[Federal Register Volume 81, Number 218 (Thursday, November 10, 2016)]
[Notices]
[Pages 79071-79078]
[FR Doc No: 2016-27154]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79245; File No. SR-NSCC-2016-005)

Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Accelerate Its
Trade Guaranty, Add New Clearing Fund Components, Enhance Its Intraday
Risk Management, Provide for Loss Allocation of ``Off-the-Market
Transactions,'' and Make Other Changes

November 4, 2016
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 25, 2016, National Securities Clearing Corporation (``NSCC''
or the ``Corporation'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared primarily by
the clearing agency.\3\ The

Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On October 25, 2016, NSCC filed this proposed rule change as
an advance notice (SR-NSCC-2016-803) with the Commission pursuant to
Section 806(e)(1) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act entitled the Payment, Clearing, and Settlement
Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b-
4(n)(1)(i) of the Act, 17 CFR 240.19b-4(n)(1)(i). A copy of the
advance notice is available at http://www.dtcc.com/legal/sec-rule-filings.aspx.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The proposed rule change consists of amendments to NSCC's Rules &
Procedures (``Rules'') \4\ in order to (i) accelerate NSCC's trade
guaranty from midnight of one day after trade date (``T+1'') to the
point of trade comparison and validation for bilateral submissions or
to the point of trade validation for locked-in submissions, (ii) add
three new components to the Clearing Fund formula and eliminate the
current Specified Activity charge from the Clearing Fund formula, (iii)
amend Procedure II to remove language that permits NSCC to delay
processing and reporting for certain index receipt transactions, (iv)
enhance NSCC's current intraday mark-to-market margin process and
clarify the circumstances and criteria for its intraday risk management
monitoring and intraday collections of mark-to-market margin, (v)
introduce a new loss allocation provision for any trades that fall
within the proposed definition of ``Off-the-Market Transactions'' and
(vi) make a technical change to Procedure XV to remove the reference to
ID Net Subscribers, as described below.
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    \4\ Capitalized terms not defined herein are defined in the
Rules, available at http://dtcc.com/~/media/Files/Downloads/legal/
rules/nscc_rules.pdf.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

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

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

1. Purpose
(i) Accelerate the NSCC Trade Guaranty
    Pursuant to Addendum K of the Rules, NSCC currently guarantees the
completion of trades that are cleared and settled through NSCC's
Continuous Net Settlement (``CNS'') \5\ system (``CNS trades'') and
through its Balance Order Accounting Operation \6\ (``Balance Order
trades'') that have reached the later of midnight of T+1 or midnight of
the day they are reported to Members.\7\ NSCC proposes to amend its
Rules in order to guarantee the completion of CNS trades and Balance
Order trades upon comparison and validation for bilateral submissions
to NSCC or upon validation for locked-in submissions to NSCC.
Validation refers to the process whereby NSCC validates a locked-in
trade, or compares and validates a bilateral trade, to confirm such
trade has sufficient and correct information for clearance and
settlement processing. For purposes of this description in the proposed
rule change, the process of comparing and validating bilateral
submissions and the process for validating locked-in submissions are
collectively referred to as ``trade validation.''
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    \5\ CNS and its operation are described in Rule 11 and Procedure
VII.
    \6\ The Balance Order Accounting Operation is described in Rule
5 and Procedure V. NSCC does not become a counterparty to Balance
Order trades, but it does provide a trade guaranty to the receive
and deliver parties that remains effective through close of business
on the originally scheduled settlement date.
    \7\ Today, shortened process trades, such as same-day and next-
day settling trades, are already guaranteed upon comparison or trade
recording processing.
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    NSCC has previously shortened the time at which its trade guaranty
applied to trades in response to processing developments and risk
management considerations and to follow industry settlement cycles.\8\
Since implementation of the current trade guaranty policy, the
marketplace has experienced significant change. The proposed
accelerated trade guaranty and related proposed changes described
herein would benefit the industry by mitigating counterparty risk and
enhancing counterparties' ability to assess that risk by having NSCC
become the central counterparty to CNS trades and by applying the trade
guaranty to Balance Order trades at an earlier point in the settlement
cycle.
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    \8\ See Securities Exchange Act Release Nos. 44648 (August 2,
2001), 66 FR 42245 (August 10, 2001) (SR-NSCC-2001-11); 35442 (March
3, 1995), 60 FR 13197 (March 10, 1995) (SR-NSCC-95-02); 35807 (June
5, 1995), 60 FR 31177 (June 13, 1995) (SR-NSCC-95-03); and 27192
(August 29, 1989), 54 FR 37010 (approving SR-NSCC-87-04, SR-MCC-87-
03, and SR-SCCP-87-03 until December 31, 1990).
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    The transfer of counterparty credit risk from Members to NSCC at an
earlier point in the settlement cycle facilitates a shortened holding
period of bilateral credit risk for counterparties by transferring the
obligation onto NSCC, which is better equipped to manage that
counterparty credit risk, including potential systemic impact, compared
to the counterparties themselves.
    In order to implement this proposed change, NSCC would amend
Addendum K of its Rules \9\ to provide that CNS trades and Balance
Order trades would be guaranteed by NSCC at the point of trade
validation.\10\
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    \9\ Supra note 4.
    \10\ The proposed accelerated trade guaranty would not apply to
items not currently guaranteed today.
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    NSCC also proposes to clarify in Addendum K \11\ that the guaranty
of obligations arising out of the exercise or assignment of options
that are settled at NSCC is not governed by Addendum K \12\ but by a
separate arrangement between NSCC and The Options Clearing Corporation,
as referred to in Procedure III of the Rules.\13\
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    \11\ Supra note 4.
    \12\ Id.
    \13\ Id.
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(ii) Proposed Enhancements to NSCC's Clearing Fund Formula
    In conjunction with accelerating the trade guaranty, NSCC would
enhance its Clearing Fund formula to address the risks posed by the
expanded trade guaranty. Specifically, NSCC proposes to amend Procedure
XV \14\ (Clearing Fund Formula and Other Matters) to include three new
components: The Margin Requirement Differential (``MRD''), the Coverage
Component and the Intraday Backtesting Charge.
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    \14\ Id.
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    NSCC also proposes to add to Procedure XV \15\ a description of the
enhanced intraday mark-to-market component of the Clearing Fund formula
that clarifies the circumstances and criteria for the assessment of an
intraday mark-to-market call. In addition, NSCC proposes to delete the
Specified Activity charge, a component of the Clearing Fund formula
that mitigates shortened cycle risk (that is, the risk of the trade
guaranty attaching prior to collection of daily Clearing Fund). This
charge would no longer be necessary because the MRD would mitigate
those same risks.
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    \15\ Id.
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    A more detailed description of the foregoing changes follows:
A. The Required Deposit and the Accelerated Trade Guaranty
    NSCC collects Required Deposits from all Members as margin to
protect NSCC against losses in the event of a Member's default. The
objective of the Required Deposit is to mitigate potential losses to
NSCC associated with liquidation of the Member's portfolio if NSCC
ceases to act for a Member (hereinafter referred to as

