[Federal Register Volume 80, Number 78 (Thursday, April 23, 2015)]
[Notices]
[Page 22753]
[FR Doc No: 2015-09430]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74762; File No. SR-EDGX-2015-08]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Designation of Longer Period for Commission Action on a Proposed Rule
Change, as Modified by Amendment No. 1, To Amend Rules 11.6, 11.8,
11.9, 11.10 and 11.11 of EDGX Exchange, Inc.

April 17, 2015.
    On February 20, 2015, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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
proposed rule change to amend Rules 11.6, 11.8, 11.9, 11.10 and 11.11
to clarify and to include additional specificity regarding the current
functionality of the Exchange's System,\3\ including the operation of
its order types and order instructions. On February 27, 2015, the
Exchange filed Amendment No. 1 to the proposal.\4\ The proposed rule
change, as modified by Amendment No. 1, was published for comment in
the Federal Register on March 10, 2015.\5\ The Commission received no
comment letters.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The term ``System'' is defined as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.'' See Exchange Rule
1.5(cc).
    \4\ Amendment No. 1 replaced SR-EDGX-2015-08 and superseded such
filing in its entirety.
    \5\ See Securities Exchange Act Release No. 74439 (March 4,
2015), 80 FR 12666.
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \6\ provides that within 45 days of the
publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether these proposed rule changes should be disapproved.
The 45th day for this filing is April 24, 2015.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission is extending the 45-day time period for Commission
action on the proposed rule change. The Commission finds that it is
appropriate to designate a longer period within which to take action on
the proposed rule change so that it has sufficient time to consider and
take action on the Exchange's proposed rule change.
    Accordingly, pursuant to Section 19(b)(2)(A)(ii)(I) of the Act \7\
and for the reasons stated above, the Commission designates June 8,
2015, as the date by which the Commission should either approve or
disapprove, or institute proceedings to determine whether to
disapprove, the proposed rule change, as modified by Amendment No. 1
(File No. SR-EDGX-2015-08).
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2)(A)(ii)(I).

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

    \8\ 17 CFR 200.30-3(a)(31).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-09430 Filed 4-22-15; 8:45 am]
 BILLING CODE 8011-01-P


contribution is increased as a result of an amendment of OCC's Rules.
Additionally, and consistent with existing operational practice, the
proposed changes would specify that OCC, upon the failure of a Clearing
Member for any reason to timely satisfy a deficit regarding its
required Clearing Fund contribution, OCC would be authorized to
withdraw an amount equal to such deficit from the Clearing Member's
bank account maintained in respect of an OCC firm account. OCC also
proposes to specify that Clearing Members shall have until 9:00 a.m.
Central Time on the second business day after the issuance of the
Clearing Fund Status Report to meet their required Clearing Fund
contribution if such contribution increases as a result of monthly
Clearing Fund sizing or an intra-month resizing of the Clearing Fund to
more closely align with the settlement time for the collection of other
deficits (e.g., the required time for making good any deficiency
generally under existing Article VIII, Section 6 of the By-Laws or for
satisfying any margin deficits under Rule 605). The proposed change is
designed to ensure that OCC is able to obtain funds owed from its
Clearing Members in a timely fashion so that OCC can continue to meet
its overall financial resource requirements, thereby reducing the risk
presented to OCC.
    OCC notes that it also proposes a number of non-material changes,
such as relocating provisions of OCC's By-Laws concerning the Clearing
Fund to its Rules, making other clarifying and conforming changes to
its Rules, Collateral Risk Management Policy and Default Management
Policy, and clarifying certain pro-cyclicality measures in its existing
margin methodology, which are not expected to have any impact on OCC's
risk management practices or the risk presented to OCC or its
participants.
    Taken together, OCC believes the enhancements discussed in this
proposed rule change would provide for a more comprehensive approach to
managing OCC's credit risks and would allow OCC to more accurately
measure its credit risk exposures, better test the sufficiency of its
financial resources, and respond quickly when OCC believes additional
financial resources are required.
Consistency With the Payment, Clearing and Settlement Supervision Act
    The stated purpose of the Clearing Supervision Act is to mitigate
systemic risk in the financial system and promote financial stability
by, among other things, promoting uniform risk management standards for
systemically important financial market utilities and strengthening the
liquidity of systemically important financial market utilities.\63\
Section 805(a)(2) of the Clearing Supervision Act \64\ authorizes the
Commission to prescribe risk management standards for the payment,
clearing and settlement activities of designated clearing entities,
like OCC, for which the Commission is the supervisory agency. Section
805(b) of the Clearing Supervision Act \65\ states that the objectives
and principles for risk management standards prescribed under Section
805(a) shall be to:
---------------------------------------------------------------------------

