MEMORANDUM

DATE:
July 1, 2014
TO:
Air and Radiation Docket EPA-HQ-OAR-2012-0401
SUBJECT:
Additional Detail on the Calculation of the Cellulosic Converted Fraction, and Attribution of Batch RINs for D-code Dependent Feedstocks

This memorandum provides additional information about the implications for cellulosic fuel producers processing biomass with an adjusted cellulosic content below EPA's cellulosic content threshold of 75%. This memorandum may also be informative to biofuel producers who generate a single type of fuel by simultaneously processing multiple feedstocks.  All cellulosic biofuel processes using biomass feedstocks must employ a process with the demonstrated capability of converting cellulosic material to biofuel. However, fuel produced using a single type of biomass with an adjusted cellulosic content greater than 75% (e.g., corn stover or switchgrass) will be allowed to generate cellulosic renewable identification numbers (RINs) for the entire fuel volume, while producers using a single type of biomass with an adjusted cellulosic content below 75% will have to apportion different D-codes to the RINs produced based on the amount of cellulosic and non-cellulosic fuel produced. In practice, such producers will treat a single type of biomass material as two separate feedstocks  -  one cellulosic feedstock and one non-cellulosic feedstock  -  and allocate RINs using existing regulations for generating fuels using multiple feedstocks. For most producers this apportionment will be straight-forward, but for producers simultaneously processing cellulosic and non-cellulosic feedstocks in a single reactor using a biochemical process, the apportionment will be more complicated and require additional record keeping and reporting requirements. The regulatory framework EPA established to verify that the number of cellulosic RINs generated by such processes corresponds to the volume of the cellulosic biofuel produced involves verifying that the calculated converted fraction (CF) applied to each portion of the feedstock material (cellulosic and non-cellulosic) is accurate. Establishing the accuracy of these determined CF values requires obtaining reasonably accurate feedstock and process data, which are used to perform a mass balance accounting of the various feedstock materials.  This allows portions of the final fuel to be attributed either to the cellulosic or non-cellulosic portions of the biomass used as feedstock. This memorandum explains:  1) why EPA has established separate requirements for various types of processes, 2) what types of data can be considered reasonably accurate to form the basis for calculating cellulosic and non-cellulosic CF values for feedstocks, and 3) how accurate feedstock CF values can be used in existing regulations to apportion RINs for a single type of fuel produced from multiple feedstocks (including single types of biomass that have less than 75% adjusted cellulosic content, and are treated as two feedstocks under EPA regulations).

I. Background
      a. The cellulosic content threshold, and the implications for feedstocks with lower cellulosic contents
EPA is finalizing a cellulosic content threshold for feedstocks to qualify for cellulosic RINs for the total volume of fuel produced.  If a feedstock has an average adjusted cellulosic content of at least 75%, all of the fuel produced from the feedstock is eligible to generate cellulosic RINs.  "Adjusted cellulosic content" is the percent of organic matter that is cellulosic material (cellulose, hemicellulose, and lignin).  In other words, the "adjusted cellulosic content" is adjusted so as not to include the inorganic (ash) components of the feedstock.  This adjustment is appropriate because the inorganic portion of feedstock is not converted biofuel.
Where a biofuel producer is seeking to generate cellulosic RINs from a single type of biomass, but the biomass contains less than 75% adjusted cellulosic content, the biomass must be treated as two separate feedstocks; one cellulosic and the other non-cellulosic.  In such cases, as well as in situations where biofuel producers convert two or more different types of biomass simultaneously, producers are eligible to generate cellulosic RINs for a percentage of the fuel produced, based on the cellulosic converted fraction and the equations in 40 CFR 80.1426(f)(3)(vi).   The purpose of this memorandum is to provide details on how the cellulosic converted fraction can be calculated, and examples of methods that may be used to generate the data needed to calculate the cellulosic converted fraction.
      b. Registration, reporting and record keeping requirements for thermochemical and biochemical processes
EPA is requiring all producers of cellulosic RINs converting cellulosic biomass to complete additional registration requirements. These additional requirements are designed to demonstrate that the process being registered is capable of performing cellulosic biomass conversion.  Additionally, as part of the engineering review, the relevant unit process equipment to perform the described conversion to biofuel will be confirmed to be both in place and operational.
Process technology plays a key role in how much of the final fuel product is derived from cellulose, hemicellulose, or lignin.  The two basic processes for converting cellulosic feedstocks into biofuel are thermochemical and biochemical.  Thermochemical processes mainly consist of pyrolysis  -  in which cellulosic biomass is decomposed with temperature to form bio-oils that can be further processed to produce a finished fuel  -  and gasification  -  in which cellulosic biomass is decomposed to form synthesis gas ("syngas") that with further catalytic processing can produce a finished fuel product.  Thermochemical processes typically convert all of the organic components of the feedstock into finished fuel, and the portion of the finished fuel derived from cellulosic material is proportional to the cellulosic content of the organic fraction of the feedstock. Therefore, EPA's additional registration requirements for thermochemical producers are intended to demonstrate how much of the feedstock is cellulosic, and that the conversion equipment to be used in the process is both in place and operational at the time of registration.
By contrast, the biochemical process first requires the release of sugars from biomass and then the use of microorganisms to convert the sugars into fuels.  The amount of cellulosic material converted to fuel will depend on the details of the process, such as the types and combinations of enzymes used. Variations from process to process will establish different hydrolysis efficiencies for cellulosic and non-cellulosic carbohydrates.  Thus, for biochemical processes, the cellulosic portion of the fuel will not necessarily be proportional to the cellulosic composition of the feedstock.
For in situ processes, where cellulosic and non-cellulosic material are simultaneously hydrolyzed to intermediate sugars or converted to fuel, the registration, reporting, and recordkeeping requirements, as well as the method for determining the cellulosic converted fraction, are different depending on whether the cellulosic biomass is converted by a biochemical or a thermochemical process. EPA's additional registration and record keeping requirements for in situ biochemical producers of cellulosic fuel are intended to establish and monitor the relative conversion efficiencies for both the cellulosic and non-cellulosic portions of the feedstock in order to ensure that RIN assignments have been made appropriately.

II. Definition of the cellulosic Converted Fraction
EPA defines the converted fraction (CF) to be the average mass percent (typically a yearly average) representing that portion of the feedstock that is converted into renewable fuel. The CF is calculated by dividing the dry mass of the feedstock that is converted to renewable fuel by the dry mass of the feedstock that is capable of being converted to fuel. Calculating separate CF and cellulosic CF values among in situ biochemical processes can be complicated because the mass of the resulting fuel corresponding to the non-cellulosic and cellulosic portions cannot be directly measured. However, existing EPA regulations detail how RINs can be allocated where multiple feedstocks are being simultaneously processed.  This memo provides more detail on how the formulas in 80.1426(f)(3)(vi) should be used to calculate RINs.
III. Description of possible process configurations for biochemical and "in situ" biochemical processes
Biochemical processes typically employ engineered yeast strains to ferment aqueous sugars into alcohols that can be separated and used as biofuels. Release of sugars from complex carbohydrates is facilitated by enzymatic treatment in a process called hydrolysis. The polymeric linkages in these carbohydrates can be cellulosic or non-cellulosic, and this distinction determines which enzymatic treatment will result in hydrolyzing the chemical bonds linking the sugars together. In this case, enzymes can be viewed as keys that un-lock the sugars, and only the proper key will fit a particular chemical bond's lock.  Released sugars will be converted to biofuel in the same manner regardless of whether they were derived from cellulosic or non-cellulosic carbohydrates. Therefore, hydrolysis is the critical step controlling the fraction of the finished fuel that can be considered to be derived from cellulosic material. Determining the extent to which the cellulosic portion of a feedstock was hydrolyzed can be quantified in a number of ways, but this validation is more difficult for processes that perform in situ hydrolysis of both the cellulosic and non-cellulosic feedstock portions. This is due to the fact that the fraction of sugars or fuel derived from either type of carbohydrate cannot be measured directly, but rather requires a mass balance accounting to identify the source of the sugars or fuel.  Figure 1 shows a simplified example of a biochemical process performing in situ biochemical hydrolysis, and Figure 2 shows a separated hydrolysis scenario.
Figure 1  -  Simplified schematic of a biochemical biofuel process with in situ hydrolysis

Figure 2  -  Simplified schematic of a biochemical biofuel process with separated hydrolysis

