F1 animals at 500ppm. Systemic toxicity was evident in adults at 500 ppm and above including corneal opacity, histopathological and weight changes in the thyroid reflecting minor perturbations in thyroid homeostasis and increased kidney weight accompanied by histopathological changes in the kidney, pelvic dilatation, in F1 animals only. At 25 ppm ocular opacity was noted in F0 males and in F1 males and females. The NOAEL for systemic toxicity in adults was considered to be < 25 ppm based on ocular effects. The relevance of such effects on human risk assessment is recognised as being low. In pups, body weights gain was reduced in F1 and F2 pups at 5000ppm and in F1 pups at 500ppm. Treatment related ocular effects and kidney weight increase were also evident at these dose levels. The NOAEL for systemic toxicity and sexual development was considered to be 25ppm.

      Developmental

            A range of developmental toxicity studies have been conducted with NOA449280 comprised of a dose range-finding study and guideline compliant study in the Wistar rat, and dose range-finding and guideline compliant studies in two strains of rabbit: New Zealand White and Himalayan.
            Groups of 24 bred female Wistar rats were administered NOA449280 by oral gavage at dose levels of 0, 100, 500 or 1000 mg/kg/day on gestation days 6-20, and cesarean section performed on gestation day 21.  Effects on maternal body weight and weight gain were observed at all doses tested, and food consumption was depressed at the two highest doses tested (500 and 1000 mg/kg/day).  There was no evidence of a teratogenic response.  Pelvic girdle mal-positioning (alternatively diagnosed as the presence of 27 pre-sacral vertebrae in other laboratories) along with extra rib(s) was observed in all dose group.  Slight changes in the pattern of ossification were also observed in the foetuses. Effects seen in foetal rats were categorized as variations or slight delays in ossification that would not be expected to have any long-term effects on survival and development.
            In the New Zealand White rabbit, dose levels of 0, 10, 50 or 200 mg/kg/day were selected based on preliminary studies.  Groups of 25 bred females were administered NOA449280 by gavage on gestation days 7-28, and cesarean section performed on gestation day 29.  Significant maternal toxicity was noted at 200 mg/kg/day, with decreases in body weight gain and food consumption leading to the loss of approximately 28% of the animals at this dose level due to euthanasia, abortion and/or early deaths.  There were no treatment-related malformations noted at external or visceral examination. Despite having exceeded the MTD, minimal evidence of an increase in a single grouping of skeletal changes, that was considered a malformation in this strain, was noted. These changes, classified as costal cartilage anomalies, though seen at a low incidence, were outside the historical control range. At 50 mg/kg/day, a low incidence of costal cartilage anomalies was within the historical control, though an association with treatment could not be excluded.  The only statistically significant treatment-related changes observed in the New Zealand White rabbit foetuses were increased incidences of an extra vertebra (27 pre-sacral vertebrae) and an extra (13[th]) pair of ribs in all dose groups.  Maternal tyrosine was elevated at all dose levels and skeletal effects of this nature have been shown to be associated with plasma tyrosine elevations, consistent with HPPD inhibition, the known mode of action of NOA449280.  These effects are considered to be of no toxicological significance.
            Two separate studies were conducted with the Himalayan rabbit over a range of dose levels from 1- 250 mg/kg/day.  The data generated in this strain presented a different picture than that seen in the New Zealand White. Maternal toxicity demonstrated in this strain was substantially less evident; a low incidence of maternal mortality and lower body weight gain was observed at 250 mg/kg/day in one of the two studies.
            Foetal examination produced profiles of two separate responses to treatment. At 10 mg/kg/day and above, minor skeletal changes consisting of an increase in the foetal incidence (but not the litter incidence) of supernumerary ribs was observed. At 50 mg/kg/day and above, increases in the litter incidence of caudal displacement of the pelvic girdle (27 pre-sacral vertebrae) and supernumerary ribs were seen. These variations, which are commonly observed in rabbits, have been shown to be associated with elevated plasma tyrosine and were likely a reflection of the increase in tyrosine seen in the maternal plasma The flat dose-response in these changes parallels the plasma tyrosine levels measured in these rabbits, which rapidly reached an apparent plateau.   Similar skeletal changes were also observed in the New Zealand White rabbit and were correlated with elevated tyrosine. The biological significance of these changes is questionable, and they are generally regarded as of little or no toxicological significance.
            Superimposed on this background of tyrosine-related minor skeletal changes was an increase in the overall malformation rate at the high dose level (250 mg/kg/day) in both Himalayan rabbit studies.  The malformations affected different organs/structures and were observed at visceral and skeletal examination.  At 50 mg/kg/day, there was a slight (non-significant) increase in the incidence of skeletal malformations. These changes were considered to be effects of NOA449280.
            Overall, the NOAEL for maternal animals was considered to be 50 mg/kg/day in both strains of rabbit. At a dose level of 10 mg/kg/day, the only treatment-related foetal effects noted were minor changes which are considered non-adverse, or transient in nature; this dose represents a no-observed-adverse effect level (NOAEL) in both strains of rabbit.  A dose of 1 mg/kg/day has been clearly identified as a no-observed-effect level (NOEL).

            4. Subchronic toxicity. The short-term toxicity of bicyclopyrone has been evaluated by the oral route of administration in rats, dogs and mice.  In addition, dermal toxicity was evaluated in rats in a 28-day study.