    \63\ 12 U.S.C. 5461(b).
    \64\ 12 U.S.C. 5464(a)(2).
    \65\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     Promote robust risk management;
     promote safety and soundness;
     reduce systemic risks; and
     support the stability of the broader financial system.
    OCC believes that the proposed changes described herein would
enhance its Pre-Funded Financial Resources in a manner consistent with
the risk management standards adopted by the Commission in Rule 17Ad-22
under the Act for the reasons set forth below.\66\
---------------------------------------------------------------------------

    \66\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release
Nos. 68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-
08-11) (``Clearing Agency Standards''); 78961 (September 28, 2016),
81 FR 70786 (October 13, 2016) (S7-03-14) (``Standards for Covered
Clearing Agencies''). The Standards for Covered Clearing Agencies
became effective on December 12, 2016. OCC is a ``covered clearing
agency'' as defined in Rule 17Ad-22(a)(5) and therefore must comply
with the requirements of Rule 17Ad-22(e).
---------------------------------------------------------------------------

Clearing Fund Sizing and Sufficiency Changes
    Rule 17Ad-22(b)(3) \67\ requires a registered clearing agency that
performs CCP services to establish, implement, maintain and enforce
written policies and procedures reasonably designed to maintain
sufficient financial resources to withstand, at a minimum, a default by
the participant family to which it has the largest exposure in extreme
but plausible market conditions. Rules 17Ad-22(e)(4)(iii) and (iv) \68\
further require, in part, that a covered clearing agency 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 arising from its
payment, clearing, and settlement processes, including by maintaining
additional financial resources (beyond those collected as margin or
otherwise maintained to meet the requirements of Rule 17Ad-22(e)(4)(i)
\69\) at the minimum to enable it to cover a wide range of foreseeable
stress scenarios that include, but are not limited to, the default of
the participant family that would potentially cause the largest
aggregate credit exposure for the covered clearing agency in extreme
but plausible market conditions and do so exclusive of assessments for
additional guaranty fund contributions or other resources that are not
prefunded.
---------------------------------------------------------------------------

    \67\ 17 CFR 240.17Ad-22(b)(3).
    \68\ 17 CFR 240.17Ad-22(e)(4)(iii) and (iv).
    \69\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------

    OCC believes that the proposed changes to its By-Laws, Rules and
Clearing Fund and stress testing methodology are reasonably designed to
measure and manage OCC's credit exposures to participants by
maintaining sufficient Pre-Funded Financial Resources to cover a wide
range of foreseeable stress scenarios that include, but are not limited
to, the default of the two Clearing Member Groups that would
potentially cause the largest aggregate credit exposure in extreme but
plausible market conditions. In order to achieve this, OCC proposes to
establish a risk tolerance with regard to the sizing of the Clearing
Fund equal to a 1-in-50 year hypothetical market event, which OCC
believes represents the outer range of extreme but plausible scenarios
for OCC's cleared products for purposes of Rule 17Ad-22(e)(4) under the
Act.\70\ In order to ensure sufficient coverage of this risk tolerance,
which OCC believes represents the outer range of extreme but plausible
market conditions for the purposes of Rule 17Ad-22(e)(4) under the
Act,\71\ and to guard against intra-month scenario volatility and
procyclicality, OCC proposes to size its Clearing Fund based on a more
conservative 1-in-80 year hypothetical market event (i.e., the Sizing
Stress Tests) on a Cover 2 Standard. The proposed changes are designed
to size the Clearing Fund at a level that would be expected to cover
OCC's potential exposures under extreme but plausible market
conditions. In addition, OCC's Rules, Policy and Methodology

Description would provide for the collection of additional resources on
an intra-month basis if certain Sufficiency Scenario thresholds are
breached, as discussed in more detail above. These stress tests are
designed, in total, to result in the collection of sufficient Pre-
Funded Financial Resources (which by definition in the Policy would
exclude OCC's replenishment and assessment powers), and when necessary
call for additional financial resources, to cover a wide range of
stress scenarios, including extreme but plausible market conditions.
---------------------------------------------------------------------------

    \70\ 17 CFR 240.17Ad-22(e)(4).
    \71\ Id.
---------------------------------------------------------------------------