To determine the relative amounts of cellulosic and non-cellulosic feedstock that are hydrolyzed, a mass balance accounting of the converted feedstock and resulting products and co-products is required. There are a number of ways to perform a mass balance accounting for the converted portion of the cellulosic feedstock. It will be easier for producers using separated hydrolysis because the cellulosic conversion can be quantified directly from the cellulosic hydrolysis unit as indicated by the dashed boundary line in Figure 2.  In this case, complex analysis of the inputs and outputs is not required because the aqueous sugars in the hydrolysis unit's effluent are assumed to be derived from cellulosic carbohydrates.  Similarly, if cellulosic hydrolysis occurred as a separate step, and the resulting intermediates from that step were segregated and fermented separately, then all of the resulting fuel from this process would be cellulosic. A direct accounting for the converted cellulosic fraction will allow RINs to be easily attributed.
By contrast, in situ processes require a more complex mass balance accounting to confirm the portions of the biofuel resulting from cellulosic hydrolysis relative to non-cellulosic hydrolysis. Assessment methods can be designed in a number of ways, but would typically account for cellulosic conversion by either quantifying overall biofuel increases relative to non-cellulosic treatment, or by directly analyzing the structural make-up of the feedstock and residual materials, as well as the overall fuel yield, in order to determine relative feedstock conversion.  EPA is allowing producers to design analytical protocols specific to their process configuration as long as the mass balance accounting calculation method is verified by an independent third party engineer, these calculations can independently identify both a cellulosic and non-cellulosic CF, the data used to perform the calculations is regularly reported along with the calculated CF values, and the data itself is collected and reported in a scientifically reasonable manner.

IV. Expectations for data collection and analysis
      a. General requirements regarding data used to calculate CF
EPA is providing clarifying information on the type of methods that may be used to generate data to calculate the cellulosic converted fraction.  Data used to calculate the cellulosic CF must be obtained using an analytical method certified by a voluntary consensus standards body (VCSB), or using a non-VCSB method that would produce reasonably accurate results. If a VCSB-approved method is not used to generate the data required to calculate the cellulosic CF for a given process, then the producer will need to show that the method used is an adequate means of generating the data by providing peer reviewed references to the third party engineer performing the engineering review at registration.  An example of an appropriate VCSB test method certified by a voluntary consensus standards body for assessing the cellulosic content of a feedstock is ASTM E1758, entitled, "Determination of Carbohydrates in Biomass by High Performance Liquid Chromatography." Since this ASTM test method has been adjudicated through the voluntary consensus standards body process we are confident in its use in practice.  An example of another type of method would be a non-voluntary consensus standards body test method such as the National Renewable Energy Laboratory (NREL) Laboratory Analytical Procedure to measure structural carbohydrates and is an example of such a methodology that is commonly presented in peer-reviewed literature.  Since this NREL method has not been adjudicated through the voluntary consensus standards body process, the user of these types of non-VCSB test methods will be required to provide peer reviewed references to the third party engineer performing the engineering review at registration to show that the non-VCSB method used is an adequate means of generating the data.  These are examples of test methods that quantify the amount of cellulose, hemicellulose, and/or lignin in biomass.  Data from these analyses can be used in a mass balance equation to determine the cellulosic CF.  In the next sections we describe these methods in more detail, as well as some other methods that can be used to determine the cellulosic fraction of a feedstock.  This information, in turn, can be used to calculate the cellulosic CF of the finished fuel.
      b. Structural Carbohydrate Analysis
One method of determining the cellulose and hemicellulose content of biomass is using a High Performance Liquid Chromatography (HPLC) structural carbohydrate analysis, also known as a dietary fiber analysis.  This type of structural carbohydrate analysis has been commonly used by researchers who are interested in the composition of a feedstock that will be used for biofuel.  For this type of test, acid hydrolysis is used to break down both cellulose and hemicellulose into monomeric sugars (i.e., cellulose is converted to glucose; hemicellulose is converted to xylose, galactose, arabinose, and mannose).  The concentrations of these sugars are measured using HPLC.  The glucose concentration can be used as a measure of the cellulose concentration in the plant, and the sum of the xylose, galactose, arabinose, and mannose concentrations can be used as a measure of the hemicellulose concentration.  The sample can also be analyzed for acetyl content, which is part of hemicellulose.  Examples of this type of procedure are the National Renewable Energy Lab (NREL) Laboratory Analytical Procedure, "Determination of Structural Carbohydrates and Lignin in Biomass" and ASTM E1758, "Determination of Carbohydrates in Biomass by High Performance Liquid Chromatography."  Although this type of method has been successfully used to measure cellulose and hemicellulose for many feedstocks, an important caveat is that the results obtained are highly dependent on the exact methods used, and small changes to the procedures can have a large effect on the results. In addition, the NREL and ASTM procedures warn that biases may be introduced if the sample has a high protein content, or if extractives have not been removed.
Because the HPLC structural carbohydrate analysis only measures cellulose and hemicellulose, a separate method is needed to measure the lignin concentration.  A procedure for measuring the lignin concentration is detailed in the NREL method cited above, as well as in ASTM E1721 "Determination of Acid-Insoluble Residue in Biomass."  Briefly, the acid hydrolysis step that breaks down the cellulose and hemicellulose also separates lignin into an "acid soluble" portion and an "acid insoluble" portion.  The concentration of acid soluble lignin can be measured using a UV-Visible spectrophotometer.  The concentration of acid insoluble lignin can be measured gravimetrically.
In addition to the HPLC structural carbohydrate method, near infrared spectroscopy (NIRS) can be used to determine the structural carbohydrate composition, as well as the presence of other components.  NIRS measures the chemical bonds in a biomass sample, which can be used to determine its composition.  This method is rapid and non-destructive.  In order for measurements to be made using NIRS, the spectra must be calibrated using other methods, such as an HPLC compositional analysis.
      c. Detergent Fiber Analysis
For a determination of the total fiber content of biomass, a neutral detergent fiber (NDF) test can be used.  The NDF method dissolves non-fiber components such as proteins, lipids, and sugars.  The leftover material is the total fiber, which can be measured gravimetrically. This method is detailed in AOAC 2002.04 Amylase-Treated Neutral Detergent Fiber in Feeds.  This method is commonly used for determining the forage potential of biomass.
The NDF method can be used along with an acid detergent fiber (ADF) test and an acid detergent lignin (ADL) test to determine the amount of cellulose, hemicellulose and lignin, rather than just the total fiber content.  The ADF method breaks down hemicellulose, so that cellulose and lignin remain.  The measurement of ADF can be subtracted from the measurement of NDF to determine the concentration of hemicellulose in the sample.  The ADL test measures the lignin concentration by breaking down both cellulose and hemicellulose using sulfuric acid and ignition.  The ADL measurement can be subtracted from the ADF measurement to determine cellulose concentration.  The detergent fiber analyses are much simpler than the HPLC structural carbohydrate analysis.  However, these two types of methods do not always give the same results.  For example, one study showed that the detergent fiber methods overestimate cellulose and hemicellulose and underestimate lignin relative to the structural carbohydrate analysis.  Another study has shown that NDF and ADF cannot be used to accurately determine glucan and xylan content of the fiber portion of a feedstock.  Even though the detergent fiber analyses do not give the same measurements of cellulose, hemicellulose, or lignin as the HPLC structural carbohydrate analysis, the NDF method does give a good measure of the sum of cellulose, hemicellulose, and lignin.  For cases where only the total cellulosic content (cellulose, hemicellulose, and lignin) or the adjusted cellulosic content is required, rather than separate measurements of cellulose, hemicellulose and lignin, the NDF method is appropriate.
      d. Quantification of Starch Content
Measurement of the starch content can be used to indirectly determine the cellulosic converted fraction.   To measure the starch content, enzymes are used to convert the starch to maltodextrin and then to glucose.  A subsequent reaction forms a dye in proportion to the amount of glucose present. The absorbance of this dye is measured with a spectrophotometer.  Standards are used to calibrate the spectrophotometer measurements and determine the starch content of the initial sample.  Because both starch and cellulosic material can be converted to fuel, a measure of the starch content of the feedstock and residual material after conversion can give information about how much starch was converted to fuel, which would help determine the cellulosic converted fraction.
V. Allocating RINs using the 1426 equations
      a. Description of how EPA views cellulosic and non-cellulosic components of a feedstock as 2 separate feedstocks for RIN allocation
For simplicity, EPA selected to specify that if a single plant's average adjusted cellulosic content is less than 75%, then the feedstock is considered to be two feedstocks  -  specifically a cellulosic and non-cellulosic feedstock. This designation allows the equations in Table 4 to 80.1426 to be used to allocate both cellulosic and non-cellulosic RINs for the resulting mixed batch of fuel. This will require a separate converted fraction (CF) to be calculated for both the cellulosic and non-cellulosic fractions.
      b. Calculation of the cellulosic CF and identification of the volume of D3-RINs
The converted fraction (CF) is a unitless average mass percent representing that portion of the feedstock that is converted into renewable fuel. This is calculated by dividing the mass of the feedstock that is converted to renewable fuel by the mass of the feedstock that is capable of being converted to fuel. For in situ biofuel producers, this calculation will require some type of material balance accounting because the fuel will be a mixture of both cellulosic and non-cellulosic fuel.
There are several possible combinations of system boundaries and analytical methods that could be used to perform a mass balance accounting of cellulosic conversion, which would offer the data needed to calculate the corresponding cellulosic biofuel production via an in situ process. Thus, there are different ways to obtain the data to be used to calculate the CF values need to perform RIN allocation. We will present an example of how to use data characterizing feedstock composition, cellulosic conversion and certain process parameters to allocate RINs. In this example we assume that an in situ process is simultaneously processing corn starch and cellulosic polysaccharides associated with corn kernel fiber to produce ethanol.
Data characterizing the corn composition (Table 1) and process specific data to elucidate the relative starch and cellulosic converted fraction (CF) will be required to appropriately allocate RINs. For this example, the validation protocol for obtaining the cellulosic CF requires performing an analytic process that involves 1) removing starch, 2) quantifying an initial level of cellulosic polysaccharides prior to hydrolysis, 3) quantifying a final level of cellulosic polysaccharides following hydrolysis, and 4) identifying the cellulosic ethanol by calculating the difference between the initial and final levels of cellulosic polysaccharides. In this example, the CF is determined to be the identified cellulosic ethanol (Step 4) divided by the theoretical ethanol yield for the total initial amount of cellulosic polysaccharides.
Once the amount of ethanol resulting from the cellulosic polysaccharides has been identified, data characterizing the combined feedstock composition can be used to identify the cellulosic portion of the feedstock. An analysis of a representative sample of the feedstock would be used to characterize the corn composition (Table 1). Feedstock characteristics (Table 1), accurate CF values for cellulosic and non-cellulosic conversion, and the total volume (cellulosic plus non-cellulosic volume) can be used to allocate RINs for the example batch (Table 2).
Table 1  -  Relevant feedstock characteristics and composition
                                Corn Composition
Kernel Mass (M), lb wet
61.2 lb/bu
Corn Moisture (m), % wet
15%