a ``default''). NSCC determines Required Deposit amounts using a risk-
based margin methodology that is intended to capture market price risk.
The methodology uses historical market moves to project or forecast the
potential gains or losses on the liquidation of a defaulting Member's
portfolio, assuming that a portfolio would take three days to liquidate
or hedge in normal market conditions. The projected liquidation gains
or losses are used to determine the Member's Required Deposit, which is
calculated to cover projected liquidation losses to be at or above a 99
percent confidence level (the ``Coverage Target''). The aggregate of
all Members' Required Deposits constitutes NSCC's Clearing Fund, which
NSCC would be able to access if a defaulting Member's own Required
Deposit is insufficient to satisfy losses to NSCC caused by the
liquidation of the Member's portfolio.
    NSCC calculates and collects Required Deposits from Members daily.
Each Member's daily Required Deposit is calculated based on the end-of-
day positions from the prior day and is generally collected by 10:00
a.m. ET. NSCC's current trade guaranty does not generally attach to
trades until midnight of T+1, after Required Deposits reflecting these
trades have been collected. Therefore, Members' Required Deposits are
generally sufficient to cover projected liquidation losses for
guaranteed trades. However, under the accelerated trade guaranty
proposal, NSCC's trade guaranty would attach to current-day trades
immediately upon trade validation, before Required Deposits reflecting
these trades have been collected (which NSCC refers to herein as the
``coverage gap'').\16\ Therefore, Members' Required Deposits may not be
sufficient to cover the projected liquidation losses of trades
guaranteed by NSCC upon trade validation, and NSCC, absent the proposed
Clearing Fund formula enhancements, could incur a loss associated with
those trades if it ceases to act for a Member.
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    \16\ The coverage gap is the period between the time that NSCC
would guarantee a trade and the time that NSCC would collect
additional margin to cover such trade.
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B. Addition of the MRD to the Clearing Fund Formula
    The MRD is designed to help mitigate the risks posed to the
Corporation by day-over-day fluctuations in a Member's portfolio by
forecasting future changes in a Member's portfolio based on a
historical look-back at each Member's portfolio over a given time
period. A Member's portfolio may fluctuate significantly from one
trading day to the next as the Member executes trades throughout the
day. Currently, daily fluctuations in a Member's portfolio resulting
from such trades do not pose any additional or different risk to NSCC
because those trades are not guaranteed by NSCC until a Required
Deposit reflecting such trades is collected by NSCC. However, under the
accelerated trade guaranty proposal, trades would be guaranteed by NSCC
upon trade validation and therefore may result in large un-margined
intraday portfolio fluctuations during the coverage gap. The MRD would
increase Members' Required Deposits by an amount calculated to cover
forecasted fluctuations in Members' portfolios, based upon historical
activity.
    The MRD would be calculated and charged on a daily basis as a part
of each Member's Required Deposit and consists of two components: The
``MRD VaR'' and the ``MRD MTM.'' The MRD VaR looks at historical day-
over-day positive changes in the start of day (``SOD'') volatility
component of a Member's Required Deposit \17\ (``Volatility Charge'')
over a 100-day look-back period and would be calculated to equal the
exponentially weighted moving average (``EWMA'') of such changes to the
Member's Volatility Charge during the look-back period. The MRD MTM
looks at historical day-over-day increases to the SOD mark-to-market
component of a Member's Required Deposit \18\ over a 100-day look-back
period and would be calculated to equal the EWMA of such changes to the
Member's SOD mark-to-market component during the look-back period. The
MRD is calculated to equal the sum of MRD VaR and MRD MTM times a
multiplier calibrated based on backtesting results. NSCC has determined
that a 100-day look-back period would provide it with a sufficient time
series to reflect current market conditions.
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    \17\ The volatility component of the Clearing Fund formula for
CNS trades and Balance Order trades is described in Procedure XV,
Sections I.(A)(1)(a) and I.(A)(2)(a), respectively.
    \18\ The SOD mark-to-market component of the Clearing Fund
formula for CNS trades consists of Regular Mark-to-Market and ID Net
Mark-to-Market, which are described in Procedure XV, Sections
I.(A)(1)(b) and I.(A)(1)(c), respectively. The SOD mark-to-market
component of the Clearing Fund formula for Balance Order trades is
described in Procedure XV, Section I.(A)(2)(b).
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    By addressing the day-over-day changes to each Member's SOD
Volatility Charge and SOD mark-to-market component, the MRD would help
mitigate the risks posed to the Corporation by un-margined day-over-day
fluctuations to a Member's portfolio resulting from intraday trading
activity that would be guaranteed during the coverage gap.
C. Addition of the Coverage Component to the Clearing Fund Formula
    The ``Coverage Component'' is designed to mitigate the risks
associated with a Member's Required Deposit being insufficient to cover
projected liquidation losses to the Coverage Target by adjusting a
Member's Required Deposit towards the Coverage Target. The Corporation
would face increased exposure to a Member's un-margined portfolio as a
result of the proposed accelerated trade guaranty and would have an
increased need to have each Member's Required Deposit meet the Coverage
Target. The Coverage Component would supplement the MRD by preemptively
increasing a Member's Required Deposit in an amount calculated to
forecast potential deficiencies in the margin coverage of a Member's
guaranteed portfolio. The preemptive nature of the Coverage Component
differentiates it from the Regular Backtesting Charge and the Intraday
Backtesting Charge, both of which are reactive measures to increase the
Member's Required Deposit to above the Coverage Target.
    The Coverage Component would be calculated and charged on a daily
basis as a part of each Member's Required Deposit. To calculate the
Coverage Component, NSCC would compare the simulated liquidation profit
and loss of a Member's portfolio, using the actual positions in the
Member's portfolio and the actual historical returns on the security
positions in the portfolio, against the sum of each of the following
components of the Clearing Fund formula: The Volatility Charge, the
MRD, the Illiquid Charge and the Market Maker domination charge
(collectively, the ``Market Risk Components''), to determine if there
were any deficiencies between the amounts collected by these components
and the simulated profit and loss of the Member's portfolio that would
have been realized had it been liquidated during a 100-day look-back
period. NSCC would then determine a daily ``peak deficiency'' amount
for each Member equal to the maximum deficiency over a rolling 10
business day period for the preceding 100 days. The Coverage Component
would be calculated to equal the EWMA of the peak deficiencies over the
100-day look-back period.
    In working to bring each Member's Required Deposit towards the
Coverage Target by preemptively collecting an