    Additionally, the proposed changes to avoid pro-cyclicality in the
Clearing Fund (e.g., preventing the Clearing Fund from decreasing more
than 5% from month-to-month and using a three-month look back period in
sizing the Clearing Fund) are designed to promote stability and to
prevent the Clearing Fund from decreasing rapidly when a previous peak
falls out of the look-back period. OCC believes that this conservative
approach to anti-procyclicality would help to ensure that OCC continues
to maintain adequate Pre-Funded Financial Resources during periods
where volatility decreases significantly, market conditions change
rapidly, or Clearing Member business activity causes a significant
decrease in stress test results.
    OCC further believes that the proposed changes to its Rules to
generally reduce the timeframe in which Clearing Members must meet
deficits in their Clearing Fund contributions are appropriate because
it would expedite the adjustment of Clearing Fund contributions to the
appropriate size as determined by OCC's new Clearing Fund and stress
test methodology, thereby allowing the Clearing Fund to respond more
quickly in rapidly changing or emergency market conditions. Moreover,
consistent with existing operational practice, new Rule 1005(c) would
establish that, upon the failure of a Clearing Member for any reason to
timely satisfy a deficit regarding its required Clearing Fund
contribution, OCC would be authorized to withdraw an amount equal to
such deficit from the Clearing Member's bank account maintained in
respect of an OCC firm account. The proposed rule change is designed to
ensure that OCC is able to obtain funds owed from its Clearing Members
in a timely fashion so that OCC can continue to meet its overall
financial resource requirements. OCC believes the proposed changes
would help to ensure that OCC maintains sufficient resources to meet
its financial resource requirements under Rule 17Ad-22.\72\
---------------------------------------------------------------------------

    \72\ Id.
---------------------------------------------------------------------------

    For these reasons, OCC believes the proposed changes are reasonably
designed so that OCC can measure and manage its credit exposure to its
participants through the maintenance of additional financial resources
at a minimum to enable it to cover a wide range of foreseeable stress
scenarios that include, but are not limited to, the default of the
participant family that would potentially cause the largest aggregate
credit exposure for OCC in extreme but plausible market conditions, and
do so exclusive of assessments for additional Clearing Fund
contributions or other resources that are not prefunded, in a manner
consistent with Rule 17Ad-22(b)(3) and Rules 17Ad-22(e)(4)(iii) and
(iv).\73\
---------------------------------------------------------------------------

    \73\ 17 CFR 240.17Ad-22(b)(3) and (e)(4)(iii) and (iv).
---------------------------------------------------------------------------

Proposed Stress Testing and Clearing Fund Methodology
    Rule 17Ad-22(e)(4)(vi)(A) \74\ requires, in part, that a covered
clearing agency 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 arising from its payment, clearing, and settlement processes,
including by testing the sufficiency of its total financial resources
available to meet the minimum financial resource requirements under
Rule 17Ad-22(e)(4)(iii) \75\ by conducting stress testing of its total
financial resources once each day using standard predetermined
parameters and assumptions.
---------------------------------------------------------------------------

    \74\ 17 CFR 240.17Ad-22(e)(4)(vi)(A).
    \75\ 17 CFR 240.17Ad-22(e)(4)(iii).
---------------------------------------------------------------------------

    OCC proposes to adopt a new stress testing methodology, as
described in the proposed Policy and Methodology Description, to enable
OCC to conduct a variety of Sizing Stress Tests, Adequacy Stress Tests,
Sufficiency Stress Tests and Informational Stress Tests, each of which
play different but complementary roles in promoting OCC's ability to
more robustly identify, measure, monitor and manage its credit risks to
its participants. These stress tests would be run on a daily basis
using standard predetermined parameters and assumptions and would allow
OCC to test the sufficiency of its Pre-Funded Financial Resources under
a wide range of Historical Scenarios, which take into account stresses
on a number of factors such as price and volatility, as well as testing
the adequacy of OCC's Pre-Funded Financial Resources with respect to
its proposed risk tolerance. In turn, these stress tests would enable
OCC to more effectively design margin and Clearing Fund requirements
that are calibrated to cover Clearing Member defaults under such
scenarios. The proposed Clearing Fund and stress testing methodology
would also use Sufficiency Stress Tests to determine whether OCC should
call for additional collateral to ensure that it consistently maintains
sufficient financial resources. OCC believes that the proposed changes
are therefore designed to allow OCC to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, by
testing the sufficiency of its Pre-Funded Financial Resources available
to meet its minimum financial resource requirements under Rule 17Ad-22
\76\ in a manner consistent with Rule 17Ad-22(e)(4)(vi).\77\
---------------------------------------------------------------------------

    \76\ 17 CFR 240.17Ad-22.
    \77\ 17 CFR 240.17Ad-22(e)(4)(vi).
---------------------------------------------------------------------------