Kernel Mass, lb dry
52.0 lb/bu
Starch, % of kernel dry
75.0%
Cellulosic polysaccharides, % of kernel dry
4.0%

RIN allocation for the cellulosic and non-cellulosic portions of the biofuel can be performed by applying the RIN volume (VRIN ) equation.
VRIN=EV∙VS∙FED-codeFEstarch+FEcellulose
Where EV is the equivalence value for the renewable fuel (in this case it is 1 since the fuel is ethanol), VS is the standardized volume of the renewable fuel produced, and FE is the feedstock energy value.  Note that this equation will be applied separately to calculate the RIN volume for each D-code. The feedstock energy (FE) is characterized by the FE equation.
FE=M∙(1-m)∙CF∙E
Where M is the mass of the feedstock, m is the feedstock moisture content, CF is the converted fraction and E is the energy content of the components of the feedstock converted to fuel (Table 2).

Table 2  -  Example: assumed inputs, intermediate values, and calculations
                  Example in situ RIN Allocation Calculation
Assumed feedstock for example (M), lb wet

Total standardized volume of fuel (VS), gal
                                                                      1,000,000

                                                                         64,158

Note: 77,000 Btu/gal ethanol

                                    Starch
                                   Cellulose
                                   Comments
Feedstock, thousand lb dry / batch
                                                                          637.5
                                                                             34
Account for moisture content and composition (Table 1).

Energy Content (E), Btu/lb dry
                                                                          7,600
                                                                          7,600
Theoretical feedstock energy assuming complete conversion.

Converted Fraction (CF)
                                                                           0.95
                                                                           0.35
Calculated using method approved at registration.

Feedstock Energy (FE), thousand Btu
                                                                      4,602,750
                                                                         90,440
Obtained by multiplying the dry feedstock, E, and CF.

RIN Volume (VRIN), gallons
                                                                         62,922
                                                                          1,236
Number of D6 and D3 RINs that would be assigned respectively for this example batch.

For the example presented, 1,000,000 pounds of wet corn feedstock was processed to produce 64,158 gallons of ethanol. Based on the feedstock characteristics (determined using an appropriate analytical method as discussed previously) for the given reporting period, the wet feedstock was composed of 637,500 pounds of starch and 34,000 pounds of cellulose on a dry mass basis. By establishing and using the dry mass of these components for subsequent calculation, the moisture content term in the FE equation simplifies to 1. Multiplying the dry mass of each feedstock by its corresponding converted fraction (CF) and energy content (E) yields the feedstock energy (FE). Using the resulting FE values for starch and cellulose respectively, and applying the VRIN equation for allocating RIN volumes to batches with these two feedstocks yields the RIN volume for each type of D-code. Note that since the fuel produced is ethanol, the energy equivalence value (EV) is 1.
This example shows how information about the wet feedstock mass, total fuel output, feedstock characteristics, and calculated process parameters can be used to allocate separate RINs for an in situ process converting both starch and cellulose to ethanol.


[Federal Register Volume 78, Number 72 (Monday, April 15, 2013)]
[Notices]
[Pages 22353-22357]
[FR Doc No: 2013-08724]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69351; File No. SR-Phlx-2013-35]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Pricing for Mini Options

April 9, 2013.
    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 March 26, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
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 by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the its Pricing Schedule by adding
Section A, entitled ``Mini Options Fees,'' and by redesignating
existing Section A as Section B.
    The text of the proposed rule change is provided in Exhibit 5. The
text of the proposed rule change is also available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
    While changes to the Pricing Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated that they become
operative on March 28, 2013.

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 Exchange 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 Exchange 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
    The purpose of the proposed rule change is to set forth in new
Section A of the Pricing Schedule the applicability of various existing
fees, rebates, and caps to Mini Options, and specifically to establish
that transaction fees with respect to Mini Options will be set at
$0.00. Existing Section A, Customer Rebate Program, will be
redesignated as Section B.
    The Exchange represented in its filing establishing Mini Options
(the ``Mini Options Listing Filing'') that ``the current Pricing
Schedule will not apply to the trading of mini-option contracts'' and
that ``[t]he Exchange will not commence trading of mini-option
contracts until specific fees for mini-options contracts trading have
been filed with the Commission.'' \3\ The purpose of the proposed new
Section A is to adopt the fees that are specific to Mini Options, as
provided for in the Mini Options Listing Filing.
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    \3\ See SR-Phlx-2012-126, page 8. See also Securities Exchange
Act Release No. 68132 (November 1, 2012), 77 FR 66904 (November 7,
2012) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To List and Trade Option Contracts Overlying 10 Shares of
Certain Securities).
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    New Section A will appear after the Preface section of the Pricing
Schedule which contains definitions that apply to the entire Pricing
Schedule, including new Section A. Except where different treatment is
specified for Mini Options in Section A, the rest of the Pricing
Schedule will apply to Mini Options in the same way it applies to all
other options. For example, a Mini Options class will count as an
options class assignment for purposes of determining the level of
Streaming Quote Trader Fees and Remote Streaming Quote Trader Fees in
Section VI. Cross references to Section A in the Table of Contents and
Section IV.A, PIXL Pricing, will be updated to refer to Section B, and
the Table of Contents will be updated to refer to Mini Options as new
Section A.
    Applicable Symbols. Proposed new Section A identifies the Mini
Options symbols as AAPL7, AMZN7, GLD7, GOOG7 and SPY7. Accordingly, new
Section A will apply exclusively to these new symbols.
    Transaction Fees. New Section A provides for a ``Mini Options
Transaction Fee--Electronic'' and for a ``Mini-Options Transaction
Fee--Floor and QCC'', both of which will apply in the Customer,
Professional, Specialist and Market Maker, Broker-Dealer and Firm fee
categories.\4\ In each case, the Exchange is currently setting these
fees at $0.00 but may in the future file proposed rule changes to amend
the transaction fee level in one or more categories. The Exchange is
establishing the separate Section A Pricing Schedule section for Mini
Options transaction fees in order to facilitate differentiation in the
future between Mini Options transaction fees and other options
transaction fees.
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    \4\ Transaction fees for options other than Mini Options are
currently found in Sections I through III of the Pricing Schedule.
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    PIXL Executions. The new Section A transaction fees will apply to
PIXL executions in Mini Options rather than the PIXL Pricing fees set
forth in Section IV.A.\5\
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    \5\ PIXL is the Exchange's price improvement mechanism known as
Price Improvement XL or (PIXL\SM\). See Rule 1080(n) and Section IV
of the Pricing Schedule.
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    Payment for Order Flow. Pursuant to new Section A, Payment for
Order Flow Fees set forth in Section II of the Pricing