      Rat

            NOA449280 was administered in the diet to rats for 90-days in two studies, one a preliminary study in the AlpkAPfSD rat (Rattray 2003) at dose levels 500, 2000 or 5000ppm and one OECD guideline study in the Han Wistar rat (Shearer 2009) at dose levels 2.5, 10, 2500 or 5000ppm. In neither study was there a clear treatment related effect on clinical observations, functional observational battery (FOB), haematology or blood clinical chemistry parameters. In common with other inhibitors of 4-hydroxyphenyl pyruvate dioxygenase (HPPD),  the rat is the most sensitive species and toxicity noted in both studies in this case is attributable to significantly elevated plasma tyrosine concentrations. Dose levels of 2500ppm bicyclopyrone and above resulted in reduced body weight and weight gain in both sexes. The characteristic sign of tyrosine toxicity, corneal opacity/keratitis, was noted in both sexes at dose levels 500ppm and above. Increased kidney weights were noted in males at dose levels of 500ppm and above but despite a tenfold increase in dose level there was no clear dose relationship and no accompanying histopathological change in the kidney. Similarly an increase in liver weight was noted at dose levels of 500ppm and above in males and 2000ppm and above in females. As with the kidney there was no clear dose response and the change was not accompanied by any significant changes in clinical chemistry or histopathology of the liver. The NOAEL in the 90 day rat studies was 10ppm (equivalent to 0.72 /0.88g/kg bwt/day for males and females, respectively).

            In a 28-day dermal toxicity study,  histopathological effects in the cornea, keratitis and minimal degeneration of the corneal epithelium, were noted in a small number of animals of sexes at 1000 and 250 mg/kg/day. Minor increases in liver weights (< 120% of control) in dosed males were within the historical control range and in the absence of any associated differences in histopathology or clinical chemistry were concluded to be of no toxicological significance. Similarly minor increased in kidney weights in males were without histopathological correlates and were considered to be of no toxicological significance. The 28-day dermal NOAEL was concluded to be 50 mg/kg/day.

      Mouse

            NOA449280 was administered in the diet to mice for 90 days at dose levels 100, 3500 or 7000ppm to establish suitable dose levels for an 80 week carcinogenicity study. Administration of 7000ppm (equivalent to > 1000mg/kg bwt/day), the limit dose for this study type, to CD-1 mice did not adversely affect bodyweight or haematology parameters. Dose levels of 7000 and 3500ppm resulted in increased liver weight accompanied by minimal hepatocyte hypertrophy. At 100ppm minimal increase in liver weight in females only was not accompanied by any change in liver histopathology and was therefore considered not to be of toxicological significance. A dose level of 100ppm (equivalent to 15.4/20.8 mg/kg bwt/day in males and females respectively) was concluded to be the NOAEL for this study.

      Dog

            In a 28 day study at dose levels 10, 100 or 250 mg/kg the male dog dosed with 250 mg/kg bwt/day NOA449280 was killed for humane reasons after 7 days of dosing; the top dose group was therefore terminated. Treatment related clinical observations included hypoactivity, unsteady gait, nystagmus, opisthotonus, rapid heart rate and vomiting. No adverse pathology was noted in central or peripheral nervous system. There were no adverse effects of treatment following 28 days dosing at the lower dose levels of 100 and 10 mg/kg/day. Plasma tyrosine levels and increased levels of tyrosine metabolites in the urine were noted at all dose levels and considered to reflect exposure toNOA449280.  A dose level of 125 mg/kg/day was selected as the top dose level for the 90 day study Following 90 days dosing at a maximum of 125 mg/kg no adverse effects were noted on bodyweight, clinical observations, haematology or histopathology of organs examined. A decrease in cholesterol was noted in both sexes at 125 mg/kg. An increase in liver weight was noted in females only at 125 mg/kg but in the absence of any histopathological changes or any similar change noted in the subsequent 1 year study this finding was considered adaptive and of no toxicological significance. A dose of 125 mg/kg bwt/day NOA449280 was concluded to be the NOAEL for the 90 day study in dogs. In the 1 year study at dose levels of 2.5, 25 or 125 mg/kg one male from the top dose group was found dead after 336 days; there had been no prior clinical signs. Signs of toxicity in all animals included corneal opacity and keratitis in some males and females at 125 and 25 mg/kg and histopathological changes in the nervous system, chromatolysis and swelling of selected neurones in the dorsal root ganglion and minimal fibre degeneration in the sciatic nerve in some dogs from all dosed groups. A dose level of 2.5 mg/kg/wt NOA449280 was reported to be the LOEL for the 1 year dog study.  Syngenta concludes the No Observed Adverse Effect level (NOAEL) for the 52-week toxicity study in dogs is 2.5 mg/kg based on an increase in corneal opacity in dogs treated with 25 mg/kg and above.

            5. Chronic toxicity. The long-term toxicity and carcinogenic potential of NOA449280 has been evaluated in a 104 week study in the rat which included a 52 week long-term toxicity phase and in an 80 week carcinogenicity study in the mouse.

		Rat

            NOA449280 was administered in the diet to Han Wistar rats for 104 week in an OECD 453 guideline study (Robertson and Perry 2012) at dose levels of 0, 5, 500, 2500 and 500ppm. In common with other inhibitors of 4-hydroxyphenyl-pyruvate dioxygenase (HPPD) corneal opacity accompanied by keratitis and regenerative hyperplasia of the cornea was evident from week 4 of dosing until the end of the treatment period in animals given diets containing 500ppm NOA449280 and above. The findings were noted to be more severe in male rats and towards the end of the 104 week period a low incidence of squamous cell carcinomas and papillomas were noted in male rats at 50ppm and above. Similar tumours have been noted with other HPPD inhibitors in 104 week studies in the rat and are considered to be attributable to the continued damage to, and consequent regenerative hyperplasia of, the corneal epithelium in this most sensitive species. A clear No Observed Adverse Effect Level (NOAEL) for toxicity to the cornea was identified as 5ppm.  Other toxicities identified in the NOA449280 chronic/carcinogenicity study in the rat and identified as resulting from chronic systemic exposure to significantly elevated tyrosine are an increased incidence of thyroid hypertrophy and hyperplasia, indicative of a perturbation in thyroid function and also discussed further in and an increased incidence of chronic glomerulonephropathy, accompanied by elevated covariant kidney weights and changes in urinary proteins, in males rats. The NOAEL for these findings was concluded to be 5ppm NOA449280.  Other treatment related findings including an increased incidence of acinar atrophy of the pancreas in male rats and a decrease covariant heart weight, accompanied in male rats by a decreased incidence of cardiomyopathy, had clear NOAEL at 500ppm.