amount designed to cover projected liquidation profit and loss of a
Member's portfolio, including the trades guaranteed during the coverage
gap, NSCC would further mitigate the risks posed to it by the proposed
accelerated trade guaranty.
D. Addition of the Intraday Backtesting Charge to the Clearing Fund
Formula
    NSCC employs daily backtesting to determine the adequacy of each
Member's Required Deposit. NSCC compares the Required Deposit \19\ for
each Member with the simulated liquidation profit and loss using the
actual positions in the Member's portfolio and the actual historical
returns on the security positions in the portfolio. NSCC investigates
the cause(s) of any backtesting deficiencies. As a part of this
investigation, NSCC pays particular attention to Members with
backtesting deficiencies that bring the results for that Member below
the Coverage Target to determine if there is an identifiable cause of
repeat backtesting deficiencies. NSCC also evaluates whether multiple
Members experience backtesting deficiencies for the same underlying
reason. Upon implementation of the accelerated trade guaranty, NSCC
would employ a similar backtesting process on an intraday basis to
determine the adequacy of each Member's Required Deposit. However,
instead of backtesting a Member's Required Deposit against the Member's
SOD portfolio, NSCC would use portfolios from two intraday time
slices.\20\
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    \19\ For backtesting comparisons, NSCC uses the Required Deposit
amount without regard to the actual collateral posted by the Member.
    \20\ Intraday time slices are subject to change based upon
market conditions and would include the positions from SOD plus any
additional positions up to that time.
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1. Calculation of the Intraday Backtesting Charge
    The objective of the Intraday Backtesting Charge is to increase
Required Deposits for Members that are likely to experience intraday
backtesting deficiencies on the basis described above by an amount
sufficient to maintain such Member's intraday backtesting coverage
above the Coverage Target. Members that maintain consistent end of day
positions but have a high level of intraday trading activity pose risk
to NSCC if they were to default intraday.
    Because the intraday trading activity and size of the intraday
backtesting deficiencies vary among impacted Members, NSCC must assess
an Intraday Backtesting Charge that is specific to each impacted
Member. To do so, NSCC examines each impacted Member's historical
intraday backtesting deficiencies observed over the prior 12-month
period to identify the five largest intraday backtesting deficiencies
that have occurred during that time. The presumptive Intraday
Backtesting Charge amount would equal that Member's fifth largest
historical intraday backtesting deficiency, subject to adjustment as
further described below. NSCC believes that applying an additional
margin charge equal to the fifth largest historical intraday
backtesting deficiency to a Member's Required Deposit would have
brought the Member's historically observed intraday backtesting
coverage above the Coverage Target.\21\
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    \21\ Intraday backtesting would include 500 observations per
year (twice per day over 250 observation days). Each occurrence of a
backtesting deficiency would reduce a Member's overall backtesting
coverage by 0.2 percent (1 exception/500 observations). Accordingly,
an Intraday Backtesting Charge equal to the fifth largest
backtesting deficiency would have brought backtesting coverage up to
99.2 percent.
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    The Intraday Backtesting Charge would only be applicable to those
Members whose overall 12-month trailing intraday backtesting coverage
falls below the Coverage Target.
    Although the fifth largest historical backtesting deficiency for a
Member would be used as the Intraday Backtesting Charge in most cases,
NSCC would retain discretion to adjust the charge amount based on other
circumstances that might be relevant for assessing whether an impacted
Member is likely to experience future backtesting deficiencies and the
estimated size of such deficiencies. Examples of relevant circumstances
that could be considered by NSCC in calculating the final, applicable
Intraday Backtesting Charge amount include material differences among
the Member's five largest intraday backtesting deficiencies observed
over the prior 12-month period, variability in the net settlement
activity after the collection of the Member's Required Deposit and
observed market price volatility in excess of the Member's historical
Volatility Charge. Based on NSCC's assessment of the impact of these
circumstances on the likelihood, and estimated size, of future intraday
backtesting deficiencies for a Member, NSCC may, in its discretion,
adjust the Intraday Backtesting Charge for such Member in an amount
that NSCC determines to be more appropriate for maintaining such
Member's intraday backtesting results above the Coverage Target.
    The resulting Intraday Backtesting Charge would be added to the
Required Deposit for such Member and would be imposed on a daily basis
for a one-month period.
    In order to differentiate the Backtesting Charge assessed on the
start of the day portfolio from the Backtesting Charge assessed on an
intraday basis, NSCC would amend the Rules by adding a defined term
``Regular Backtesting Charge'' to Procedure XV, Section I.(B)(3).\22\
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    \22\ Supra note 4.
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2. Communication With Members and Imposition of the Intraday
Backtesting Charge
    If NSCC determines that an Intraday Backtesting Charge should apply
to a Member who was not assessed an Intraday Backtesting Charge during
the immediately preceding month or that the Intraday Backtesting Charge
applied to a Member during the previous month should be increased, NSCC
would notify the Member on or around the 25th calendar day of the month
prior to the assessment of the Intraday Backtesting Charge or prior to
the increase to the Intraday Backtesting Charge, as applicable, if not
earlier.
    NSCC would impose the Intraday Backtesting Charge as an additional
charge applied to each impacted Member's Required Deposit on a daily
basis for a one-month period and would review each applied Intraday
Backtesting Charge each month. If an impacted Member's trailing 12-
month intraday backtesting coverage exceeds the Coverage Target
(without taking into account historically imposed Intraday Backtesting
Charges), the Intraday Backtesting Charge would be removed.
E. Removal of the Specified Activity Charge From the Clearing Fund
Formula
    Currently, NSCC collects a Specified Activity charge, which is
designed to cover the risk posed to NSCC by transactions that settle on
a shortened cycle.\23\ Such transactions pose an increased risk to NSCC
because these trades settle on a shortened settlement cycle and may be
guaranteed by NSCC prior to the collection of margin on them. The
Specified Activity charge currently mitigates this risk by increasing
the Required Deposit for a Member in relation to the number of
Specified Activity trades submitted by the Member to NSCC over a 100-
day look-back period. However, the risk posed to NSCC by Specified
Activity