Schedule will not apply to Mini Options.\6\
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    \6\ The Payment for Order Flow program started on July 1, 2005
as a pilot and after a series of orders extending the pilot became
effective on April 29, 2012. See Securities Exchange Act Release No.
52114 (July 22, 2005), 70 FR 44138 (August 1, 2005) (SR-Phlx-2005-
44); 57851 (May 22, 2008), 73 FR 31177 (May 20, 2008) (SR-Phlx-2008-
38); 55891 (June 11, 2007), 72 FR 333271 (June 15, 2007) (SR-Phlx-
2007-39); 53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-
2006-25); 53078 (January 9, 2006), 71 FR 2289 (January 13, 2006)
(SR-Phlx-2005-88); 52568 (October 6, 2005), 70 FR 60120 (October 14,
2005) (SR-Phlx-2005-58); and 59841 (April 29, 2009), 74 FR 21035
(May 6, 2009) (SR-Phlx-2009-38).
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    Customer Rebate Program. New Section A clarifies that Mini Options
volume will not be included in and will not be eligible for the
Customer Rebate Program which is being moved from Section A of the
Pricing Schedule to Section B of the Pricing Schedule.\7\
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    \7\ The Exchange has recently described and amended its Customer
Rebate Program. See SR-Phlx-2013-13. See also Securities Exchange
Act Release No. 68924 (February 13, 2013), 78 FR 11916 (February 20,
2013).
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    Routing Fees. Today, the Exchange calculates Routing Fees by
assessing certain Exchange costs related to routing orders to away
markets plus the away market's actual transaction fee.\8\ The Exchange
assesses a $0.05 per contract fixed Routing Fee when routing orders to
the NASDAQ Options Market LLC (``NOM'') and NASDAQ OMX BX, Inc. (``BX
Options'') and a $0.11 per contract fixed Routing Fee to all other
options exchanges in addition to the actual transaction fee or rebate
paid by the away market.\9\ With respect to the rebate, the Exchange
pays a market participant the rebate offered by an away market where
there is such a rebate. Any rebate available is netted against a fee
assessed by the Exchange. With respect to orders routed to C2 Options
Exchange, Incorporated (``C2''), the Exchange assesses non-Customer
simple, non-complex orders in equity options (single stock) that are
routed to C2 a Routing Fee which includes a fixed cost of $0.11 per
contract plus a flat rate of $0.85 per contract, except with respect to
Customers. With respect to Customers, the Exchange does not pass the
rebate offered by C2, rather, Customer simple, non-complex orders in
equity options (single stock) that are routed to C2 are assessed $0.00
per contract.
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    \8\ Routing fees applicable to options other than Mini Options
are set forth in Section V of the Pricing Schedule. Routing fees
allow the Exchange to recoup costs it incurs for routing and
executing orders in equity options to various away markets.
    \9\ The fixed Routing Fee is based on costs that are incurred by
the Exchange when routing to an away market in addition to the away
market's transaction fee. For example, the Exchange incurs a fee
when it utilizes Nasdaq Options Services LLC (``NOS''), a member of
the Exchange and the Exchange's exclusive order router, to route
orders in options listed and open for trading on the PHLX XL system
to destination markets. Each time NOS routes to away markets NOS
incurs a clearing-related cost and, in the case of certain
exchanges, a transaction fee is also charged in certain symbols,
which fees are passed through to the Exchange. The Exchange also
incurs administrative and technical costs associated with operating
NOS, membership fees at away markets, Options Regulatory Fees
(``ORFs'') and technical costs associated with routing options. The
transaction fee assessed by the Exchange is based on the away
market's actual transaction fee or rebate for a particular market
participant at the time that the order was entered into the
Exchange's trading system. This transaction fee is calculated on an
order-by-order basis, since different away markets charge different
amounts. In the event that there is no transaction fee or rebate
assessed by the away market, the only fee assessed is the fixed
Routing Fee.
---------------------------------------------------------------------------

    The Exchange has recently filed a proposed rule change to make a
number of pricing changes described in this paragraph to its Routing
Fees. Effective April 1, 2013, the Exchange's Routing Fees in Section V
of the Pricing Schedule will be as follows: Non-Customers will be
assessed a $0.95 per contract flat fee and the Customer Routing Fee
will be dependent on the away market.\10\ With respect to Customer
orders routed to NOM, the Exchange will assess a fixed fee of $0.05 per
contract (``Fixed Fee'') in addition to the actual transaction fee
assessed by the away market would apply. With respect to Customer
orders that are routed to BX Options, the Exchange will not assess a
Routing Fee and will not pass the rebate. The Exchange will assess a
Customer Routing Fee of $0.11 per contract (``Fixed Fee'') in addition
to the actual transaction fee when routing to an options exchange other
than NOM and BX Options. Similar to Customer orders routed to BX, the
Exchange will no longer pass any rebate paid by any away market for any
Customer orders.
---------------------------------------------------------------------------

    \10\ See SR-Phlx-2013-23 (not yet published) [sic].
---------------------------------------------------------------------------

    New Section A establishes Routing Fees for Mini Options that will
apply instead of the existing Routing Fees set forth in Section V of
the Pricing Schedule. Routing Fees for Customers are set at $0.01 per
contract in addition to the actual transaction fee assessed. If the
away market pays a rebate, the Customer Routing Fee will be $0.00.
Routing Fees for all other participants (non-Customers) will be a flat
rate of $0.15 per contract and the Exchange will not charge non-
Customers the actual transaction fee assessed by the away market or
pass back any rebate.
    QCC Transaction Fees and Rebates. New Section A establishes that
QCC Transaction fees and rebates, set forth in Section II \11\ of the
Pricing Schedule, are not applicable to Section A of the Pricing
Schedule.
---------------------------------------------------------------------------

    \11\ QCC Orders are defined in Rule 1080(o).
---------------------------------------------------------------------------

    Fee Caps. New Section A provides that the Monthly Market Maker Cap
\12\ and the Monthly Firm Fee Cap \13\, defined in Section II of the
Pricing Schedule, will not be applicable to transactions in Mini
Options. Therefore, any fees that may be assessed with respect to
transactions in Mini Options will not be applied toward these caps.
---------------------------------------------------------------------------