Clearing Fund and Stress Testing Governance, Monitoring, and Review
    Rule 17Ad-22(e)(4)(vi) and (vii) \78\ require, in part, that a
covered clearing agency 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 arising from its payment, clearing, and
settlement processes, including by (i) conducting a comprehensive
analysis on at least a monthly basis of the existing stress testing
scenarios, models, and underlying parameters and assumptions, and
considering modifications to ensure they are appropriate for
determining the covered clearing agency's required level of default
protection in light of current and evolving market conditions; (ii)
conducting a comprehensive analysis of stress testing scenarios,
models, and underlying parameters and assumptions more frequently than
monthly when the products cleared or markets served display high
volatility or become less liquid, or when the size or concentration of
positions held by the covered clearing agency's participants increases
significantly; (iii) reporting the results of such analyses to
appropriate decision makers at the covered clearing agency, including
but not limited to, its risk management committee or board of
directors, and using these results to evaluate the adequacy of and
adjust its margin methodology, model parameters,

models used to generate clearing or guaranty fund requirements, and any
other relevant aspects of its credit risk management framework, in
supporting compliance with the minimum financial resources
requirements; and (iv) performing a model validation for its credit
risk models not less than annually or more frequently as may be
contemplated by the covered clearing agency's risk management
framework.
---------------------------------------------------------------------------

    \78\ 17 CFR 240.17Ad-22(e)(4)(vi)(B)-(D) and (vii).
---------------------------------------------------------------------------

    The proposed Policy would set forth requirements for the daily and
monthly monitoring, review, and reporting of stress test results.
Specifically, under the Policy, STLRM would monitor the results of all
of the Adequacy and Sufficiency Stress Tests on a daily basis and
immediately escalate any material issues identified with respect to the
adequacy of OCC's financial resources to the STWG and the Management
Committee to determine if it would be appropriate to recommend a change
to the stress test scenarios used to size the Clearing Fund. In
addition, the Policy would require that STWG perform a comprehensive
monthly analysis of OCC's stress testing results, as well as
information related to the scenarios, models, parameters, and
assumptions impacting the sizing of the Clearing Fund and evaluate
their appropriateness for determining OCC's required level of financial
resources in light of current and evolving market conditions. Moreover,
the Policy would require that such review be conducted more frequently
than monthly when the products cleared or markets served display high
volatility or become less liquid; the size or concentration of
positions held by OCC's participants increases significantly; or as
otherwise appropriate.
    Pursuant to the proposed Policy, STLRM would report the results of
stress tests and its comprehensive monthly analysis to OCC's Management
Committee and Risk Committee on at least a monthly basis and would
maintain procedures for determining whether, and in what circumstances,
the results of such stress tests should be reported to the Management
Committee or the Risk Committee more frequently than monthly, and would
indicate the persons responsible for making that determination. In the
performance of the monthly review of stress testing results and
analysis and considering whether escalation is appropriate, the Policy
would require that due consideration be given to the intended purpose
of the Policy to: (a) Assess the adequacy of, and adjust as necessary,
OCC's total amount of financial resources; (b) support compliance with
the minimum financial resources requirements under applicable
regulations; and (c) evaluate the adequacy of, and recommend
adjustments to OCC's margin methodology, margin parameters, models used
to generate margin or guaranty fund requirements, and any other
relevant aspects of OCC's credit risk management.
    In addition, the proposed Policy would require that OCC's Model
Validation Group perform a model validation of OCC's Clearing Fund
model on an annual basis and that the Risk Committee would be
responsible for reviewing the model validation report.
    Based on the foregoing, OCC believes that the proposed Policy is
reasonably designed to ensure that OCC: (i) Conducts a comprehensive
analysis on at least a monthly basis of the existing stress testing
scenarios, models, and underlying parameters and assumptions, and
considers modifications to ensure they are appropriate for determining
OCC's required level of default protection in light of current and
evolving market conditions; (ii) conducts a comprehensive analysis of
stress testing scenarios, models, and underlying parameters and
assumptions more frequently than monthly when the products cleared or
markets served display high volatility or become less liquid, or when
the size or concentration of positions held by OCC's participants
increases significantly; (iii) reports the results of such analyses to
appropriate decision makers, including but not limited to, OCC's
Management Committee and the Risk Committee of the Board, and uses
these results to evaluate the adequacy of and adjust its margin
methodology, model parameters, models used to generate Clearing Fund
requirements, and any other relevant aspects of its credit risk
management framework, in supporting compliance with the minimum
financial resources requirements; and (iv) performs a model validation
for its credit risk models not less than annually or more frequently as
may be contemplated by OCC's risk management framework in accordance
with Rules 17Ad-22(e)(4)(vi) and (vii).\79\
---------------------------------------------------------------------------