		Mouse

            NOA449280 was administered in the diet to CD-1 mice for 80 weeks in an OECD 451 guideline study (Robertson and Perry 2012). In contract to the toxicities noted in the rat but consistent with findings noted for other HPPD inhibitors (Lewis and Botham 2012) long-term dosing of up to the limit dose of NOA449280 resulted in few adverse effects in the mouse. At the top dose of 7000ppm a slight reduction in bodyweight and bodyweight gain was noted in both sexes and an increased liver weight was accompanied in males only by an increased incidence of mild centrilobular hepatocyte hypertrophy. There was a numerically higher incidence of bronchio-alveolar adenomas in male mice receiving 7000 ppm NOA449280. However, no similar finding was noted in females and there were no other histopathological changes in the lung. Although higher than the study control, the incidence at 7000ppm was within the control range of studies running concurrently in the conducting laboratory. This numerically higher incidence of bronchio-alveolar adenomas in male mice at 7000ppm was concluded not to be related to treatment with NOA449280.  A clear NOAEL for the 80 week study in the mouse was 1700ppm equivalent to 233 and 242 mg/kg bwt/day in male and female mice respectively.  Dietary dosing of NOA449280 for 104 weeks to rats has been shown to result in squamous cell tumours of the cornea which are associated with constant damage and repair of the corneal epithelium and can be attributed to the significantly elevated tyrosine levels resulting from HPPD inhibition in this most sensitive species. Although it is known that inhibition of HpPD in humans can result in elevated tyrosine a detailed analysis of the mode of action and its relevance to humans against accepted scientific criteria has shown that humans are unlikely to exhibit the toxicities seen in the rat (Lewis and Botham 2012). In addition, the US EPA have recognised that data available for HPPD inhibitors support the view that the high levels of plasma tyrosine seen in male rats and the consequent corneal damage is unlikely to be seen in humans (Hazard Science Policy Council Memo D 341612 dated 07/02/2007). Therefore, the tumours noted in male rats are considered to be rat specific and not relevant for human risk assessment.

            No treatment-related tumours were identified in the mouse following dietary dosing a limit dose (approximately 1000mg/kg bwt/day) for 80 weeks. It is concluded that NOA449280 does not present a carcinogenic hazard to humans.

            6. Animal metabolism. The metabolism and distribution of bicyclopyrone has been investigated in livestock, using laying hens and lactating goats as representative species for poultry and ruminates, respectively.  In each study bicyclopyrone radiolabelled with 14C in either pyridinyl or bicyclooctenone ring was used.
		Poultry
            The absorption, distribution, metabolism and excretion of [pyridinyl-14C] NOA449280 and [bicyclooctenone-14C] NOA449280 were investigated following repeated oral administration to the laying hen.  Excretion balance and tissue distribution investigations were performed following repeated oral administrations for 10 consecutive days at a nominal dose level of 20 mg NOA449280/kg of dry diet.  The total radioactive recovery was 81% and 79% for the pyridinyl and bicyclooctenone labels respectively.  The majority of the administered radioactivity was recovered in the excreta (pyridinyl label: 76%, bicyclooctenone label: 76%).
            The highest residues were found in liver (1.752 mg/kg and 1.776 mg/kg for pyridinyl and bicyclooctenone labels respectively) and accounted for only ca 0.3% of the administered dose.  Residue levels in other commodities such as egg yolk, egg white, muscle, peritoneal fat and skin and subcutaneous fat were low and in total accounted for <0.25% of the administered dose for both radiolabels.  Radioactive residues in eggs (mean for a 24 hour period) reached a plateau of 0.10 mg/kg in both labels at approximately 6 to 8 days.
            Each of the samples along with excreta was analyzed for characterization and identification of metabolites and to elucidate the biotransformation of NOA449280 in laying hens.  Results from analysis of samples from both radiolabels provided the following observations:
         * Radioactive residues in edible tissues consisted predominantly of NOA449280
         * There was no appreciable difference in excretion profiles between the radiolabels
         * Eggs contributed a minor route of excretion of the radioactivity