    \12\ The Monthly Market Maker Cap is $550,000 for: (i)
Electronic and floor Option Transaction Charges; (ii) QCC
Transaction Fees (as defined in Exchange Rule 1080(o) and Floor QCC
Orders, as defined in 1064(e)); and (iii) fees related to an order
or quote that is contra to a PIXL Order or specifically responding
to a PIXL auction. The trading activity of separate Specialist and
Market Maker member organizations will be aggregated in calculating
the Monthly Market Maker Cap if there is Common Ownership between
the member organizations. All dividend, merger, short stock interest
and reversal and conversion strategy executions (as defined in this
Section II) will be excluded from the Monthly Market Maker Cap. In
addition, Specialists or Market Makers that (i) are on the contra-
side of an electronically-delivered and executed Customer order; and
(ii) have reached the Monthly Market Maker Cap will be assessed a
$0.16 per contract fee. For QCC Orders as defined in Exchange Rule
1080(o), and Floor QCC Orders, as defined in 1064(e), a Service Fee
of $0.07 per side applies once a Specialist or Market Maker has
reached the Monthly Market Maker Cap. The $0.07 Service Fee applies
to every contract side of the QCC Order and Floor QCC Order after a
Specialist or Market Maker has reached the Monthly Market Maker Cap,
except for reversal and conversion strategies executed via QCC. The
Service Fee is not being assessed to a Specialist or Market Maker
that does not reach the Monthly Market Maker Cap in a particular
calendar month.
    \13\ Firms are subject to a maximum fee of $75,000 (``Monthly
Firm Fee Cap''). Firm floor option transaction charges and QCC
Transaction Fees as defined in Section II of the Pricing Schedule in
the aggregate, for one billing month will not exceed the Monthly
Firm Fee Cap per member organization when such members are trading
in their own proprietary account.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \14\ in general,
and furthers the objectives of Section 6(b)(4) of the Act \15\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Transaction Fees. The Exchange believes that the proposed Mini
Options Transaction Fee-Electronic and Mini Options Transaction Fee--
Floor and QCC, as well as the applicability of those fees to PIXL
executions in Mini Options, are reasonable because those fees are set
at zero in order to encourage market participants to transact Mini
Options. They are also equitable and not unfairly discriminatory
because all the market participant categories will be

able to take advantage of the zero fee level and will therefore be
treated in a uniform matter. Likewise, the Exchange believes that not
applying QCC Transaction fees and rebates to transactions in Mini
Options is reasonable, equitable and not unfairly discriminatory
because the Exchange does not desire to assess certain transaction fees
to encourage all market participants to transact Mini Options. No
market participant would be assessed QCC Transaction fees or rebates.
    Fee Caps. The Exchange believes that it is reasonable, equitable
and not unfairly discriminatory to not apply the Monthly Market Maker
Cap or Monthly Firm Fee Cap to Mini Options transaction fees because
the Mini Options transaction fees are set at zero in any event for all
market participants. The fee caps would not be affected by transactions
in Mini Options for which transaction fees are not assessed in the
first place.
    Customer Rebate Program. The Exchange believes that it is
reasonable, equitable and not unfairly discriminatory that Mini Options
volume will not be included in and will not be eligible for the
Customer Rebate Program defined in newly relocated Section B of the
Pricing Schedule. The Customer Rebate Program was established to
incentivize market participants to increase the amount of Customer
order flow they transact on the Exchange.\16\ The Customer Rebate
Program is predicated on certain volume tiers that assume an option
contract size of 100 shares. Due to the smaller size of the Mini
Options contract, Mini Options will not make sense in the context of
the volume tiers upon which the calculation of the Customer Rebate is
based and the logic behind the Customer Rebate Program would not be
achieved by including them. For this reason the Exchange believes that
it is reasonable to not permit Mini Options to qualify in the Customer
Rebate Program. Also, the Exchange would uniformly not pay rebates to
any market participant transacting Customer Mini Options. Finally,
redesignation of the caption of the Customer Rebate Program from A. to
B. will provide clarity to the Pricing Schedule as it accommodates the
new Mini Options Fees language in A.
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 68924 (February 13,
2013), 78 FR 11916 (February 20, 2013).
---------------------------------------------------------------------------

    Payment for Order Flow Fees. The Exchange believes that it is
reasonable, equitable and not unfairly discriminatory that the Payment
for Order Flow fees set forth in Section II will not apply to Mini
Options because the Exchange is not charging any transaction fees for
these products at this time. By eliminating Payment for Order Flow Fees
as applied to Mini Options the Exchange will incentivize members to
transact in them. Further, Specialists and Market Makers will not be
singled out from among other market participants for assessment of this
fee. All market participants will be treated the same way by not having
the Payment for Order Flow fees imposed on them with respect to Mini
Options.
    Proposed Mini Options Routing Fees--Customers. In the proposed new
language in Section A of the Pricing Schedule, for Mini Options a $0.01
per contract Routing Fee will be charged for Customer orders in
addition to the actual transaction fee assessed, provided that if the
away market pays a rebate to the Exchange, the Customer Routing Fee is
$0.00. The Customer Routing Fees for Mini Options are reasonable
because they will allow the Exchange to recoup and cover its costs of
providing routing services for Customer orders in Mini Options just as
it does for other standard equity options for which it incurs the same
costs. The Exchange believes this Routing Fee for Customers in Mini
Options is reasonable because it is lower than the other fixed Routing
Fees for standard options, as discussed above, which are assessed with
respect to Customer transactions in other options pursuant to Section V
of the Pricing Schedule. Additionally, the Customer Routing Fees will
be similar to the new Routing Fees that the Exchange recently filed and
which will be operative on April 1, 2013, except the fixed cost will be
lower in the case of Mini Options. Similar to that filing, the Exchange
would not pass rebates back to Customers, but would also not asses a
Customer a Routing Fee if a rebate were paid by the away market. The
Exchange believes that its proposal to not pass a rebate that is
offered by an away market for Customers orders in Mini Options is
reasonable because to the extent that another market is paying a
rebate, the Exchange will not assess a Routing Fee for that
transaction. If a market participant desires the rebate, the market
participant has the option to direct the order to that away market.
Other options exchanges today do not pass the rebate.\17\
---------------------------------------------------------------------------

    \17\ See CBOE's Fees Schedule and International Securities
Exchange LLC's (``ISE'') Fee Schedule.
---------------------------------------------------------------------------

    The Exchange believes the Routing Fees for Mini Options for
Customers are equitable and not unfairly discriminatory because the
Exchange would uniformly assess the same Routing Fees to all Customers,
and because market participants have the ability to directly route
orders in Mini Options to an away market and avoid the Routing Fee.
Also, market participants may submit orders to the Exchange as
ineligible for routing or ``DNR'' to avoid Routing Fees. The Exchange
believes that its proposal to not pass a rebate that is offered by an
away market for Customer Mini Option orders is equitable and not
unfairly discriminatory because the Exchange would not pay such a
rebate on any Customer Mini Option order.
    Proposed Mini Options Routing Fees--Non-Customers. In the proposed
new language in Section A of the Pricing Schedule, Routing Fees for
Mini Options for all participants other than Customers (``non-
Customers'') will be a flat fee of $0.15 per contract. The Exchange
believes this fee is reasonable because it is lower than the $0.95 per
contract flat fee that will be in effect on April 1, 2013 for non-
Customers orders routed to all options exchanges (other than BX Options
and NOM) for orders in options other than Mini Options.\18\ The non-
Customer Routing Fees for Mini Options are reasonable because they will
allow the Exchange to recoup and cover its costs of providing routing
services for non-Customer orders in Mini Options just as it does for
other equity options for which it incurs the same costs. The Exchange
believes that its proposal to amend its non-Customer Routing Fees from
a fixed fee plus actual transaction charges to a flat rate is
reasonable because the flat rate makes it easier for market
participants to anticipate the Routing Fees which they would be
assessed at any given time. The Exchange believes that assessing all
non-Customer orders the same flat rate will provide market participants
with certainty with respect to Routing Fees. While each destination
market's transaction charge varies and there is a cost incurred by the
Exchange when routing orders to away markets, including clearing costs,
administrative and technical costs associated with operating NOS,
membership fees at away markets, ORFs and technical costs associated
with routing options, the Exchange believes that the proposed Routing
Fees will enable it to recover the costs it incurs to route non-
Customer orders to away markets. Other

exchanges similarly assess a fixed rate fee to route non-Customer
orders.\19\
---------------------------------------------------------------------------

    \18\ The Exchange believes that the proposed non-Customer
Routing Fee for Mini Options that are routed to BX and NOM is
reasonable even though it is higher than $0.05 Routing Fee assessed
with respect to non-Customer orders routed to BX and NOM today in
options other than Mini Options, inasmuch as the Exchange is not
charging any transaction fees with respect to Mini Options.
    \19\ BATS Exchange, Inc. (``BATS'') assesses non-Customer fixed
rates of $0.57 and $0.95 per contract when routing to away markets.
See BATS BZX Exchange Fee Schedule. The Chicago Board Options
Exchange Incorporated (``CBOE'') assesses non-Customer orders a
$0.50 per contract routing fee in addition to the customary CBOE
execution charges. See CBOE's Fees Schedule.
---------------------------------------------------------------------------