    \79\ Id.
---------------------------------------------------------------------------

Proposed Changes to Minimum Contribution Amount and Allocation
Methodology
    Rule 17Ad-22(e)(4) \80\ generally requires that a covered clearing
agency 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
arising from its payment, clearing, and settlement processes. With
respect to the use of Clearing Funds and the requirements of Rule 17Ad-
22(e)(4),\81\ the Commission has noted that, to the extent that a
clearing agency uses guaranty or clearing fund contributions to
mutualize risk across participants, the clearing agency generally
should value margin and guaranty fund contributions so that the
contributions are commensurate to the risks posed by the participants'
activity, and the clearing agency also generally should consider the
appropriate balance of individualized and pooled elements within its
default waterfall, with a careful consideration of whether the balance
of those elements mitigates risk and to what extent an imbalance among
those elements might encourage moral hazard, in that one participant
may take more risks because the other participants bear the costs of
those risks.\82\
---------------------------------------------------------------------------

    \80\ 17 CFR 240.17Ad-22(e)(4).
    \81\ Id.
    \82\ See supra note 65, Standards for Covered Clearing Agencies
at 70813.
---------------------------------------------------------------------------

    OCC believes that the proposed changes to its initial and minimum
Clearing Fund contribution amounts strike an appropriate balance
between individualized and mutualized resources for new Clearing
Members and those Clearing Members with minimal open interest. As noted
above, OCC's existing initial and minimum fixed contribution
requirements have been in place since June 5, 2000, while its Clearing
Fund has grown from approximately $2 billion in 2000 to several
multiples of that, both currently and under the proposal described
herein.\83\ As a result, OCC undertook an analysis to determine the
appropriateness of this amount. As discussed in detail above, OCC
considered a number of factors such as the potential impact on Clearing
Members that are at the minimum or otherwise below or just over the
newly proposed $500,000 requirement, the impact to those members in
dollar and percentage terms as well as compared to their net capital,
evolving market conditions, evolution in the size of the Clearing Fund,
minimum contribution requirements of other CCPs, and heightened
regulatory obligations on OCC given its status as a systemically
important financial market utility. OCC believes that the proposed
increase is appropriate given the increase in OCC's overall Clearing
Fund size and is in line with or lower than the minimum

requirements of other CCPs. OCC therefore believes that the proposed
increase is reasonably designed to ensure OCC is able to manage its
credit exposures to participants and those arising from its payment,
clearing, and settlement processes in a manner that considers an
appropriate balance of individualized and pooled elements within its
default waterfall.
---------------------------------------------------------------------------

    \83\ See supra note 39 and accompanying text.
---------------------------------------------------------------------------

    Additionally, OCC proposes to modify its allocation weighting
methodology to more closely align Clearing Members' Clearing Fund
contribution requirements with the level of risk they bring to OCC.
Specifically, the proposed Clearing Fund contribution requirements
would be based on an allocation methodology of 70% of total risk, 15%
of volume and 15% of open interest (as opposed to the current weighting
of 35% total risk, 50% open interest, and 15% volume). OCC believes
that this change would better align incentives for each Clearing Member
to reduce the risk it introduces to the Clearing Fund by determining
each Clearing Member's proportionate share of the Clearing Fund based
on the risk it presents to OCC.
    OCC also proposes to modify the volume component of its Clearing
Fund contribution allocation weighting methodology to provide that OCC
would use cleared volume, as opposed to executed volume, to base the
volume component of the allocation on where the position is ultimately
cleared as opposed to where it was executed. OCC believes that the
proposed change is designed to more appropriately allocate contribution
requirements commensurate to the risks posed by its Clearing Members.
    For these reasons, OCC believes that the proposed changes are
designed to manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes in a
manner consistent with Rule 17Ad-22(e)(4).\84\
---------------------------------------------------------------------------

    \84\ 17 CFR 240.17Ad-22(e)(4).
---------------------------------------------------------------------------