would no longer be unique to such trade activity--the proposed
accelerated trade guaranty would result in a similar risk to NSCC. The
addition of the MRD and Coverage Components to the Clearing Fund
formula would mitigate the risks posed by trades guaranteed by NSCC
prior to the collection of margin on those trades. As a result, NSCC
proposes to eliminate the Specified Activity charge because imposing a
separate Specified Activity charge would no longer be necessary once
the MRD and Coverage Components are added to the Clearing Fund formula.
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    \23\ Examples of these trades can include next day settling
trades, same day settling trades, cash trades or sellers' options.
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F. Enhanced Intraday Mark-to-Market Margining
    NSCC proposes to enhance its current intraday margining to further
mitigate the intraday coverage gap risk that may be introduced to the
Corporation as a result of the proposed accelerated trade guaranty. By
way of background, NSCC currently collects a SOD mark-to-market margin,
which is designed to mitigate the risk arising out of the value change
between the contract/settlement value of a Member's open positions and
the current market value, as part of its Clearing Fund formula. A
Member's SOD mark-to-market margin is calculated and collected as part
of a Member's daily Required Deposit based on the Member's prior end-
of-day positions. The SOD mark-to-market component of the daily
Required Deposit is calculated to cover a Member's exposure due to
market moves and/or trading and settlement activity by bringing the
portfolio of open positions up to the current market value. However,
because the SOD mark-to-market component is calculated only once daily
using the prior end-of-day positions and prices, it will not cover a
Member's exposure arising out of any intraday changes to position and
market value in a Member's portfolio. Accordingly, NSCC currently
collects intraday mark-to-market margin from Members to cover
additional risk exposure arising out of intraday position and market
value changes to the Member's portfolio if the additional risks are
sufficiently large to warrant the collection of an intraday margin.
    NSCC has determined that it is not necessary to collect intraday
margin from every Member that experiences an intraday mark-to-market
change because the Volatility Charge already collected as part of
Members' daily Required Deposits is calculated to cover projected
changes in the contract/settlement value of a Member's portfolio and
likely cover intraday changes to a Member's portfolio. However, in
certain instances, Members may have intraday mark-to-market changes
that are significant enough that NSCC is exposed to an increased risk
of loss as a result of such Member's intraday activities. In
particular, NSCC measures each Member's intraday mark-to-market
exposure against the Volatility Charge. NSCC collects an intraday mark-
to-market amount from any Member that has an intraday mark-to-market
exposure that meets or exceeds a threshold percentage as compared to
the Member's Volatility Charge. NSCC believes that such Members pose an
increased risk of loss to the Corporation because the coverage provided
by the Volatility Charge, which is designed to cover estimated losses
to a portfolio over a specified time period, would be exhausted by an
intraday mark-to-market exposure so large that the Member's Required
Deposit would potentially be unable to absorb further intraday losses
to the Member's portfolio.
    In order to further mitigate the risk posed to NSCC by the proposed
accelerated trade guaranty, NSCC is proposing to enhance its collection
of intraday mark-to-market margin. NSCC would impose the intraday mark-
to-market margin amount at a lower threshold. Currently, NSCC makes an
intraday mark-to-market margin call if a Member's intraday mark-to-
market exposure meets or exceeds 100 percent of such Member's
Volatility Charge; however, such threshold may be reduced by NSCC
during volatile market conditions. With this proposal, NSCC would make
an intraday margin call if a Member's intraday mark-to-market exposure
meets or exceeds 80 percent of such Member's Volatility Charge, where
such threshold may still be reduced by NSCC during volatile market
conditions. This proposed change would serve to collect intraday margin
earlier and more proactively preserve the coverage provided by a
Member's Volatility Charge and Required Deposit.
    In addition, NSCC would monitor intraday changes to Member's mark-
to-market exposure at regular intervals to further mitigate the risk
posed to NSCC by the accelerated trade guaranty. By doing so, NSCC
would be able to make intraday margin calls more frequently to those
Members whose intraday mark-to-market exposures exceed the Volatility
Charge threshold. Enhancing the collection of the intraday mark-to-
market amount so that it occurs earlier and more frequently would allow
NSCC to reduce the amount of uncovered risk during the coverage gap and
would therefore further mitigate the risk posed to the Corporation by
the accelerated trade guaranty.
    NSCC proposes to amend Procedure XV to include a description of the
enhanced intraday mark-to-market margin charge that clarifies the
circumstances and criteria for the assessment of an intraday mark-to-
market call. This would ensure that Members are aware that the
Corporation regularly monitors and considers intraday mark-to-market as
part of its regular Clearing Fund formula.
G. Adjustments to the Calculation of the Excess Capital Premium
Component
    The Excess Capital Premium \24\ is designed to address spikes in a
Member's Required Deposit based upon any one day of activity. It is not
designed to provide additional Required Deposits over an extended
period of time. Currently, the Excess Capital Premium for a Member is
calculated based upon the Member's Clearing Fund Required Deposit and
the Member's excess net capital. With the addition of the MRD and the
Coverage Component, NSCC proposes to exclude these charges from the
calculation of the Excess Capital Premium. The MRD and the Coverage
Component all utilize a historical look-back period, which accounts for
the risk of such activity well after the relevant trades have settled.
Risks related to such trades would be reflected in increased amounts
assessed for these components over the subsequent time periods. If
these components are included in the calculation of the Excess Capital
Premium, especially during periods following an increase in activity,
then the increased MRD and Coverage Component could lead to more
frequent Excess Capital Premium charges over an extended period of
time. This is not the intended purpose of the Excess Capital Premium
and could place an unnecessary burden on Members.
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    \24\ The Excess Capital Premium is a charge imposed on a Member
when the Member's Required Deposit exceeds its excess net capital,
as described in Procedure XV.
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(iii) Proposed Changes to Procedure II (Trade Comparison and Recording
Service)
    Next day settling index receipts may be guaranteed prior to the
collection of margin reflecting such trades and thus carry a very
similar risk as Specified Activity trades described above. More
specifically, because these trades are settled on the day after they
are received and validated by NSCC, NSCC currently attaches its
guaranty to them at the time of validation, prior to the collection of
a Required Deposit that reflects such trades. Unlike the risk from
Specified

Activity trades, which is mitigated by the Specified Activity charge,
the risk for next day settling index receipts is currently mitigated by
permitting NSCC to delay the processing and reporting of these trades
if a Member's Required Deposit is not paid on time. However, like the
risk associated with Specified Activity, under the proposed rule
change, this risk would generally be mitigated by the addition of the
MRD and the Coverage Component. Therefore, NSCC proposes to amend
Procedure II \25\ (Trade Comparison and Recording Service) to remove
the language that permits NSCC to delay the processing and reporting of
next day settling index receipts until the applicable margin on these
transactions is paid.
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    \25\ Supra note 4.
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(iv) Loss Allocation Provision for Off-the-Market Transactions
    NSCC proposes to introduce a new loss allocation provision for any
trades that fall within the proposed definition of ``Off-the-Market
Transactions'' in order to limit NSCC's exposure to certain trades that
have a price that differs significantly from the prevailing market
price for the underlying security at the time the trade is executed.
This provision would apply in the event that NSCC ceases to act for a
Member that engaged in Off-the-Market Transactions and only to the
extent that NSCC incurs a net loss in the liquidation of such
Transactions.\26\
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    \26\ A net loss on liquidation of the Off-the-Market Transaction
means that the loss on liquidation of the Member's portfolio exceeds
the collected Required Deposit of the Member and such loss is
attributed to the Off-the-Market Transaction. Such loss would be
allocated directly and entirely to the Member that submitted the
Off-the-Market Transaction, or on whose behalf the Off-the-Market
Transaction was submitted, to NSCC; however, no allocation would be
made if such Member has satisfied all applicable intraday mark-to-
market margin charges assessed by NSCC with respect to the Off-the-
Market Transaction.
---------------------------------------------------------------------------

    NSCC would define ``Off-the-Market Transactions'' as either a
single transaction or a series of transactions settled within the same
cycle with greater than $1 million in gross proceeds and either higher
or lower than the most recently observed market price by a percentage
amount based on market conditions and factors that impact trading
behavior of the underlying security, including volatility, liquidity
and other characteristics of such security.
    The proposed rule change would establish the loss allocation for
Off-the-Market Transactions. NSCC would allocate any losses to NSCC
resulting from the liquidation of any guaranteed, open Off-the-Market
Transaction of a defaulted Member directly and entirely to the
surviving counterparty to that transaction. Losses would be allocated
to counterparties in proportion to their specific Off-the-Market
Transaction gain and would be allocated only to the extent of NSCC's
loss; however, no allocation shall be made if the defaulted Member has
satisfied all requisite intraday mark-to-market margin assessed by NSCC
with respect to the Off-the-Market Transaction.\27\
---------------------------------------------------------------------------

    \27\ A Member's Off-the-Market Transaction that has been marked
to market is, by definition, no longer an Off-the-Market Transaction
when the mark-to-market component of the Member's Required Deposit
is satisfied.
---------------------------------------------------------------------------

    This proposed change would allow NSCC to mitigate the risk of loss
associated with guaranteeing these Off-the-Market Transactions. The
proposal recognizes that applying the accelerated trade guaranty to
transactions whose price significantly differs from the most recently
observed market price could inappropriately increase the loss that NSCC
may incur if a Member that has engaged in Off-the-Market Transactions
defaults and its open, guaranteed positions are liquidated. Members not
involved in Off-the-Market Transactions, or not involved in Off-the-
Market Transactions that result in losses to NSCC, would not be
included in this process. This exclusion would apply only to losses
that are attributable to Off-the-Market Transactions and would not
exclude Members from other obligations that may result from any loss or
liabilities incurred by NSCC from a Member default.
    In order to implement this proposed change, NSCC would amend Rule 4
\28\ (Clearing Fund) to provide that, if a loss or liability of NSCC is
determined by NSCC to arise in connection with the liquidation of any
Off-the-Market Transactions, such loss or liability would be allocated
directly to the surviving counterparty to the Off-the-Market
Transaction that submitted the transaction to NSCC for clearing. NSCC
would also amend Rule 1 \29\ (Definitions and Descriptions) to include
a definition of Off-the-Market Transactions.
---------------------------------------------------------------------------

    \28\ Supra note 4.
    \29\ Id.
---------------------------------------------------------------------------