    The Exchange believes that its proposal to amend the non-Customer
Routing Fees from a fixed fee plus actual transaction charges to a flat
rate is equitable and not unfairly discriminatory because the Exchange
would uniformly assess the same Routing Fees to all non-Customer market
participants. Under its flat fee structure, taking all costs to the
Exchange into account, the Exchange may operate at a slight gain or a
slight loss for non-Customer orders routed to and executed at away
markets. The proposed Routing Fee for non-Customer orders is an
approximation of the maximum fees the Exchange will be charged for such
executions, including costs, at away markets. As a general matter, the
Exchange believes that the proposed fees will allow it to recoup and
cover its costs of providing routing services for non-Customer orders.
The Exchange believes that the fixed rate non-Customer Routing Fee is
equitable and not unfairly discriminatory because market participants
have the ability to directly route orders to an away market and avoid
the Routing Fee. Also, market participants may submit orders to the
Exchange as ineligible for routing or ``DNR'' to avoid Routing Fees. It
is important to note that when orders are routed to an away market they
are routed based on price first.
    The Exchange believes that its proposal to not pass a rebate that
is offered by an away market for non-Customers orders is reasonable
because to the extent that another market is paying a rebate, the
Exchange will assess a $0.15 per contract fee as its total cost in each
instance. The Routing Fee is transparent and simple. If a market
participant desires the rebate, the market participant has the option
to direct the order to that away market. Other options exchanges today
do not pass the rebate. The Exchange believes that its proposal to not
pass a rebate that is offered by an away market for non-Customers
orders is equitable and not unfairly discriminatory because the
Exchange would not pay such a rebate on any non-Customer order. The
Exchange believes the Routing Fees for Mini Options for non-Customers
are equitable and not unfairly discriminatory because the Exchange
would uniformly assess the same Routing Fees to all non-Customer market
participants.
    Finally, the Exchange believes that it is reasonable, equitable and
not unfairly discriminatory to assess different fees for Customers
orders as compared to non-Customer orders because the Exchange has
traditionally assessed lower fees to Customers as compared to non-
Customers. Customers will continue to receive the lowest fees or no
fees when routing orders, as is the case today. Other options exchanges
also assess lower Routing Fees for customer orders as compared to non-
customer orders in standard options.\20\
---------------------------------------------------------------------------

    \20\ BATS assesses lower customer routing fees as compared to
non-customer routing fees per the away market. For example BATS
assesses ISE customer routing fees of $0.30 per contract and an ISE
non-customer routing fee of $0.57 per contract. See BATS BZX
Exchange Fee Schedule.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
    The Exchange operates in a highly competitive market, comprised of
eleven exchanges, in which market participants can easily and readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or rebates to be inadequate.
Accordingly, the fees that are assessed and the rebates paid by the
Exchange described in the above proposal are influenced by these robust
market forces and therefore must remain competitive with fees charged
and rebates paid by other venues and therefore must continue to be
reasonable and equitably allocated to those members that opt to direct
orders to the Exchange rather than competing venues.
    The Mini Options are a new product that will commence trading on
the Exchange on March 28, 2013. The Exchange believes that
incentivizing market participants to transact Mini Options by not
assessing transaction fees and certain other fees encourages
competition in these products. There is no intra-market competition as
the Exchange will treat all market participants in a like manner with
respect to the transaction fees. Also, the Exchange believes that
because other markets will also list Mini Options there is no undue
burden on intermarket competition because market participants will be
able to select the venue where they will trade these products. In terms
of Routing, the Exchange-believes that assessing Customers lower fees
as compared to Non-Customers and assessing the same Routing Fees to all
Non-Customers regardless of the venue does not create an undue burden
on competition. The Exchange has traditionally assessed no or lower
fees to Customers. Also, the Exchange believes that because Mini
Options represent 1/10th of the size of a standard option contract,
reduced Routing Fees will not misalign the cost to transact Mini
Options.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\21\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-Phlx-2013-35 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-Phlx-2013-35. 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 the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-Phlx-2013-35 and should be submitted on or before May 6,
2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08724 Filed 4-12-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: May 8, 2006 (Volume 71, Number 88)]
[Notices]
[Page 26804-26807]
[DOCID:fr08my06-75]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53742; File No. SR-NSCC-2006-04]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Relating to Trade
Submission Requirements and Fees and Pre-Netting

April 28, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), \1\ notice is hereby given that on March 15, 2006, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') and on March 22,
2006, amended the proposed rule change described in Items I, II, and
III below, which items have been prepared primarily by NSCC. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

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

    NSCC is seeking to: (1) Require that all locked-in trade data
submitted to NSCC for trade recording be submitted on a real-time
basis; (2) prohibit pre-netting and other practices that prevent real-
time trade submissions; and (3) establish a new fee model for equity
trade recording and netting services.

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

    In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\2\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries
prepared by NSCC.
---------------------------------------------------------------------------

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

1. Real-Time Trade Submission
    NSCC processes approximately 25 million transaction sides per day
with a gross value of nearly $500 billion.\3\ These transactions are
submitted primarily on a locked-in basis by self-regulatory
organizations (``SROs'') (such as the New York Stock Exchange, American
Stock Exchange, Nasdaq Stock Market Inc., and the regional exchanges)
and Qualified Special Representatives (``QSRs''). Generally a QSR is a
member that (i) operates an automated execution system where the member
is always the contra side to every trade, (ii) has a parent corporation
or an affiliated corporation that operates an automated execution
system where the member is always the contra side to every trade, or
(iii) clear for a broker-dealer that operates an automated execution
system where the broker-dealer is always the contra side to every trade
and the subscribers to the system enter into an agreement with the
broker-dealer and the member that acknowledges the member's role in the
clearance and settlement of trades executed on the system.\4\
---------------------------------------------------------------------------

    \3\ Data based upon second quarter, 2005, volumes.
    \4\ The remaining original trade data received by NSCC is
submitted by members for trade comparison and consists of OTC equity
trades and OTC fixed income trades submitted through the Fixed
Income Clearing Corporation (``FICC'') Real-Time Trade Matching
System. In 2005, an average of approximately 43,000 equity and fixed
income sides per day were submitted to NSCC for trade comparison.
---------------------------------------------------------------------------

    The New York Stock Exchange, the American Stock Exchange, and The
Nasdaq Stock Market Inc., currently submit trades executed on their
respective markets to NSCC on a real-time basis. Archipelago Exchange
is scheduled to begin submitting locked-in trades on a real-time basis
before the end of 2006. Accordingly, before the end of 2006, more than
70% of the trades submitted to NSCC for trade recording will be
submitted on a real-time basis. However, the remaining regional
exchanges and most of the QSRs currently submit their trades either on
a multi-batch or end-of-day basis. NSCC understands that some of these
exchanges and QSRs are in the process of developing real-time trade
submission capabilities.
    The proposed rule change would modify NSCC's Procedure II (Trade
Comparison and Recording Service) to require that all locked-in trades
submitted for trade recording by SROs and QSRs be submitted on a real-
time

basis.\5\ The term ``real-time'' when used with respect to trade data
submission will be defined in Procedure XIII (Definitions) as the
submission of trade data on a trade-by-trade basis promptly after trade
execution in any format and by any communication method acceptable to
NSCC.\6\
---------------------------------------------------------------------------

    \5\ NSCC is not at this time modifying Procedure III (Trade
Recording Service (Interface Clearing Procedures)), so files
submitted to NSCC by The Options Clearing Corporation relating to
option exercises and assignments will not be required to be
submitted on a real time basis. OCC's process of assigning option
assignments is and will continue to be an end-of-day process.
    \6\ As part of the proposal, Addendum N (Interpretation of the
Board of Directors: Locked-In Data From Qualified Special
Representatives) would be deleted as it would no longer be relevant.
---------------------------------------------------------------------------

    This requirement will reduce systemic risk for a number of reasons,
including the following:

    (1) Business Continuity. Requiring real-time submission of
locked-in trade data reduces operational risk and promotes business
continuity by promoting safe storage of transaction data at the
clearing agency level. Without real-time submission, should an event
occur after trade execution that disrupts trade input, submission of
trade data could be significantly delayed or trade data could be
lost.
    (2) Straight through processing. Real-time trade submission
promotes straight through processing and will support the movement
by the securities industry to shortened settlement cycles.
    (3) Risk Mitigation. Receipt of trade data on a real-time basis
permits NSCC's Risk Management staff to begin analysis of trades
earlier and thereby monitor members' market risks as they evolve
during the trading day.
    (4) Trade Reconciliation. Receipt of trade data on a real-time
basis will enable NSCC to record and report to its members trade
data earlier in the day thereby promoting intraday reconciliation of
transactions at the member level.