Other Clarifying, Conforming and Organizational Changes
    Rule 17Ad-22(e)(1) \85\ requires a covered clearing agency to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide for a well-founded, clear,
transparent, and enforceable legal basis for each aspect of its
activities in all relevant jurisdictions. OCC believes that the
proposed clarifying, conforming, and organizational changes to its By-
Laws and Rules are designed to provide Clearing Members with enhanced
transparency and clarity regarding their obligations associated with
the Clearing Fund. As discussed above, the primary provisions that
address OCC's Clearing Fund are currently split between Article VIII of
the By-Laws and Chapter X of the Rules. Consolidating all of these
provisions to Chapter X of the Rules would provide Clearing Members
with a single location in which to find and understand the primary
obligations that are associated with the Clearing Fund. In addition,
OCC would make a number of non-substantive changes to its rules
designed to provide additional clarity and transparency, including for
example: (1) Consolidating existing Interpretation and Policy .01 and
.02 of Article VIII, Section 5 concerning the share of any deficiency
to be borne by each Clearing Member as a result of a charge against the
Clearing Fund into new Interpretation and Policy .01 of Rule 1006 with
conforming changes and cross-references to new Interpretation and
Policy .01 of Rule 1006 being added to proposed Rules 1006(b) and (c)
to provide additional clarity in OCC's rules; (2) making minor
modifications to proposed Rule 1006(a) to clarify that matured futures
contracts are included within the scope of other contracts or
obligations issued, undertaken, or guaranteed by OCC or in respect of
which OCC is otherwise liable; (3) clarifying in the proposed Policy
that the Executive Chairman, Chief Administrative Officer, or Chief
Operating Officer would have the authority to approve proportionate
charges against the Clearing Fund; (4) clarifying in the proposed
Policy that OCC's Accounting department is responsible for maintaining
procedures for the allocation of losses due to a Clearing Member
default and to replenish the Clearing Fund in the event a deficiency in
the Clearing Fund results from events other than those specified in
proposed Rule 1006; (5) revising Rule 609 to change the term
``securities'' to ``contracts'' to clarify that OCC's authority to call
for intra-day margin also applies to non-securities products cleared by
OCC; (6) codifying in the proposed Policy the existing OCC practice
that the specific securities eligible to be used as Clearing Fund
contributions be permitted to be pledged in exchange for cash through
one of OCC's committed liquidity facilities so that OCC continues to
maintain sufficient eligible securities to fully access such
facilities; (7) clarifying in proposed Rule 1002 that the circumstances
and terms for a Clearing Member terminating its clearing membership due
to an increase in Clearing Fund contribution resulting from an
amendment of the Rules is separate from the circumstances and terms for
a Clearing Member terminating its status as a result of a proportionate
charge against the Clearing Fund; (8) clarifying in the introduction to
Chapter X of the Rules that the size of the Clearing Fund shall at all
times be subject to minimum sizing requirements and generally be
calculated on a monthly basis by OCC; however, the calculated size of
the Clearing Fund may be determined more frequently than monthly under
certain conditions specified in proposed Rule 1001; and (9) rephrasing
current rule text referencing ``computed contributions to the Clearing
Fund'' and ``as fixed at the time'' to be ``required contributions to
the Clearing Fund'' and ``as calculated at the time'' to more
accurately reflect that these rules are intended to refer to a Clearing
Member's required Clearing Fund Contribution amount as calculated under
the proposed Rules, Policy and Methodology Description and eliminate
any potential confusion with a Clearing Member's ``fixed amount'' as
determined under Rule 1003(a). OCC believes that this additional
clarity, transparency and enhanced readability regarding the primary
provisions pertaining to the Clearing Fund help to provide for a well-
founded, clear, transparent and enforceable legal basis for the rights
and obligations of Clearing Members and OCC regarding the Clearing Fund
consistent with Rule 17Ad-22(e)(1).\86\
---------------------------------------------------------------------------

    \85\ 17 CFR 240.17Ad-22(e)(1).
    \86\ Id.
---------------------------------------------------------------------------

    In addition, Section 19(b)(1) of the Exchange Act and Rule 19b-4
thereunder set forth the requirements for SRO proposed rule changes,
including the regulatory filing requirements for SPPIs.\87\ OCC
proposes to retire its existing Clearing Fund Intra-Month Re-sizing
Procedure, FRMC Procedure, and Monthly Clearing Fund Sizing Procedure,
which were previously filed as ``rules'' with the Commission,\88\ as
these procedures would no longer be relevant to OCC's proposed Clearing
Fund and stress testing methodology and processes. Under the proposal,
the material aspects of OCC's Clearing Fund-related operations would be
contained in the proposed Rules, Policy and Methodology Description
described herein. Any applicable procedural details would not be
``rules'' of OCC as those aspects of the procedures: (1) Would no
longer be relevant to OCC's

proposed Clearing Fund and stress testing methodologies and processes,
(2) would be reasonably and fairly implied by the proposed Rules,
Policy, and Methodology Description, and/or (3) would otherwise not be
deemed to be material aspects of OCC's Clearing Fund-related
operations. Accordingly, OCC believes the proposed changes would be
consistent with the requirements of Rule 17Ad-22(e)(1).\89\
---------------------------------------------------------------------------