		Lactating Ruminants

            The absorption, distribution, metabolism and excretion of [pyridinyl-14C] NOA449280 and [bicyclooctenone-14C] NOA449280 were investigated following repeated oral administration to the lactating goat.  Excretion balance and tissue distribution investigations were performed following repeated oral administrations for 7 consecutive days at a nominal dose level of 30 mg NOA449280/kg of dry diet. The total radioactive recovery was 87% and 82% for the pyridinyl and bicyclooctenone labels respectively.  The majority of the administered radioactivity was recovered in the urine (pyridinyl label: 60%, bicyclooctenone label: 62%).
            The highest residues were found in liver (2.726 mg/kg and 2.965 mg/kg for pyridinyl and bicyclooctenone labels respectively) and accounted for only ca 0.7% of the administered dose.  Residue levels in other commodities such as kidney, muscle and fat were low and in total accounted for <0.1% of the administered dose for both radiolabels.  Radioactive residues in milk (mean for a 24 hour period) reached a plateau of about 0.008 mg/kg for both labels at approximately 2 to 3 days.
            Each of these samples along with the urine, faeces and bile were analyzed for characterization and identification of metabolites and to elucidate the biotransformation of NOA449280 in lactating goats.  Results from analysis of samples from both radiolabels provided the following observations:
               o The principal components present in tissues and milk were unchanged parent and the desmethyl metabolite CSAA915194.  Other minor metabolites were found in liver
               o O-demethylation produced the metabolite CSAA915194
               o Hydroxylation of the bicyclooctenane ring occurred in 2 or more positions.
               o Trace levels of a pyridine specific metabolite were observed indicating that cleavage of the rings was a very minor pathway
               o Very little conjugation was observed
               o There was no appreciable difference in excretion profiles between the radiolabels and distribution of residues was essentially the same for both labels
               o Milk contributed a minor route of excretion of the radioactivity

            Metabolism studies conducted in laying hens and lactating goats have provided a detailed understanding of the biotransformation of NOA449280 in livestock.  The metabolic pathways in these species are similar. Tissue residues in both animals consisted primarily of parent NOA449280 and CSAA915194 (desmethyl parent) and several very minor metabolites found in the liver for the goat and several samples for the laying hen.  Analysis of the excreta and urine provided a more detailed understanding of the biotransformation of NOA449280 in these animals and allowed for a comparison of the metabolic pathways with that found in the rat.  Both animals, goat and hen, show similar biotransformation pathways for NOA449280. The primary metabolic processes observed include O-demethylation, oxidation on one or more sites of the bicyclooctenone ring, a minor amount of bridge cleavage between the rings, and conjugation to some extent.  Eggs and milk were minor routes of excretion for NOA449280.

            7. Metabolite toxicology. Metabolites that are common to crop and mammalian metabolic pathways have been assessed as part of the in vivo toxicological assessment of Bicyclopyrone. In addition, based on structural analysis, crop degradates are considered to have lower toxicity potential than parent Bicyclopyrone and to be of no toxicological significance.

            8. Endocrine disruption. The bicyclopyrone safety database does not contain any indication of a potential for direct effects of the compound on the mammalian endocrine system.

            9. Immunotoxicity. The purpose of this study is to provide information on suppression of the immune system which might occur as a result of repeated exposure to a test chemical. Based on the results of this study, treatment of female Crl:CD-1(ICR) mice with NOA449280 in the diet for a minimum of 28 consecutive days did not result in suppression of the humoral component of the immune system. The no-observed-effect level (NOEL) for immune suppression was 5000 ppm (equivalent to 1192.3 mg/kg/day). The only effect attributed to NOA449280 was higher liver weights noted for the 50, 500, and 5000 ppm groups; this effect was not considered to be adverse. There were no indications in this study that NOA449280 was immunotoxic. Similarly, data from subchronic, chronic, and reproductive toxicity studies of NOA449280 in the rat, mouse and dog, as appropriate, did not provide any evidence of an effect of NOA449280 on the immune system. Based on data from all relevant studies, Syngenta concludes that there is no evidence of immunotoxicity associated with NOA449280, and therefore, no need to conduct additional immunotoxicity assessments, specifically a natural killer cell (NKC) activity assay.

C. Aggregate Exposure

            1. Dietary exposure. Tier II acute and chronic dietary exposure evaluation was completed for bicyclopyrone (NOA449280) using the Dietary Exposure Evaluation Model (DEEM-FCID[TM]), version 2.16 from Exponent.  These exposure assessments included the proposed use on corn (including field corn, sweet corn and popcorn).  In addition to the corn use, a sugarcane import tolerance was proposed for bicyclopyrone (separate Tolerance Petition and Notice of Filing submitted with this data package).  All residues were below the LOQ (0.01 ppm) at the 1X label rate and no residues in sugarcane stalks were found even at exaggerated label rates of 3X and 5X.  As such, dietary exposure contribution from imported sugar considered negligible and imported sugar was not included in the risk assessments.  The assessments utilized residue data from field trials where bicyclopyrone was applied at the maximum intended use rate and samples were harvested at the minimum pre-harvest interval (PHI) to obtain maximum residues.  Percent of crop treated values were estimated based upon economic, pest and competitive pressures.  Secondary residues in animal commodities were estimated based on "maximum reasonably balanced diets" and transfer information from feeding studies.  Drinking water estimates were incorporated directly into the dietary exposure assessment using the higher of the estimated drinking water concentrations (EDWCs) for surface and ground water.  All consumption data for these assessments was taken from the USDA's Continuing Survey of Food Intake by individuals (CSFII) with the 1994-96 consumption database and the Supplemental CSFII children's survey (1998) consumption database.

            i. Food. Acute Exposure. The acute dietary (food only) risk assessment for females 13 to 49 years old was performed using an acute reference dose (aRfD) of 0.1 mg/kg-bw/day, based upon a rabbit developmental toxicity study with a no observed adverse effect level (NOAEL) of 10 mg/kg/day and an uncertainty factor (UF) of 100X for intra- and inter-species variations; no additional FQPA safety factor was applied.  Acute (food only) exposure to the females 13 to 49 years old resulted in a MOE of 178,571 (0.1% of the acute RfD of 0.1 mg/kg-bw/day).  The acute dietary (food only) risk assessment for all general population subgroups was performed using an acute reference dose (aRfD) of 0.5 mg/kg-bw/day, based upon a New Zealand white rabbit maternal toxicity study with a no observed adverse effect level (NOAEL) of 50 mg/kg/day and an uncertainty factor (UF) of 100X for intra- and inter-species variations; no additional FQPA safety factor was applied.  The most sensitive sub-population within the infants and children population subgroups was all infants (<1 year old) with a MOE of 295,710 (<0.1% of the acute RfD of 0.5 mg/kg-bw/day).  Since the benchmark MOE for this assessment was 100 and since the EPA has no concern for exposures resulting in a MOE above the Benchmark MOE or below 100% of the reference dose, Syngenta believes that there is a reasonable certainty that no harm will result from dietary (food only) exposure to residues arising from the proposed uses for bicyclopyrone.