2. Prohibition of Pre-Netting and Clarification of Correspondent
Clearing Service
    In order to effectively move to a real-time trade input
environment, practices that prevent real-time submission would also be
prohibited. Among such practices that NSCC has identified are the
practice of ``pre-netting'' and the inappropriate use of its
Correspondent Clearing Service. A review of QSR trade practices
indicates that certain QSRs ``pre-net'' trades before they submit trade
data to NSCC on a locked-in basis. Pre-netting is done on a bilateral
basis between a QSR and its customer, both NSCC members. In addition,
any pre-netting practices, whether being ``summarization'' (combining
like-sided trades by executing/correspondent broker), ``compression''
(combining like-sided trades by clearing broker), netting, or any other
practice that combines two or more trades prior to their submission to
NSCC, prevent the submission to NSCC of transactions on a trade-by-
trade basis and cause submitting firms to delay submission of their
trades. Delayed submission of trade data creates business continuity
risk for members and their users and settlement risk for NSCC should
some event occur that subsequently disrupts trade input and prevents
NSCC from monitoring market risks as they evolve during the trading
day. For these reasons, NSCC is proposing to require real-time trade
submission and to prohibit pre-netting activity by members submitting
trade data on a locked-in basis.\7\
---------------------------------------------------------------------------

    \7\ The Commission has approved a proposed rule change filed by
FICC that allowed FICC to adopt a similar requirement. Securities
Exchange Act Release No. 51908 (June 22, 2005), 70 FR 37450 (June
29, 2005). See FICC GSD Rules 11 (Netting System), Section 3
(Obligation to Submit Trades) and 18 (Special Provisions For Repo
Transactions), Section 3 (Collateral Substitution).
---------------------------------------------------------------------------

    Accordingly, NSCC proposes to amend Rule 7 (Comparison and Trade
Recording Operation) to make clear that locked-in trade data from SROs
and QSRs must be submitted on a trade-by-trade basis in the original
form in which the trades are executed and to make clear that pre-
netting is prohibited.\8\
---------------------------------------------------------------------------

    \8\ Trades executed in the normal course of business between a
clearing member and its correspondent or between correspondents of
the clearing member, which correspondent(s) is not itself a member
and settles such obligations through such clearing member
(``internalized trades'') are not required to be submitted to NSCC
and shall not be considered to violate the ``pre-netting''
prohibition.
---------------------------------------------------------------------------

    For these same reasons, NSCC is modifying its Procedure IV (Special
Representative Service) to clarify its appropriate use. The Special
Representative Service (the Correspondent Clearing Service of the
Special Representative Service in particular) is designed to provide an
automated vehicle by which a member, acting as a Special
Representative, may ``move'' a trade that is in the process of being
cleared and settled at NSCC to the account of another member (its
correspondent) on whose behalf the trade was executed. For example,
Member A sells securities for Member B (Member A's correspondent) on
the NYSE. The transaction is submitted to NSCC by the NYSE. As a
result, Member A has a CNS obligation to deliver the shares sold.
Acting as Special Representative for Member B, its correspondent,
Member A then submits new transaction data to NSCC showing itself as a
buyer of the securities and Member B, its correspondent, as the seller.
As a result, the Special Representative, Member A, nets out in the CNS
System, and Member B, the correspondent, has a CNS obligation to
deliver. In other words, the service provides a method whereby the
correspondent's obligation can be substituted for that of the Special
Representative.\9\
---------------------------------------------------------------------------

    \9\ This is generally referred to as a ``position movement'' to
distinguish it from an actual trade.
---------------------------------------------------------------------------

    The Correspondent Clearing Service was not designed as a mechanism
to permit a Special Representative, acting as a QSR or otherwise, to
submit original locked-in trade data. Therefore, NSCC is not requiring
that Special Representative/Correspondent Clearing input be submitted
on a real-time, trade for trade basis. Furthermore, the rule change
adds language to Procedure IV to make it clear that the Correspondent
Clearing Service is limited to position movements only and may not be
used to submit original locked-in trade data.
3. Technical Clarifications
    At this time, as part of updating its Rules and Procedures relative
to the Trade Recording and Special Representative Services, NSCC is
proposing to also make certain technical corrections, clarifications,
and organizational changes. These include the following:

    (1) Moving the definitions of ``Special Representative,''
``Qualified Special Representative,'' and ``Index Receipt Agent''
from Rule 39 to Rule 7 (where these terms are first used) and
titling Rules 7 and 39 accordingly;
    (2) amending Procedure II to (i) clarify the procedures NSCC
uses to confirm locked-in trade data (as opposed to editing and
comparing trades submitted for comparison directly by members) and
(ii) add back language relating to receipt of locked-in trade data
from QSRs that was erroneously deleted in File No. SR-NSCC-2003-12;
\10\ and
---------------------------------------------------------------------------

    \10\ Securities Exchange Act Release No. 48141 (July 8, 2003),
68 FR 42153 (July 16, 2003) [File No. SR-NSCC-2003-12].
---------------------------------------------------------------------------

    (3) amending the definition of ``Registered Clearing Agency'' in
Rule 1 (Definitions) to include an entity that provides electronic
trade confirmation or central matching services pursuant to an
exemption from registration and to make corresponding changes to
applicable cross-references.

4. New Fee Model
    In conjunction with the implementation of the real-time trade
submission requirement, NSCC plans to implement a new fee model to
address certain economic factors that it believes have influenced
firms' trade submission practices described above. The proposed new fee
model is designed to respond to trading activity trends, to mitigate
the anticipated impact of the proposed real-time submission
requirement, and to

realign fees with service benefits. The scope of the new fee model
includes revised fees for equity Trade Recording, Correspondent
Clearing, and Flip Trades, and a new fee structure for trade clearance
(i.e., Netting Fee).
    The relevant portion of NSCC's proposed revised fee structure is
set forth below. Language proposed to be added is italicized, and
language proposed to be deleted is in brackets.

Addendum A--National Securities Clearing Corporation Fee Structure

I. Trade Comparison and Recording Service Fees
* * * * *
    C. Trade recording fees will be charged as follows on those items
originally compared by other parties, but cleared through the
Corporation:\11\
---------------------------------------------------------------------------

    \11\ Trade Recording Fees will be charged for all OCS and IDC
input except for sides originally submitted correctly to the
Corporation's comparison system.
---------------------------------------------------------------------------

    1. Each side of each stock, warrant or right item entered for
settlement, but not compared by the Corporation--[$.0015 per 100
shares, with a minimum fee of $.0045 and a maximum fee of $.09] the sum
of a) a fixed fee of $.0025, and b) a fee of $.0006 per 100 shares,
with a minimum fee of $.0006 per 100 shares and a maximum fee of $0.60
per 100,000 shares being applicable.
    2. Each side of each bond item entered for settlement, but not
compared by the Corporation--$1.00 per side.
    3. Each side of a foreign security trade entered for settlement,
but not compared by the Corporation--$.75 per side.
* * * * *
    II. TRADE CLEARANCE FEES--represents fees for netting, issuance of
instructions to receive or deliver, effecting book-entry deliveries,
and related activity.
* * * * *
    E. Trade Netting [Clearance (netting)]--The sum of $[.007] .003 per
side, plus 1) a ``value into the net'' fee of $.19 per million dollars
of processed value (i.e. for CNS and Balance Order netting, the sum of
the contract amount and any CNS fail value), and 2) a ``value out of
the net'' fee of $.69 per million dollars of settling value (i.e. the
absolute value of the CNS Long and Short Positions).
    F. Designated valued deliveries\12\ (transaction processing)
entered into the clearance system through special representative
procedures--$[.05] .0125 per side.
---------------------------------------------------------------------------

    \12\ A designated value delivery is an instruction from a
Special Representative to CNS to transfer a valued position from one
participant to another participant or to a non-participant through a
clearing interface.
---------------------------------------------------------------------------