(v) Technical Proposed Rule Change
    NSCC is proposing a change to Procedure XV \30\ to clarify the
calculation of the Regular Mark-to-Market component for CNS
transactions. NSCC's historical and current policy for the calculation
of any mark-to-market component of the Clearing Fund calculation for
CNS trades and Balance Order trades is that where a credit is derived
from a Member's mark-to-market calculation, the value of the
calculation is adjusted to zero. When NSCC implemented the ID Net
service,\31\ a provision was added to Procedure XV \32\ that explicitly
stated this policy as it relates to CNS transactions of subscribers to
the ID Net service. This change inadvertently created an implication
that the calculation of Regular Mark-to-Market credit for Members who
were not ID Net Subscribers would not be set to zero. NSCC is proposing
to revise the applicable provision to remove the reference to ID Net
Subscribers.
---------------------------------------------------------------------------

    \30\ Id.
    \31\ NSCC's ID Net service is defined further in Rule 65. Rules,
supra note 4. See Securities Exchange Act Release No. 57901 (June 2,
2008), 73 FR 32373 (June 6, 2008) (SR-NSCC-2007-14).
    \32\ Supra note 4.
---------------------------------------------------------------------------

(vi) Member Outreach
    Over the past several years, NSCC has conducted outreach with its
Members with respect to impact on their Clearing Fund Required Deposits
as a result of this proposal. This includes the publication of the 2013
whitepaper, ``Enhancing Risk Management: Important Upcoming Changes
From NSCC'', as well as individual impact studies provided to each
Member showing the anticipated impact on the Member's Clearing Fund
Required Deposit based on their historical portfolios.
Implementation Timeframe
    Pending Commission approval, Members would be advised of the
implementation date of this proposal through issuance of an NSCC
Important Notice. NSCC expects to run the proposed changes in a test
environment for a parallel period of at least three months prior to
implementation. Details and dates regarding such test period would be
communicated to Members through an NSCC Important Notice.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, in part, that NSCC's
Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions, to assure the safeguarding of
securities and funds which are in the custody and control of NSCC or
for which it is responsible and to protect investors and the public
interest.\33\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The proposal to accelerate the time that NSCC's trade guaranty
attaches to trades submitted to it for clearing has been designed to
promote the prompt and accurate clearance and settlement of

securities transactions in furtherance of the Act. Specifically, NSCC
would provide a trade guaranty to CNS trades and Balance Order trades
at an earlier point in the settlement cycle. The proposed accelerated
guaranty would mitigate counterparty risk and would enhance Members'
ability to assess that risk by having NSCC become the central
counterparty to CNS trades and by applying the trade guaranty to
Balance Order trades at an earlier point in the settlement cycle.
Therefore, NSCC believes the proposed accelerated guaranty promotes the
prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Act.\34\
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

    The proposed rule changes to (i) add the new components to the
Clearing Fund formula, (ii) enhance the intraday mark-to-market margin
process and (iii) remove provisions regarding the Specified Activity
charge and the provisions that permit NSCC to delay processing and
reporting for certain index receipt transactions (all as described in
detail above) have been designed to assure the safeguarding of
securities and funds in the custody and control of NSCC or for which it
is responsible in furtherance of the Act. Specifically, the proposals
in (i) and (ii) would allow NSCC to appropriately collect additional
margin to mitigate the exposure presented to NSCC by the accelerated
trade guaranty, providing NSCC with the ability to safeguard the funds
and securities for which it is responsible by enabling it to collect
adequate collateral to cover its additional exposures. By enhancing the
Clearing Fund formula, the proposals in (i) and (ii) would also reduce
the risk of loss mutualization to Members because the enhanced margin
collected from each Member would help NSCC limit its exposure to
potential losses from defaults by its participants under normal market
conditions and minimize potential losses to NSCC and its non-defaulting
Members. The proposed rule changes in (iii) would eliminate provisions
that would no longer be needed to mitigate risk because the risk they
currently address would be addressed by the new components proposed to
be introduced to the Clearing Fund formula, as discussed in detail
above. Therefore, NSCC believes the proposed rule changes in (i), (ii)
and (iii) assures the safeguarding of securities and funds which are in
the custody and control of NSCC or for which it is responsible,
consistent with Section 17A(b)(3)(F) of the Act.\35\
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    The proposed rule change to introduce a new loss allocation
provision for any trades that fall within the proposed definition of
Off-the-Market Transactions would help NSCC to limit its exposure to
certain trades that have a price that differs significantly from the
most recently observed market price for the underlying security.
Therefore, the reduction of NSCC's exposure to Off-the-Market
Transactions would assist NSCC in responding to a Member default and
would minimize potential losses to NSCC and its non-defaulting Members.
As such, this proposed rule change is designed to assure the
safeguarding of securities and funds that are in the custody and
control of NSCC or for which it is responsible, consistent with Section
17A(b)(3)(F) of the Act.\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    Also, the proposed technical change to the calculation of the
Regular Mark-to-Market component for CNS transactions would provide
additional clarity to NSCC Members and would ensure the Rules
accurately reflect that Regular Mark-to-Market credit for all NSCC
Members would be set to zero. Therefore, NSCC believes the proposed
technical change would protect investors and the public interest,
consistent with the requirements of Section 17A(b)(3)(F) of the
Act.\37\
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

    NSCC believes that the proposal is also consistent with Rules 17Ad-
22(b)(1) and (b)(2), promulgated under the Act. Rule 17Ad-22(b)(1)
requires NSCC to establish, implement, maintain and enforce written
policies and procedures reasonably designed to measure its credit
exposures to its participants at least once a day and limit its
exposures to potential losses from defaults by its participants under
normal market conditions so that the operations of NSCC would not be
disrupted and non-defaulting participants would not be exposed to
losses that they cannot anticipate or control.\38\ NSCC's proposal to
expand its current intraday margin collection to include (a) the
collection of intraday mark-to-market margin at a lower threshold and
(b) the collection of the Intraday Backtesting Charge would further
enhance its intraday monitoring and its ability to measure credit
exposures at least once a day. The proposal to enhance the amount of
margin collected from each Member would help NSCC to limit its exposure
to potential losses from defaults by its participants under normal
market conditions and reduce risk of loss mutualization to the NSCC
membership. Similarly, the proposal to introduce a new loss allocation
provision for Off-the-Market Transactions would also help NSCC to limit
its exposure to potential losses from defaults by its participants
under normal market conditions. Therefore, NSCC believes the proposals
are consistent with the requirements of Rule 17Ad-22(b)(1), promulgated
under the Act, cited above.
---------------------------------------------------------------------------

    \38\ 17 CFR 240.17Ad-22(b)(1).
---------------------------------------------------------------------------

    Rule 17Ad-22(b)(2) requires NSCC to establish, implement, maintain
and enforce written policies and procedures reasonably designed to
``use margin requirements to limit its credit exposures to participants
under normal market conditions and use risk-based models and parameters
to set margin requirements.'' \39\ The proposal to add the MRD, the
Coverage Component and the Intraday Backtesting Charge to the Clearing
Fund formula and to collect intraday mark-to-market margin at a lower
threshold in order to mitigate the exposure presented to NSCC by the
accelerated trade guaranty would enable NSCC to enhance its margin
requirements to better limit its credit exposures to participants under
normal market conditions. Therefore, NSCC believes the proposed changes
are consistent with the requirements of Rule 17Ad-22(b)(2), promulgated
under the Act, cited above.
---------------------------------------------------------------------------

    \39\ 17 CFR 240.17Ad-22(b)(2).
---------------------------------------------------------------------------