            Chronic Exposure.  The bicyclopyrone chronic dietary (food only) risk assessment was performed for all population subgroups with a chronic reference dose of 0.0028 mg/kg-bw/day based on a chronic rat chronic study a no observed adverse effect level (NOAEL) of 0.28 mg/kg-bw/day and an uncertainty factor of 100X for intra- and inter-species variations; no additional FQPA safety factor was applied.  For the purpose of the aggregate risk assessment, exposure values were expressed in terms of margin of exposure (MOE), which was calculated by dividing the NOAEL by the exposure for each population subgroup.  In addition, exposure was also expressed as a percent of the reference dose (%RfD).  Chronic (food only) exposure to the U.S. population resulted in a MOE of 31,871 (0.3% of the chronic RfD of 0.0028 mg/kg-bw/day).  The most sensitive sub-population was children (3-5 years old) with a MOE of 13,284 (0.8% of the chronic RfD).  Since the benchmark MOE for this assessment was 100 and since the EPA has no concern for exposures resulting in a MOE above the Benchmark MOE or below 100% of the reference dose, Syngenta believes that there is a reasonable certainty that no harm will result from dietary (food only) exposure to residues arising from the proposed uses for bicyclopyrone.

            Cancer.  Bicyclopyrone is considered "not likely to be a human carcinogen".  Therefore, no cancer dietary risk assessment was performed for bicyclopyrone.

            ii. Drinking water. Tier II acute and chronic dietary exposure evaluation was completed for bicyclopyrone (NOA449280) using the Dietary Exposure Evaluation Model (DEEM-FCID[TM]), version 2.16 from Exponent.  These exposure assessments included the proposed use on corn (including field corn, sweet corn and popcorn).  In addition to the corn use, a sugarcane import tolerance was proposed for bicyclopyrone.  All residues were below the LOQ (0.01 ppm) at the 1X label rate and no residues in sugarcane stalks were found even at exaggerated label rates of 3X and 5X.  As such, dietary exposure contribution from imported sugar considered negligible and imported sugar was not included in the risk assessments.  The assessments utilized residue data from field trials where bicyclopyrone was applied at the maximum intended use rate and samples were harvested at the minimum pre-harvest interval (PHI) to obtain maximum residues.  Percent of crop treated values were estimated based upon economic, pest and competitive pressures.  Secondary residues in animal commodities were estimated based on "maximum reasonably balanced diets" and transfer information from feeding studies.  Drinking water estimates were incorporated directly into the dietary exposure assessment using the higher of the estimated drinking water concentrations (EDWCs) for surface and ground water.  All consumption data for these assessments was taken from the USDA's Continuing Survey of Food Intake by individuals (CSFII) with the 1994-96 consumption database and the Supplemental CSFII children's survey (1998) consumption database.

            Acute Exposure from Drinking Water.  The acute surface water EDWC of 2.365 ppb was input directly into the DEEM-FCID(TM) software as "water, direct and indirect, all sources" to model the acute drinking water exposures.  Exposure contributions at the 99.9[th]%-ile of exposures were determined by taking the difference between the aggregate (food + drinking water) exposures and the food (alone) exposures for each population subgroup.  Acute drinking water exposure U.S. population resulted in a MOE of 127,551 (0.1% of the acute RfD of 0.5 mg/kg-bw/day).  The most exposed sub-population was females (13-49 years old) with a MOE of 36,496 (0.3% of the aRfD of 0.1 mg/kg/day).  Since the benchmark MOE for this assessment was 100 and since the EPA has no concern for exposures resulting in a MOE above the Benchmark MOE or below 100% of the reference dose, Syngenta believes that there is a reasonable certainty that no harm will result from drinking water exposure to residues arising from the proposed uses for bicyclopyrone.

            Chronic Exposure from Drinking Water.  The chronic surface water EDWC of 0.689 ppb was input directly into the DEEM-FCID(TM) software as "water, direct and indirect, all sources" to model the chronic drinking water exposures.  Chronic drinking water exposure to the U.S. population resulted in a MOE of 19,281 (0.5% of the chronic RfD of 0.0028 mg/kg-bw/day).  Chronic drinking water exposure to the most exposed sub-population (infants, <1 year old) resulted in a MOE of 5,881 (1.7% of the chronic RfD of 0.0028 mg/kg-bw/day).  Since the benchmark MOE for this assessment was 100 and since the EPA has no concern for exposures resulting in a MOE above the Benchmark MOE or below 100% of the reference dose, Syngenta believes that there is a reasonable certainty that no harm will result from drinking exposure to residues arising from the proposed uses for bicyclopyrone.

            2. Non-dietary exposure. There are currently no planned uses for bicyclopyrone that would result in residential handler (mixer/loader/applicator) or post-application exposure.  A nondietary exposure risk assessment is therefore was not performed for bicyclopyrone.