    \87\ See supra note 55.
    \88\ See supra note 11.
    \89\ Id.
---------------------------------------------------------------------------

III. Date of Effectiveness of the Advance Notice and Timing for
Commission Action

    The proposed change may be implemented if the Commission does not
object to the proposed change within 60 days of the later of (i) the
date the proposed change was filed with the Commission or (ii) the date
any additional information requested by the Commission is received. OCC
shall not implement the proposed change if the Commission has any
objection to the proposed change.
    The Commission may extend the period for review by an additional 60
days if the proposed change raises novel or complex issues, subject to
the Commission providing the clearing agency with prompt written notice
of the extension. A proposed change may be implemented in less than 60
days from the date the advance notice is filed, or the date further
information requested by the Commission is received, if the Commission
notifies the clearing agency in writing that it does not object to the
proposed change and authorizes the clearing agency to implement the
proposed change on an earlier date, subject to any conditions imposed
by the Commission.
    OCC shall post notice on its website of proposed changes that are
implemented.
    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 advance
notice is consistent with the Clearing Supervision 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 protected]. Please include
File Number SR-OCC-2018-803 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-OCC-2018-803. 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 website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the advance notice that are filed with the
Commission, and all written communications relating to the advance
notice 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 website 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 OCC and on OCC's website at
https://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_18_803.pdf.
    All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-OCC-2018-803 and
should be submitted on or before July 23, 2018.

    By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14459 Filed 7-5-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 74, Number 110 (Wednesday, June 10, 2009)]
[Rules and Regulations]
[Pages 27442-27444]
[FR Doc No: E9-13486]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2006-0004; FRL-8900-5]

Approval and Promulgation of Air Quality Implementation Plans;
Indiana

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: Pursuant to provisions in the Clean Air Act (Act) which allow
EPA to correct State Implementation Plan (SIP) actions made in error,
EPA is taking final action to correct an error in part of its June 12,
2006 approval of an amendment to Indiana's ozone SIP. In today's
action, EPA is rescinding its approval of the inclusion of the state's
codified definition of hazardous air pollutant (HAP) in Indiana's ozone
SIP.

DATES: This final rule is effective on July 10, 2009.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R05-OAR-2006-0004. All documents in the docket are listed on
the http://www.regulations.gov Web

site. Although listed in the index, some information is not publicly
available, i.e., Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form.
    Publicly available docket materials are available either
electronically through http://www.regulations.gov or in hard copy at
the Environmental Protection Agency, Region 5, Air and Radiation
Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This
facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding Federal holidays. We recommend that you telephone Steven
Rosenthal, Environmental Engineer, at<PHONE_NUMBER> before visiting
the Region 5 office.

FOR FURTHER INFORMATION CONTACT: Steven Rosenthal, Environmental
Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J),
U.S. Environmental Protection Agency, Region 5, 77 West Jackson
Boulevard, Chicago, Illinois 60604,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This supplementary information
section is arranged as follows:

I. What public comments were received on the proposed correction
notice and what is EPA's response?
II. What action is EPA taking and what is the reason for this
action?
III. Statutory and Executive Order Reviews

I. What public comments were received on the proposed correction notice
and what is EPA's response?

    EPA did not receive any public comments on the August 4, 2008,
proposed correction notice.

II. What action is EPA taking and what is the reason for this action?

    Section 110 of the Act is the authority under which Congress has
directed EPA to act on SIPs and SIP revisions. Section 110(a)
establishes the applicable procedures for SIP development and
submission. The trigger for these activities is the promulgation of
national ambient air quality standards (NAAQS); and the focus of the
State's efforts is to develop ``a plan which provides for
implementation, maintenance, and enforcement'' of the NAAQS. Section
110(a)(1). EPA must then determine whether the submission contains the
air quality-related components prescribed in Section 110(a)(2).
    Other than for lead, which is both a HAP and criteria pollutant,
Section 110 does not provide parameters to determine the approvability
of a HAP provision. Instead, in the 1990 Amendments to the Act,
Congress envisioned that HAPs (including the then-listed ethylene
glycol monobutyl ether (EGBE)) would be regulated under Section 112.
State programs for hazardous pollutants, including delegations, are
governed by Section 112(l) of the Act. They should not be included in
the SIP under Section 110.
    Section 110(k)(6) of the Act provides that ``whenever EPA
determines that its action approving, disapproving, or promulgating any
plan or plan revision (or part thereof), * * * was in error, EPA may
revise such action as appropriate without requiring any further
submission from the State.'' Therefore, under section 110(k)(6), EPA is
rescinding its exclusion of EGBE from Indiana's definition of HAP, and
is also rescinding Indiana's definition of HAP in 326 IAC 1-2-33.5,
from Indiana's ozone SIP.
    On June 12, 2006, as requested by the State, EPA took action under
section 110(a) of the Act and deleted EGBE from the SIP's definition
for HAP in 326 IAC 1-2-33.5. For the reasons discussed above, EPA
should not have taken this action under section 110(a) of the Act. On
January 10, 2008, the Indiana Department of Environmental Management
requested that EPA correct that earlier action.

III. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely corrects an error and approves State law as meeting Federal
requirements and imposes no additional requirements beyond those
imposed by State law. Accordingly, the Administrator certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities under the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.). Because this rule corrects an error and
approves preexisting requirements under State law and does not impose
any additional enforceable duty beyond that required by State law, it
does not contain any unfunded mandate or significantly or uniquely
affect small governments, as described in the Unfunded Mandates Reform
Act of 1995 (Pub. L. 104-4).
    This final rule also does not have Tribal implications because it
will not have a substantial direct effect on one or more Indian Tribes,
on the relationship between the Federal Government and Indian Tribes,
or on the distribution of power and responsibilities between the
Federal Government and Indian Tribes, as specified by Executive Order
13175 (65 FR 67249, November 9, 2000). This final action also does not
have Federalism implications because it does not have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government, as specified
in Executive Order 13132 (64 FR 43255, August 10, 1999). This action
merely corrects an error and approves a State rule implementing a
Federal standard, and does not alter the relationship or the
distribution of power and responsibilities established in the Act. This
rule also is not subject to Executive Order 13045 ``Protection of
Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve State
choices, provided that they meet the criteria of the Act. In this
context, in the absence of a prior existing requirement for the State
to use voluntary consensus standards (VCS), EPA has no authority to
disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the Act. Thus, the requirements of section
12(d) of the National Technology Transfer and Advancement Act of 1995
(15 U.S.C. 272 note) do not apply. This rule does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act (5 U.S.C. 801 et seq.), as added by
the Small Business Regulatory Enforcement Fairness Act of 1996,
generally provides that before a rule may take effect, the agency
promulgating the rule must submit a rule report, which includes a copy
of the rule, to each House of the Congress and to the Comptroller
General of the United States. EPA will submit a report containing this
rule and other required information to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States
prior to publication of the rule in

the Federal Register. A major rule cannot take effect until 60 days
after it is published in the Federal Register. This correction to 40
CFR 52 for Indiana is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the Act, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by August 10, 2009. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Ozone, Hazardous air
pollutants, Reporting and recordkeeping requirements, Volatile organic
compounds.

    Dated: April 22, 2009.
Walter W. Kovalick, Jr.,
Acting Regional Administrator, Region 5.

0
40 CFR Part 52 is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart P--Indiana

0
2. Section 52.770 is amended by revising paragraph (c)(176) to read as
follows:

Sec.  52.770  Identification of plan.

* * * * *
    (c) * * *
    (176) On December 21, 2005, Indiana submitted revised regulations
to the EPA. As a result, the compounds, 1,1,1,2,2,3,3-heptafluoro-3-
methoxy-propane, 3-ethoxy-1,1,1,2,3,4,4,5,5,6,6,6-dodecafluoro-2-
(trifluoromethyl)hexane, 1,1,1,2,3,3,3-heptafluoropropane, and methyl
formate, are added to the list of ``nonphotochemically reactive
hydrocarbons'' or ``negligibly photochemically reactive compounds'' in
326 IAC 1-2-48 and these compounds are deleted from the list of VOCs in
326 IAC 1-2-90. Companies producing or using the four compounds will no
longer need to follow the VOC rules for these compounds. The
requirements in 326 IAC 1-2-48 and 1-2-90 were also modified for the
compound t-butyl acetate. It is not considered a VOC for emission
limits and content requirements. T-butyl acetate will still be
considered a VOC for the recordkeeping, emissions reporting, and
inventory requirements.
    (i) Incorporation by reference.
    (A) Indiana Administrative Code Title 326: Air Pollution Control
Board, Article 1: General Provisions, Rule 2: Definitions, Section 48:
```Nonphotochemically reactive hydrocarbon' or `negligibly
photochemically reactive compounds' defined'', and Section 90: ``
`Volatile organic compound' or `VOC' defined''. Filed with the
Secretary of State on October 20, 2005 and effective November 19, 2005.
Published in 29 Indiana Register 795-797 on December 1, 2005.
* * * * *

[FR Doc. E9-13486 Filed 6-9-09; 8:45 am]
BILLING CODE 6560-50-P