    The proposed changes to NSCC's Clearing Fund formula and the
intraday margin process are also designed to be consistent with Rules
17Ad-22(e)(4) and (e)(6) of the Act, which were recently adopted by the
Commission.\40\ Rule 17Ad-22(e)(4) will require NSCC to establish,
implement, maintain and enforce written policies and procedures
reasonably designed to effectively identify, measure, monitor, and
manage its credit exposures to participants and those exposures arising
from its payment, clearing, and settlement processes.\41\ NSCC's
proposal to expand its current intraday margin collection to include
(a) the collection of intraday mark-to-market margin at a lower
threshold and (b) the collection of the Intraday Backtesting Charge
would enhance its ability to identify, measure,

monitor and manage its credit exposures to participants. The proposal
to enhance the amount of margin NSCC collected from each Member and to
introduce a new loss allocation provision for Off-the-Market
Transactions would further help NSCC to manage its credit exposures to
participants and those exposures arising from its payment, clearing,
and settlement processes. Therefore, NSCC believes these proposals are
consistent with the requirements of Rule 17Ad-22(e)(4), promulgated
under the Act, cited above.
---------------------------------------------------------------------------

    \40\ The Commission adopted amendments to Rule 17Ad-22,
including the addition of new section 17Ad-22(e), on September 28,
2016. See Securities Exchange Act Release No. 78961 (September 28,
2016), 81 FR 70786 (October 13, 2016) (S7-03-14). The amendments to
Rule 17Ad-22 become effective on December 12, 2016. Id. NSCC is a
``covered clearing agency'' as defined in Rule 17Ad-22(a)(5) and
must comply with new section (e) of Rule 17Ad-22 by April 11, 2017.
Id.
    \41\ See Securities Exchange Act Release No. 78961 (September
28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(6) will require NSCC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to cover its credit exposures to its participants by
establishing a risk-based margin system that is monitored by management
on an ongoing basis and regularly reviewed, tested, and verified.\42\
The proposal to add the MRD, the Coverage Component and the Intraday
Backtesting Charge to the Clearing Fund formula and to collect intraday
mark-to-market margin at a lower threshold would help NSCC to cover its
credit exposures to its participants by establishing a risk-based
margin system that is monitored by management on an ongoing basis and
regularly reviewed, tested, and verified. Therefore, NSCC believes this
proposal is consistent with the requirements of Rule 17Ad-22(e)(6),
promulgated under the Act, cited above.
---------------------------------------------------------------------------

    \42\ Id.
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    NSCC does not believe that the proposed rule changes associated
with the acceleration of NSCC's guaranty would impose any burden on
competition but, because these proposed changes would pose additional
risks to NSCC, NSCC has also proposed to (i) add the new components to
the NSCC Clearing Fund formula and (ii) enhance the intraday mark-to-
market margin process; however, NSCC does not believe these proposed
rule changes would impose any burden on competition that is not
necessary and appropriate \43\ because the additional margin charges
assessed on Members are needed to limit the additional exposure to NSCC
of potential losses from defaults by Members as a result of
guaranteeing trades at an earlier point in the settlement cycle and are
commensurate with the risk presented by the trades Members submitted to
NSCC for clearing.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    Additionally, NSCC has proposed to introduce a new loss allocation
provision for any trades that fall within the proposed definition of
Off-the-Market Transactions; however, NSCC also does not believe that
this proposed change would impose any burden on competition that is not
necessary or appropriate \44\ because the new loss allocation provision
would allow NSCC to mitigate the risk of loss associated with
guaranteeing the Off-the-Market Transactions and would apply to Members
in proportion to their specific Off-the-Market Transaction gain and
only to the extent of NSCC's loss.
---------------------------------------------------------------------------

    \44\ Id.
---------------------------------------------------------------------------

    Based on the foregoing, NSCC does not believe the proposed rule
changes would impose any burden on competition that is not necessary
and appropriate.\45\
---------------------------------------------------------------------------

    \45\ Id.
---------------------------------------------------------------------------

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others

    NSCC has not received any written comments relating to this
proposed rule change. NSCC will notify the Commission of any written
comments it receives.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.
    The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.

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-NSCC-2016-005 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSCC-2016-005. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of NSCC and on
DTCC's Web site (http://dtcc.com/legal/sec-rule-filings.aspx). 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-NSCC-2016-005 and should be
submitted on or before December 1, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\46\
---------------------------------------------------------------------------

    \46\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-27154 Filed 11-9-16; 8:45 am]
 BILLING CODE 8011-01-P


ENVIRONMENTAL PROTECTION AGENCY

[OECA-2007-0466; FRL-8327-5]

Agency Information Collection Activities:  Proposed Collection; Comment
Request; State Review Framework; EPA ICR Number 2185.01

AGENCY:	Environmental Protection Agency (EPA).

ACTION:	Notice.

SUMMARY:	In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
et seq.), this document announces that EPA is planning to submit a
proposed amendment to an existing Information Collection Request (ICR),
number 2185.01, which is set to expire on November 30, 2008, to the
Office of Management and Budget (OMB).  This is a request for a new
collection.  Before submitting the ICR to OMB for review and approval,
EPA is soliciting comments on specific aspects of the proposed
information collection as described below.

DATES:  Comments must be submitted on or before [insert date 60 days
after publication date].

ADDRESSES:  Submit your comments, identified by Docket ID No. EPA-
OECA-2007-0466 by one of the following methods:

  HYPERLINK "http://www.regulations.gov"  www.regulations.gov : Follow
the on-line instructions for submitting comments.

Email<EMAIL_ADDRESS>
Fax:<PHONE_NUMBER>

Mail: EPA Docket Center, Environmental Protection Agency, OECA Docket,
mail code 2201T, 1200 Pennsylvania Ave., NW, Washington, D.C. 20460.

Hand Delivery: The EPA Docket Center in the District of Columbia is
located at EPA West, Room 3334, 1301 Constitution Avenue, NW,
Washington, DC, 20460.  Such deliveries are only accepted during the
Docket’s normal hours of operation, and special arrangements should be
made for deliveries of boxed information.  The EPA Docket Center Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Reading Room is
(202) 566-1752, and the telephone number for the OECA Docket is (202)
566-1514.

Instructions:  Direct your comments to Docket ID No. OECA-2007-0466.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at
HYPERLINK "http://www.regulations.gov"  www.regulations.gov , including
any personal information provided, unless the comment includes
information claimed to be Confidential Business Information (CBI) or
other information whose disclosure is restricted by statute. Do not
submit information that you consider to be CBI or otherwise protected
through www.regulations.gov or e-mail.

FOR FURTHER INFORMATON CONTACT:   Arthur Horowitz at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:  The   HYPERLINK "http://www.regulations.gov"
 www.regulations.gov  website is an “anonymous access” system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment.  If you send an e-mail comment
directly to EPA without going through www.regulations.gov your e-mail
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet.  If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit.  If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment.  Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA’s public docket visit the EPA Docket Center
homepage at   HYPERLINK "http://www.epa.gov/epahome/dockets.htm"
http://www.epa.gov/epahome/dockets.htm .

Affected entities: EPA Regional Offices, State governments, and local
governments

Title: State Review Framework

Abstract: The State Review Framework ((Framework() is an oversight tool
designed to assess state performance in enforcement and compliance
assurance.  The Framework(s goal is to evaluate state performance by
examining existing data to provide a consistent level of oversight and
develop a uniform mechanism by which EPA Regions, working
collaboratively with their states, can ensure that state environmental
agencies are consistently implementing the national compliance and
enforcement program in order to meet agreed-upon goals.  Furthermore,
the Framework is designed to foster dialogue on enforcement and
compliance performance between the states that will enhance
relationships and increase feedback, which will in turn lead to
consistent program management and improved environmental results.  The
Framework is described in the April 26, 2005 Federal Register Notice (79
FR 21408).  This amendment will allow OECA to collect information to
assist in the evaluation of the State Review Framework implementation
from FY 2005 to the end of FY 2007.  This request will allow EPA to make
inquiries to assess the State Review Framework process, including the
consistency achieved among the EPA Regions and states, the resources
required to conduct the reviews, and the overall effectiveness of the
program.