      D. Cumulative Effects

            Cumulative Exposure to Substances with a Common Mechanism of Toxicity.  Section 408(b)(2)(D)(v) 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".  The EPA does not have, at this time, available data to determine whether bicyclopyrone has a common mechanism of toxicity with other substances or how to include this pesticide in a cumulative risk assessment.  For the purposes of this tolerance action, the EPA has not assumed that bicyclopyrone has a common mechanism of toxicity with other substances.

      E. Safety Determination

            1. U.S. population. The acute dietary exposure analysis (food plus water) showed that exposure from the proposed bicyclopyrone crop uses resulted in a MOE of 104,119 (0.1% of the acute RfD of 0.5 mg/kg-bw/day) for the general U.S. population.  For the acute aggregate assessments, females 13-49 years old were the most sensitive subgroup with an acute aggregate MOE of 30,303 or 0.3% of the aRfD (Benchmark MOE = 100; aRfD = 0.1 mg/kg/day).  The chronic dietary exposure analysis (food plus water) showed that exposure from proposed bicyclopyrone crop uses result in a MOE of 11,667 (0.9% of the chronic RfD of 0.0028 mg/kg-bw/day) for the general U.S. population.  Based on the completeness and reliability of the toxicity data supporting these petitions, Syngenta believes that there is a reasonable certainty that no harm will result from aggregate exposure to residues arising from all proposed bicyclopyrone uses, including anticipated dietary exposure from food, water, and all other types of non-occupational exposures.

            2. Infants and children. The acute dietary exposure analysis (food plus water) showed that exposure from all proposed bicyclopyrone uses would result in a MOE of 41,995 (0.2% of the acute RfD of 0.5 mg/kg-bw/day) for infants less than one year old population subgroup.  The chronic dietary exposure analysis (food plus water) showed that exposure from all proposed bicyclopyrone uses would result in a MOE of 4,748 (2.1% of the chronic RfD of 0.0028 mg/kg-bw/day) for infants less than one year old (the most sensitive population subgroup.  Since all aggregate MOEs exceed the benchmark MOE of 100, Syngenta believes that there is a reasonable certainty that no harm will occur to infants and children from aggregate exposure to residues arising from all proposed bicyclopyrone uses, including anticipated dietary exposure from food, water and all other types of non-occupational exposures.

      F. International Tolerances

            There are currently no Maximum Residue Limits (MRLs) set for bicyclopyrone for crops by the Codex Alimentarius Commission and international MRLs for the herbicide bicyclopyrone have not been established.


[Federal Register: August 8, 2007 (Volume 72, Number 152)]
[Notices]
[Page 44593-44596]
[DOCID:fr08au07-114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56186; File No. SR-BSE-2006-56]

Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing of Amendment No. 2 to the Proposed Rule Change and
Order Granting Accelerated Approval of Proposed Rule Change as Modified
by Amendments No. 1 and 2 Thereto To Add to the Boston Options Exchange
a New Functionality Called an Auto Auction Order

August 2, 2007.

I. Introduction

    On December 15, 2006, the Boston Stock Exchange, Inc. (``BSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposal to amend the Boston Options Exchange (``BOX'') Rules to add a
new functionality referred to as an Auto Auction Order (``AAO'') to
make it easier for customers to participate in a price improvement
auction (``Improvement Auction''). On February 1, 2007, BSE filed
Amendment No. 1 to the proposed rule change. The proposed rule change
was published for comment in the Federal Register on February 12,
2007.\3\ The Commission received one comment letter regarding the
proposal.\4\ BSE filed a response to the comment letter on June 8,
2007.\5\ On June 8, 2007, BSE filed Amendment No. 2 to the proposed
rule change.\6\ This order approves the proposed rule

change, as modified by Amendments No. 1 and 2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55233 (February 2,
2007), 72 FR 6626 (``Notice'').
    \4\ See letter to Nancy M. Morris, Secretary, Commission, from
Michael J. Simon, Secretary, International Securities Exchange, LLC
(``ISE''), dated March 5, 2007 (``ISE Letter'').
    \5\ See letter to Nancy M. Morris, Secretary, Commission, from
William Meehan, General Counsel, BSE, dated June 8, 2007 (``BSE
Letter'').
    \6\ In Amendment No. 2, BSE amended the proposal to reflect that
AAOs may be entered only for Public Customer accounts and only in a
series for which the standard trading increment is greater than one
cent. BSE also made corresponding technical changes to the rule
text.
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II. Description of the Proposal

    BSE proposes to amend the BOX Rules to add a new order
functionality called an AAO that would automatically participate in any
Improvement Auction (e.g., Price Improvement Period (``PIP'') auction)
\7\ if it meets certain criteria. An AAO is a Limit Order that is
submitted by an Order Flow Provider (``OFP'') \8\ on behalf of a Public
Customer \9\ to the BOX Trading Host in one-cent increments in a series
whose minimum trading increment is greater than one cent. The penny
incremented limit price that is entered by the Public Customer is
referred to as the ``AAO Maximum Improvement Price.'' The AAO Maximum
Improvement Price is the maximum (if the order is to buy) or minimum
(if the order is to sell) price at which the Public Customer is willing
to trade in any Improvement Auction.
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    \7\ See Chapter V, Section 18 of the BOX Rules.
    \8\ ``Order Flow Provider'' is defined as an Options Participant
representing as agent Customer Orders on BOX and those non-Market
Maker Participants conducting proprietary trading. See Chapter I,
Section 1(a)(46) of the BOX Rules.
    \9\ ``Public Customer'' is defined a person that is not a broker
or dealer in securities. See Chapter I, Section 1(a)(50) of the BOX
Rules.
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    The BOX Trading Host will round AAOs to the nearest minimum trading
increment (up if the order is to sell and down if the order is to buy)
and place it on the BOX Book (``AAO Limit Order''). The AAO Limit Order
will be processed as a standard Limit Order as described in Chapter 5,
Section 14(c)(i) of the BOX Rules and will be traded in accordance with
Chapter 5, Section 16 of the BOX Rules.