    G. Flip Trades--$[.005] .0025 per side.
* * * * *
    These proposed fee changes are the result of an extensive analysis
of the business practices, rules, fee structure, and the associated
revenue flows for NSCC's clearing services. The current clearing fee
schedule has a legacy that fundamentally dates back more than two
decades and is primarily based on a transaction count. The bias towards
transaction counting has led to a disproportionate growth in revenues
as transaction activity has grown. In addition, analysis of transaction
input shows a clear trend over time to smaller trade sizes. This trend
is a function of decimalization, increased algorithmic trading
activities, and the proliferation of new trading platforms. As a
result, approximately 70% of equity trades currently submitted to NSCC
are for 300 shares or less.
    While the proposed fee changes are designed to be revenue-neutral
to NSCC, the mixture of these fees will change. Trade Recording,
Correspondent Clearing, and Flip Trade fees will be reduced. The
current trade clearance fee will be replaced with a new Netting Fee.
The current trade clearance fee is a flat transaction fee that neither
factors in the netting benefits of NSCC's CNS and Balance Order systems
nor reflects the relative risk of members' netted obligations to NSCC.
The new Netting Fee will reflect both the value of NSCC's netting and
the relative risk presented thereby. Collectively, these fees are less
volume sensitive and establish a fair and consistent pricing philosophy
for all participants that encourages real-time capture of trade input.
    The Trade Recording fee would be modified to: (1) Establish a two-
element fee based on sides and shares; (2) institute a fixed charge per
side; (3) decrease the share minimum per trade from 300 shares to 100
shares; (4) increase share maximum per trade from 6,000 shares to
100,000 shares; and (5) reduce overall fees for the Trade Recording
service. The Netting Fee would be modified to establish a multi-element
fee based on items and values, including: (1) A fixed fee per side; (2)
an ``into-the-net'' fee based on items and gross value (i.e., the sum
of the contract amount and fail value) processed in the CNS and Balance
Order nets; and (3) an ``out-of-the-net'' fee based on the absolute
value of the CNS Long and Short Positions. Finally, the ``per item''
fee for Correspondent Clearing and Flip Trades would be reduced.
5. Implementation Timeframe
    NSCC plans to implement all these proposed rule changes, other than
the requirement to submit locked-in trade data on a real-time basis, on
July 1, 2006, subject to Commission approval. Recognizing that
requiring exchanges and QSRs to submit locked-in trade data on a real-
time basis will require some of these organizations to make systems
changes, NSCC proposes that the requirement to submit locked-in trade
data on a real-time basis and corresponding changes (i.e., adding the
definition of ``Real-time'' to Procedure XIII and the deletion of
Addendum N, which requires QSRs to submit locked-in trade data on trade
date) would become effective on January 1, 2007, in order to provide
time for those affected organizations to implement the necessary
changes. The proposed rules will note these time frames accordingly.
    NSCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act\13\ and the rules and
regulations thereunder applicable to NSCC because it should promote the
prompt and accurate clearance and settlement of securities transactions
by requiring that all locked-in trade data submitted to NSCC for trade
recording be submitted on a real-time basis and by prohibit pre-netting
and other practices that prevent real-time trade submissions. In
addition, the proposed rule change should provide for the equitable
allocation of reasonable dues, fees, and other charges among NSCC's
members.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will have any
impact or impose any burden on competition.

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

    NSCC has not solicited or received any written comments on this
proposal. 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 thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date 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 such proposed rule change or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
) or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NSCC-2006-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NSCC-2006-04. 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 Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of NSCC and on
NSCC's Web site at http://www.nscc.com/legal. 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-2006-04 and should be submitted on
or before May 30, 2006.

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

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

Nancy M. Morris,
Secretary.
[FR Doc. E6-6910 Filed 5-5-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: May 22, 2009 (Volume 74, Number 98)]
[Notices]
[Page 24054-24055]
[DOCID:fr22my09-103]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59925; File No. SR-Phlx-2009-43]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to the Order Entry Port Fee

May 14, 2009.
    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 May 7, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'')
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 by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to modify the manner in which members are
assessed the Order Entry Port Fee of $250 a month. The Exchange
proposes to delete endnote 60, which references the Order Entry Port
Fee and defines an active order entry port, and instead charge members
the $250 monthly fee regardless of whether the order entry port is
active.
    While changes to the Exchange's Fee Schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be implemented on June 1, 2009.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/
Filings/, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange 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 Exchange 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
    The purpose of the proposed rule change is to modify the manner in
which the Order Entry Port Fee is billed to members. The Order Entry
Port Fee is a connectivity fee assessed on members in connection with
routing orders to the Exchange via an external order entry port.
Currently, members access the Exchange's network through order entry
ports. A member organization may have more than one order entry port.
Member are assessed a monthly fee of $250 in connection with sending
orders to the Exchange. The $250 monthly Order Entry Port Fee is
assessed per member organization order entry mnemonic.\3\ Specifically,
the fee is currently assessed on any order entry mnemonic that is
active during a billing month. An order entry mnemonic is considered
active if a member organization sends at least one order to the
Exchange using that order entry mnemonic during the applicable billing
month.\4\
---------------------------------------------------------------------------

    \3\ Order entry mnemonics are codes that identify member
organization order entry ports.
    \4\ See Securities Exchange Act Release No. 58728 (October 3,
2008), 73 FR 59695 (October 9, 2008) (SR-Phlx-2008-70). See also the
Exchange's Fee Schedule at endnote 60.
---------------------------------------------------------------------------

    The Exchange proposes to assess the $250 monthly Order Flow Port
Fee on members regardless of whether the order entry mnemonic is active
during the billing month. Accordingly, the Exchange proposes to delete
endnote 60 which states, ``[a]n order entry mnemonic is considered
active if a member organization sends at least one order to the
Exchange using that order entry mnemonic during the applicable billing
month.'' Instead, the Exchange

proposes to assess members the $250 monthly fee, regardless of usage,
and solely on the number of order entry ports assigned to each member
organization. Per this proposal, whether or not the order entry port is
active will not be considered in billing the monthly fee of $250, only
the amount of order entry ports per member organization will determine
the amount billed to a member organization.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \5\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \6\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The proposal would continue
to uniformly assess the Order Entry Port Fee on members in order to
support the costs of the infrastructure associated with market access.
The fee remains reasonable in that members will continue to be charged
a flat rate for this service based on the number of order entry ports.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition 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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \7\ and paragraph (f)(2) of Rule 19b-4 \8\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission may summarily abrogate such rule change if
it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or

     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2009-43 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-Phlx-2009-43. 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 Phlx. 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-Phlx-2009-43 and should be
submitted on or before June 12, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-11937 Filed 5-21-09; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]
[Notices]
[Pages 10204-10205]
[FR Doc No: 2015-03767]

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

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2014-0126]

Notice of Application for Approval of Discontinuance or
Modification of a Railroad Signal System

    In accordance with Part 235 of Title 49 Code of Federal Regulations
(CFR) and 49 U.S.C. 20502(a), this document

provides the public notice that by a document dated November 24, 2014,
the Union Pacific Railroad (UP) petitioned the Federal Railroad
Administration (FRA) seeking approval for the discontinuance or
modification of a signal system. FRA assigned the petition Docket
Number FRA-2014-0126.
    Applicants: Union Pacific Railroad Company, Mr. Neal Hathaway, AVP
Engineering--Signal, 1400 Douglas Street, MS 0910, Omaha, NE 68179.
    UP seeks approval of the discontinuance of the automatic cab signal
(ACS) system between Milepost (MP) 81.7 and MP 84.1 on the Portland
Subdivision, near The Dalles, OR. The purpose of the discontinuance is
to establish a consistent limit for the ACS system. The affected
trackage will be converted to traffic control system operation.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulatons.gov and in person at the U.S. Department of
Transportation's (DOT) Docket Operations Facility, 1200 New Jersey
Avenue SE., W12-140, Washington, DC 20590. The Docket Operations
Facility is open from 9 a.m. to 5 p.m., Monday through Friday, except
Federal Holidays.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by April 13, 2015 will be considered by FRA
before final action is taken. Comments received after that date will be
considered as far as practicable.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the document,
if submitted on behalf of an association, business, labor union, etc.).
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its processes. DOT posts these comments,
without edit, including any personal information the commenter
provides, to www.regulations.gov, as described in the system of records
notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.
See also http://www.regulations.gov/#!privacyNotice for the privacy
notice of regulations.gov.

    Issued in Washington, DC, on February 19, 2015.
Ron Hynes,
Director, Office of Technical Oversight.
[FR Doc. 2015-03767 Filed 2-24-15; 8:45 am]
BILLING CODE 4910-06-P