An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number.  The OMB control numbers for EPA's regulations
in 40 CFR are listed in 40 CFR part 9.

The EPA would like to solicit comments to:

(i) evaluate the accuracy of the Agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used;

(ii) enhance the quality, utility, and clarity of the information to be
collected; and

(iii) minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.

	Burden Statement:  The estimated burden for this Framework is 6 hours
per respondent.  The total number of respondents is 236, producing an
approximate total burden of 1375 hours.  For each respondent, the
proposed frequency of response is one-time in a three-year cycle.  The
projected cost burden to respondents is $47,213, which includes a total
capital and start-up component of $0.0, annualized over its expected
useful life, and a total operation and maintenance component of $0.0.
Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal agency.  This includes the time needed
to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to comply
with any previously applicable instructions and requirements; train
personnel to be able to respond to a collection of information; search
data sources; complete and review the collection of information; and
transmit or otherwise disclose the information.

Dated:  June 6 2007

Lisa Lund, Acting Director,

Office of Compliance,

Office of Enforcement and Compliance Assurance.

 PAGE

 PAGE  5


[Federal Register Volume 79, Number 11 (Thursday, January 16, 2014)]
[Rules and Regulations]
[Pages 2785-2786]
[FR Doc No: 2014-00721]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 510 and 529

[Docket No. FDA-2013-N-0002]

Withdrawal of Approval of New Animal Drug Applications; Argent
Laboratories; Formalin; Tricaine Methanesulfonate

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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

SUMMARY: The Food and Drug Administration (FDA) is amending the animal
drug regulations to reflect the withdrawal of approval of two new
animal drug applications (NADAs) held by Argent Laboratories.
Withdrawal of approval of these NADAs was at the sponsor's request
because the products are no longer manufactured or marketed.

DATES: This final rule is effective January 27, 2014.

FOR FURTHER INFORMATION CONTACT: David Alterman, Center for Veterinary
Medicine (HFV-212), Food and Drug Administration, 7519 Standish Pl.,
Rockville, MD 20855,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Argent Laboratories, 8702 152d Ave. NE.,
Redmond, WA 98052 has requested that FDA withdraw approval of the
following two NADAs because the products are no longer manufactured or
marketed: NADA 042-427 for FINQUEL (tricaine methanesulfonate) and NADA
140-831 for PARACIDE-F (formalin).
    Elsewhere in this issue of the Federal Register, FDA gave notice
that approval of NADAs 042-427 and 140-831, and all supplements and
amendments thereto, is withdrawn. As provided in the regulatory text of
this document, the

animal drug regulations are amended to reflect these voluntary
withdrawals of approval.
    Following these withdrawals of approval, Argent Laboratories will
no longer be the sponsor of an approved application. Accordingly, 21
CFR 510.600(c) is being amended to remove the entries for this firm.
    This rule does not meet the definition of ``rule'' in 5 U.S.C.
804(3)(A) because it is a rule of ``particular applicability.''
Therefore, it is not subject to the congressional review requirements
in 5 U.S.C. 801-808.

List of Subjects

21 CFR Part 510

    Administrative practice and procedure, Animal drugs, Labeling,
Reporting and recordkeeping requirements.

21 CFR Part 529

    Animal drugs.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under
the authority delegated to the Commissioner of Food and Drugs and
redelegated to the Center for Veterinary Medicine, 21 CFR parts 510 and
529 are amended as follows:

PART 510--NEW ANIMAL DRUGS

0
1. The authority citation for 21 CFR part 510 continues to read as
follows:

    Authority:  21 U.S.C. 321, 331, 351, 352, 353, 360b, 371, 379e.

Sec.  510.600  [Amended]

0
2. In Sec.  510.600, in the table in paragraph (c)(1), remove the entry
for ``Argent Laboratories''; and in the table in paragraph (c)(2),
remove the entry for ``051212''.

PART 529--CERTAIN OTHER DOSAGE FORM NEW ANIMAL DRUGS

0
3. The authority citation for 21 CFR part 529 continues to read as
follows:

    Authority:  21 U.S.C. 360b.

0
4. In Sec.  529.1030:
0
a. Revise paragraph (b);
0
b. Remove paragraphs (d)(1)(i) and (d)(1)(ii), and redesignate
paragraphs (d)(1)(iii), (d)(1)(iv), and (d)(1)(v) as paragraphs
(d)(1)(i), (d)(1)(ii), and (d)(1)(iii);
0
c. Remove paragraphs (d)(2)(i) and (d)(2)(ii), and redesignate
paragraphs (d)(2)(iii), (d)(2)(iv), and (d)(2)(v) as paragraphs
(d)(2)(i), (d)(2)(ii), and (d)(2)(iii); and
0
d. Revise the introductory text in newly designated paragraph
(d)(2)(ii), and revise paragraph (d)(2)(iii).
    The revisions read as follows:

Sec.  529.1030  Formalin.

* * * * *
    (b) Sponsors. See Nos. 049968, 050378, and 067188 in Sec.
510.600(c) of this chapter.
* * * * *
    (d) * * *
    (2) * * *
    (ii) For control of external parasites on finfish:
* * * * *
    (iii) For control of fungi of the family Saprolegniaceae on finfish
eggs: Eggs of all finfish except Acipenseriformes, 1,000 to 2,000
[micro]L/L (ppm) for 15 minutes; eggs of Acipenseriformes, up to 1,500
[mu]L/L (ppm) for 15 minutes.
* * * * *

0
5. Revise Sec.  529.2503 to read as follows:

Sec.  529.2503  Tricaine methanesulfonate.

    (a) Specifications. Ethyl-m-amino-benzoate methanesulfonate.
    (b) Sponsor. See No. 050378 in Sec.  510.600(c) of this chapter.
    (c) Conditions of use. It is used as follows:
    (1) Amount--(i) For fish the drug is added to ambient water at a
concentration of from 15 to 330 milligrams per liter depending upon the
degree of anesthetization or sedation desired, the species and size of
the fish, and the temperature and softness of the water. Preliminary
tests of solutions must be made with small numbers of fish to determine
the desired rates of sedation or anesthesia and the appropriate
exposure times for the specific lots of fish under prevailing
conditions.
    (ii) For amphibians and other aquatic coldblooded animals, the drug
is added to ambient water in concentrations of from 1:1000 to 1:20,000
depending upon species and stage of development.
    (2) Indications for use. It is used for the temporary
immobilization of fish, amphibians, and other aquatic coldblooded
animals (poikilotherms) as an aid in handling during manual spawning
(fish stripping), weighing, measuring, marking, surgical operations,
transport, photography, and research.
    (3) Limitations. Do not use within 21 days of harvesting fish for
food. Use in fish intended for food should be restricted to
Ictaluridae, Salmonidae, Esocidae, and Percidae, and water temperature
should exceed 10 [deg]C. (50 [deg]F). In other fish and in cold-blooded
animals, the drug should be limited to hatchery or laboratory use.