A. Eligibility

    An AAO will be eligible to participate in any Improvement Auction
that may occur when the AAO is on the opposite side of the market from
the order seeking improvement and the AAO Limit Price is equal to the
National Best Bid or Offer (``NBBO''). If the AAO is eligible, the BOX
trading engine will automatically create a new order (the ``AAO
Improvement Order'') at the end of the auction phase, but prior to any
trade allocations, with the following terms:
    (1) The quantity of the AAO Improvement Order will be the lesser of
the remaining quantity on the BOX Book at the AAO Limit Price or the
quantity of the order seeking improvement in the auction; and
    (2) the price of the AAO Improvement Order will be equal to the
price of the best Improvement Order, Primary Improvement Order, or
unrelated order (on the same side of the market as the AAO) submitted
to the Improvement Auction.

B. Trade Processing of AAO

    During an Improvement Auction, if the number of contracts executed
in the Improvement Auction against the AAO Improvement Order is less
than the quantity of the AAO Limit Order, then, prior to the processing
of any other orders in the same series on the opposite side of the
market as the AAO Limit Order, the quantity of the AAO Limit Order will
be decremented on the BOX Book by the size of the executed quantity of
the AAO Improvement Order. Any residual quantity that remains after
part of an AAO has traded (either on the BOX Book or in the Improvement
Auction) will continue to be eligible to trade in any subsequent
Improvement Auctions. In addition, the residual quantity will maintain
its priority on the BOX Book in accordance with Chapter V, Section 16
of the BOX Rules.
    Any AAO Improvement Order created by the BOX Trading Host will be
assigned the time priority of the related AAO Limit Order. As such, the
AAO Improvement Order is granted time priority at its relevant price
level in an Improvement Auction. Any modification to the AAO Maximum
Improvement Price that causes the rounded AAO Limit Price to change or
any increase in the quantity of the AAO will cause a new time priority
to be assigned to the AAO Limit Order on the BOX Book. Any changes to
the AAO Maximum Improvement Price that do not effect the AAO Limit
Price will not cause a change to the time priority of the original
order.
    Additionally, a new AAO received in a particular series that is on
the opposite side of the market from another AAO, which is already on
the BOX Book, and is marketable at the AAO Maximum Improvement Price of
the other booked AAO (e.g., a buy AAO is on the BOX Book with a Limit
Price bid of $2.00 with an AAO Maximum Improvement Price of $2.03 and a
new sell AAO is received by the BOX Trading Host with an AAO Maximum
Improvement Price of $2.02), will be matched at the mid-point of the
two AAO Maximum Improvement Prices, rounded to the nearest penny
increment in the favor of the AAO that is already on the BOX Book.\10\
The quantity of the resulting trade will be for the lesser quantity of
the two AAOs.
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    \10\ The Commission notes that a non-AAO incoming order that is
marketable at the AAO Limit Price will execute against the AAO at
the displayed Limit Price.
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III. 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-BSE-2006-56 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BSE-2006-56. This file
number should be included on the subject line if e-mail 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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of BSE. 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-BSE-2006-56 and should be
submitted on or before August 29, 2007.

IV. Discussion

    After careful review of the amended proposal, the ISE Letter, and
the BSE Letter, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange\11\
and, in particular, the requirements of section 6 of the Act.\12\
Specifically, the Commission finds that the proposed rule change is
consistent with section 6(b)(5) of the Act,\13\ which requires, among
other things, that the rules of a national securities exchange be
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. Significant aspects of the proposal are discussed below.
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    \11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(5).
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A. Order Exposure

    The proposal provides that the undisplayed penny price of an AAO
resting on the BOX Book can execute against the undisplayed penny price
of another AAO.\14\ The commenter notes that other orders in the BOX
marketplace, such as market orders and limit orders that are marketable
against the displayed price of an AAO, would not receive the benefit of
the hidden penny price. The commenter believes that the proposal thus
provides a mechanism by which participants can cross orders on BOX with
no exposure to the marketplace.\15\ In response, BSE has amended its
proposal to limit the use of the AAO to only Public Customers.\16\ The
Commission believes that the amended proposal is consistent with
Section 6(b)(5) of the Act.\17\
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    \14\ See proposed Chapter V, Section 14(c)(v)(F) of the BOX
Rules.
    \15\ See ISE Letter, supra note 4, at 1-2.
    \16\ See Amendment No. 2, supra note 6.
    \17\ 15 U.S.C. 78f(b)(5).
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B. Priority and Price Competition

    The commenter also argues that the AAO would not provide for
additional price improvement opportunities, would discourage aggressive
competition in the PIP, and would unfairly advantage the AAO in the PIP
auction. First, the commenter contends that the AAO would not provide
for any increased opportunities for price improvement in the PIP
because the AAO Improvement Order would be generated at the conclusion
of the three second exposure period (and thus not be broadcast to other
BOX Participants) and would only match the best price provided by other
BOX participants, even if the AAO contained an AAO Maximum Improvement
Price that would provide additional price improvement to the PIP
order.\18\ Second, the commenter believes that the proposal will
discourage other BOX Participants from competing aggressively for PIP
orders because it provides time priority for the AAO Improvement Order
in the PIP based upon the entry time of the original AAO. Third, the
commenter argues that the AAO is unfairly advantaged in the PIP auction
because only through use of an AAO can a participant adjust the price
at which they are willing to participate in the PIP auction without
other participants knowing about its interest and still maintain its
initial time priority.\19\
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    \18\ See ISE Letter, supra note 4, at 2.
    \19\ See ISE Letter, supra note 4, at 3. As noted above, an AAO
would not lose its initial time priority if there are changes to the
initial penny order price, so long as the change does not affect the
displayed limit order price. See proposed Chapter V, Section
14(c)(v)(E) of the BOX Rules.
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    In response, BSE argues that the AAO will provide increased price
improvement opportunities because it would increase the size available
at the best Improvement Order price.\20\ Further, BSE argues that the
AAO will encourage aggressive quoting in the PIP by incenting
competitors to put forth their best price to potentially better the AAO
Maximum Improvement Price and thus increase their likelihood of
allocation. In addition, BSE analogizes the AAO to BOX's Customer PIP
Order,\21\ which also is displayed on the BOX Book at a standard
increment but contains a penny price that is not broadcast to PIP
participants.\22\ BSE represents that the AAO functionality is being
proposed to make it easier for customers to participate in an
Improvement Auction, especially non-professional customers who lack the
ability to monitor and adjust prices fast enough to be competitive, and
who may not have access to a broker that utilizes the CPO function. BSE
therefore believes that the AAO functionality will increase competition
in the PIP because it will allow more new entrants. Additionally, BSE
notes that since Public Customer orders already have priority status in
Improvement Auctions pursuant to customer priority rules, the AAO will
only incrementally increase the priority available to them.\23\
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    \20\ See BSE Letter, supra note 5, at 2.
    \21\ See Securities Exchange Release No. 49068 (January 13,
2004), 69 FR 2775 (January 20, 2004).
    \22\ See BSE Letter, supra note 5, at 2.
    \23\ See BSE Letter, supra note 5, at 3.
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    The Commission agrees that the availability of the AAO should
increase the ability of Public Customers to participate in Improvement
Auctions.\24\ The Commission also does not believe that the possibility
of undisclosed AAO penny interest will give Improvement Auction
participants a disincentive to enter their best prices and may provide
a further incentive to enter their best prices to increase the
likelihood of participating in the execution of the order. Further, the
AAO functionality provides the potential for increased size available
at the best Improvement Price. The Commission therefore believes that
the AAO functionality is consistent with the Act.
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    \24\ BSE represents that only a few OFPs have made CPOs
available to non-professional customers due, in large part, to the
constraints that are generally associated with the software
development an OFP is required to undertake to handle the processing
of the CPO. See Notice, supra note 3.
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    The Commission further notes that an AAO Limit Order would only be
eligible to participate in an Improvement Auction, and thus receive
time priority, when the AAO Limit Order equals the NBBO on the opposite
side of the Improvement Auction order at the start of the auction. The
AAO is similar to the Market Maker Prime (``MMP'') designation in the
PIP, in which a market maker that has a quote at the moment the PIP
commences that is equal to the NBBO on the same side as the PIP Primary
Improvement Order is eligible to be designated MMP for that particular
PIP auction and receive priority over other Improvement Orders in the
auction.\25\ The Commission believes that the proposal to give time
priority to an AAO that quotes aggressively before an Improvement Order
is initiated is consistent with the Act and may provide a further
incentive for Public Customers to publicly display their best prices,
which would benefit all options market participants.
---------------------------------------------------------------------------

    \25\ The MMP who participates in a PIP will have partial
priority over all other competing orders, including the AAO, entered
into the PIP at the same limit price. See Chapter V, Section 19(b)
of the BOX Rules.
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C. Penny Pilot

    The commenter argues that the Penny Pilot Program \26\ is the
appropriate

method to approach penny pricing in the options markets, rather than a
mechanism that bypasses auction market principles.\27\ As discussed
above, with respect to the commenter's substantive arguments, the
Commission believes the AAO functionality is consistent with the Act.
Further, the Commission notes that the proposal, as amended, is
intended to make it easier for Public Customers to participate in the
PIP (or other future Improvement Auctions), which already allows
trading in penny increments. In addition, pursuant to the amended
proposal, AAOs may only be entered in series that are limited to
quoting in standard increments greater than one cent. The Commission
believes it is consistent with the Act to allow BSE to implement
another initiative designed to allow limited trading in penny
increments at the same time it participates in the Penny Pilot Program.
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    \26\ The Penny Pilot was approved by the Commission to allow BOX
to permit certain option classes to be quoted in pennies on a pilot
basis. See Securities Exchange Act Release No. 55155 (January 23,
2007), 72 FR 4741 (February 1, 2007) (SR-BSE-2006-49).
    \27\ See ISE Letter, supra note 4, at 3.
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D. Accelerated Approval

    The Commission finds good cause to approve the proposal prior to
the thirtieth day after the proposal was published for comment in the
Federal Register. The proposed rule change, as modified by Amendment
No. 1, was published for full notice and comment.\28\ Amendment No. 2,
which limits the AAO functionality to Public Customer accounts, and in
a series for which the standard trading increment is greater than one
cent, modifies the proposal in response to issues raised by a
commenter. For these reasons, the Commission finds good cause,
consistent with section 19(b)(2) of the Act, to grant accelerated
approval to the proposed rule change.
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    \28\ See Notice, supra note 3.
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\29\ that the proposed rule change (SR-BSE-2006-56), as modified by
Amendments No. 1 and 2, be, and it hereby is, approved on an
accelerated basis.
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    \29\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\30\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-15431 Filed 8-7-07; 8:45 am]

BILLING CODE 8010-01-P