    Dated: January 10, 2014.
Bernadette Dunham,
Director, Center for Veterinary Medicine.
[FR Doc. 2014-00721 Filed 1-15-14; 8:45 am]
BILLING CODE 4160-01-P


[Federal Register: July 9, 2009 (Volume 74, Number 130)]
[Notices]
[Page 33003-33004]
[DOCID:fr09jy09-133]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60233; File No. SR-ISE-2009-44]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Order Granting Accelerated Approval to a
Proposed Rule Change Relating to the Amounts That Direct Edge ECN, in
Its Capacity as an Introducing Broker for Non-ISE Members, Passes
Through to Such Non-ISE Members

July 2, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 30, 2009, the International Securities Exchange, LLC (the
``Exchange'' or ``ISE'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by ISE. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons, and is approving the
proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to modify the amounts that Direct Edge ECN
(``DECN''), in its capacity as an introducing broker for non-ISE
Members, passes through to such non-ISE Members.
    The text of the proposed rule change is available on the Exchange's
Internet Web site at http://www.ise.com 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 these statements may be examined at
the places specified in Item III below. The self-regulatory
organization has prepared summaries, set forth in sections A, B and C
below, of the most significant aspects of such statements.

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

1. Purpose
    DECN, a facility of ISE, operates two trading platforms, EDGX and
EDGA. On June 30, 2009, the ISE filed for immediate effectiveness a
proposed rule change to amend DECN's fee schedule for ISE Members \3\
to: (1) Reinstate the Super Tier Rebates that apply to ISE Members
whose transactions meet certain volume thresholds; \4\ (2) adopt new
Ultra Tier Rebates that apply to ISE Members whose transactions meet
certain other volume thresholds; \5\ (3) adopt a new fee of $0.0015 per
share for securities priced at or above $1.00 any time the ROUQ or ROUC
routing strategy is used on either EDGX or EDGA and this routing
strategy results in an execution by an Enhanced Liquidity Provider; \6\
and (4) make certain other clean-up changes.\7\ The fee changes made
pursuant to SR-ISE-2009-43 became operative on July 1, 2009.
---------------------------------------------------------------------------

    \3\ References to ISE Members in this filing refer to DECN
Subscribers who are ISE Members.
    \4\ In SR-ISE-2009-43, the Exchange amended the DECNs' fee
schedule to include a per share rebate in securities reported to
Tape A and Tape C of $0.003 for securities priced at or above $1.00
when ISE Members add liquidity on EDGX if the ISE Member satisfies
any of the following three criteria on a daily basis, measured
monthly: (i) Adding 40,000,000 shares or more on either EDGX, EDGA
or EDGX and EDGA combined; (ii) adding 20,000,000 shares or more on
either EDGX, EDGA or EDGX and EDGA combined and routing 20,000,000
shares or more through EDGA; or (iii) adding 10,000,000 shares or
more of liquidity to EDGX, so long as added liquidity on EDGX is at
least 5,000,000 shares greater than the previous calendar month.
    \5\ In SR-ISE-2009-43, the Exchange adopted Ultra Tier Rebates
that provide ISE Members a $0.0032 rebate per share for securities
priced at or above $1.00 when ISE Members add liquidity on EDGX if
the attributed MPID satisfies one of the following criteria on a
daily basis, measured monthly: (i) Adding 100,000,000 shares or more
on EDGX; or (ii) adding 50,000,000 shares or more of liquidity to
EDGX, so long as added liquidity on EDGX is at least 20,000,000
shares greater than the previous calendar month. The liquidity
required to qualify for criteria (i) above shall be adjusted in the
event that Total Consolidated Volume (``TCV''), defined as volume
reported by all exchanges and trade reporting facilities to the
consolidated transaction reporting plans for Tape A, B and C
securities, falls below an average of 10,000,000,000 shares per day
(``Target TCV'') in the relevant calendar month. In such
circumstances, the adjusted amount of liquidity required to qualify
under criteria (i) above shall be the percentage that actual
reported TCV represents of Target TCV, multiplied by 100,000,000.
    \6\ See SR-ISE-2009-43.
    \7\ Id.
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    In its capacity as a member of ISE, DECN currently serves as an
introducing broker for the non-ISE Member subscribers of DECN to access
EDGX and EDGA. DECN, as an ISE Member and introducing broker, receives
rebates and is assessed charges from DECN for transactions it executes
on EDGX or EDGA in its capacity as introducing broker for non-ISE
Members. Since the amounts of such rebates and charges were changed
pursuant to SR-ISE-2009-43, DECN wishes to make corresponding changes
to the amounts it passes through to non-ISE Member subscribers of DECN
for which it acts as introducing broker. As a result, the per share
amounts that non-ISE Member subscribers receive and are charged will be
the same as the amounts that ISE Members receive and are charged.
    ISE is seeking accelerated approval of this proposed rule change,
as well as a retroactive effective date of July 1, 2009. ISE represents
that this proposal will ensure that both ISE Members and non-ISE
Members (by virtue of the pass-through described above) will in effect
receive and be charged equivalent amounts and that the imposition of
such

amounts will begin on the same July 1, 2009 start date.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its members and other persons using
its facilities. In particular, this proposal will ensure that dues,
fees and other charges imposed on ISE Members are equitably allocated
to both ISE Members and non-ISE Members (by virtue of the pass-through
described above).
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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 No. SR-ISE-2009-44 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2009-44. 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 the ISE. 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-ISE-2009-44 and should be
submitted on or before July 30, 2009.

IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change

    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.\10\
Specifically, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) \11\ of the Act, which requires that
the rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees, and other charges among members
and issuers and other persons using its facilities.
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    \10\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C 78c(f).
    \11\ 15 U.S.C. 78f(b)(4).
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    As described more fully above, ISE recently amended DECN's fee
schedule for ISE Members to, among other things, reinstate volume
thresholds applicable to the Super Tier Rebates, adopt a new Ultra Tier
Rebate, and adopt a new fee in connection with the use of the ROUQ and
ROUC routing strategies.\12\ The fee changes made pursuant to the
Member Fee Filing became operative on July 1, 2009. DECN receives
rebates and is charged fees for transactions it executes on EGDX or
EDGA in its capacity as an introducing broker for its non-ISE member
subscribers.
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    \12\ See File No. SR-ISE-2009-43 (the ``Member Fee Filing'').
---------------------------------------------------------------------------

    The current proposal, which will apply retroactively to July 1,
2009, will allow DECN to pass through the revised rebates and fees to
the non-ISE member subscribers for which it acts an introducing broker.
The Commission finds that the proposal is consistent with the Act
because it will provide rebates and charge fees to non-ISE member
subscribers that are equivalent to those established for ISE member
subscribers in the Member Fee Filing.\13\
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    \13\ Id.
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    ISE has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after publication
of notice of filing thereof in the Federal Register. As discussed
above, the proposal will allow DECN to pass through to non-ISE member
subscribers the revised rebate and fees established for ISE member
subscribers in the Member Fee Filing, resulting in equivalent rebates
and fees for ISE member and non-member subscribers. In addition,
because the proposal will apply the revised rebates and fees
retroactively to July 1, 2009, the revised rebates and fees will have
the same effective date, thereby promoting consistency in the DECN's
fee schedule. Accordingly, the Commission finds good cause, pursuant to
Section 19(b)(2) of the Act, for approving the proposed rule change
prior to the thirtieth day after the date of publication of notice of
filing thereof in the Federal Register.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-ISE-2009-44) be, and hereby
is, approved on an accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16189 Filed 7-8-09; 8:45 am]

BILLING CODE 8010-01-P