[Federal Register Volume 76, Number 186 (Monday, September 26, 2011)]
[Notices]
[Page 59472]
[FR Doc No: 2011-24593]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65361; File No. SR-ISE-2011-42]

Self-Regulatory Organizations; International Securities Exchange,
Inc., Order Granting Approval of Proposed Rule Change Relating to Rule
717

September 20, 2011.

I. Introduction

    On July 25, 2011, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to codify an existing policy
related to the application of ISE Rules 717(d) and (e). The proposed
rule change was published for comment in the Federal Register on August
8, 2011.\3\ The Commission received no comments regarding the proposal.
This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 34-65011 (August 2,
2011), 76 FR 48187.
---------------------------------------------------------------------------

II. Description of Proposal

    ISE Rules 717(d) and (e) require members to expose orders entered
on the limit order book for at least one second before executing them
as principal or against orders that were solicited from other broker-
dealers. This requirement gives other market participants an
opportunity to participate in the execution of orders before the
entering member executes them. In its enforcement of ISE Rules 717(d)
and (e), the Exchange has not considered the inadvertent interaction of
orders from the same firm within one second to be a violation of the
exposure requirement. The Exchange currently has a policy that member
firms may demonstrate that orders were entered by individuals or
systems that did not have the ability to know of the pre-existing order
on the limit order book due to the operation of effective information
barriers in place at the time the orders were entered. This proposed
rule change codifies this policy in Supplementary Material .06 to Rule
717. The proposed rule change will require that such information
barriers be fully documented and provided to the Exchange upon
request.\4\
---------------------------------------------------------------------------

    \4\ The Exchange reviews information barrier documentation to
evaluate whether a member has implemented processes that are
reasonably designed to prevent the flow of pre-trade order
information given the particular structure of the member firm.
Additionally, information barriers are reviewed as part of the
Exchange's examination program, which is administered by the
Financial Industry Regulatory Authority (``FINRA'') pursuant to a
regulatory services agreement.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6 of the Act.\5\ The Commission
finds that the proposed rule change is consistent with the requirements
of Section 6(b)(5) of the Act,\6\ which requires, among other things,
that the rules of a national securities exchange be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest and are not designed to
permit unfair discrimination between customers, issuers, brokers or
dealers.\7\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition and
capital formation.
---------------------------------------------------------------------------

    ISE Rules 717(d) and (e) require members to expose orders entered
on the limit order book for at least one second before executing them
as principal or against orders that were solicited from other broker-
dealers. This requirement gives other market participants an
opportunity to participate in the execution of orders before the
entering member executes them. The Exchange represented that it
conducts routine surveillance to identify instances when an order on
the limit order book is executed against an order entered by the same
firm within one second. The Exchange represented that when it
investigates potential violations of ISE Rules 717(d) and (e), it
considers whether such executions during the one second exposure period
were entered by persons, business units and/or systems at the same
firm, and whether the firm has knowledge of pre-existing orders on the
limit order book. Further, the Exchange indicated that it does not
consider inadvertent interaction of such orders from the same firm
during the one second exposure period to be a rule violation. This
proposal codifies this policy by adding Supplementary Material .06 to
Rule 717 to allow members to provide evidence of effective information
barriers between the persons, business units and/or systems at the time
of order entry to indicate that there was no knowledge of other pre-
existing orders entered by the firm.
    The Commission believes that this proposed rule change should
clarify the intent and application of ISE Rules 717(d) and (e). In
addition, the proposed rule change should enable Exchange to administer
the rule more efficiently by helping to assure that member firms are
adhering to the same standards for compliance with ISE Rules 717(d) and
(e). The Commission therefore believes that the proposal is consistent
with Section 6(b)(5) of the Act.\8\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-ISE-2011-42), be, and hereby
is, approved.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

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

    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-24593 Filed 9-23-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 144 (Monday, July 27, 2020)]
[Rules and Regulations]
[Page 45092]
[FR Doc No: 2020-15170]

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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230 and 232

[Release Nos. 33-10771A; 34-88606A; IC-33836A; File No. S7-03-19]
RIN 3235-AM31

Securities Offering Reform for Closed-End Investment Companies;
Correction

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; correction.

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

SUMMARY: This document makes technical corrections to amendments to
rules that modify the registration, communications, and offering
processes for business development companies (``BDCs'') and other
closed-end investment companies adopted in Release No. 33-10771 (April
8, 2020) (``Adopting Release''), which was published in the Federal
Register on June 1, 2020.

DATES: Effective August 1, 2020

FOR FURTHER INFORMATION CONTACT: Amy Miller, Senior Counsel, Investment
Company Regulation Office, Division of Investment Management,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549.

SUPPLEMENTARY INFORMATION: We are making technical amendments to
correct Sec. Sec.  230.497 and 232.405. Specifically, this document
amends Instructions 25 and 28 published in the Adopting Release.
Instruction 25.a is amended to correct a citation to Form N-2; and
Instruction 25.b is removed, with subsequent instructions renumbered
accordingly. Instruction 28.b is removed, with subsequent instructions
renumbered accordingly; newly-designated Instruction b is amended to
correct an unneeded direction to remove a heading; and newly-
redesignated Instruction 28.d is amended to redesignate Note 2 to rule
405 of Regulation S-T as Note 1 to rule 405 of Regulation S-T.

0
In FR doc. 2020-07790, which published in the Federal Register on
Monday, June 1, 2020, at 85 FR 33290, the following corrections are
made:

Sec.  230.497   [Corrected]

    1. On page 33356, in the third column, under ``Sec.  230.497'' in
Instruction 25.a, ``Remove from paragraphs (c) and (e) the text ``Form
N-2 (Sec. Sec.  239.14 and 274.11a-1 of this chapter)'' is corrected to
read ``Remove from paragraphs (c) and (e) the text ``Sec. Sec.  239.14
and 274.11a-1 of this chapter (Form N-2)''.
    2. On page 33356, in the third column, under ``Sec.  230.497''
remove Instruction 25.b.
    3. On page 33356, in the third column, under ``Sec.  230.497''
redesignate Instructions 25.c and d as Instructions 25.b and c,
respectively.

Sec.  232.405   [Corrected]

    4. On page 33357, in the first column, under ``Sec.  232.405''
remove Instruction 28.b.
    5. On page 33357, in the first and second columns, under ``Sec.
232.405'' redesignate Instructions 28.c, d, and e, as Instructions
28.b, c, and d, respectively.
    6. On page 33357, in the first column, under ``Sec.  232.405'' in
newly-redesignated Instruction 28.b, ``Removing the heading and
revising the introductory text of paragraph (b)(1)'' is corrected to
read ``Revising the introductory text of paragraph (b)(1)''.
    7. On page 33357, in the second column, under ``Sec.  232.405'' in
newly-redesignated Instruction 28.d, ``Redesignating the note to Sec.
232.405 as note 2 to Sec.  232.405 and revising the last sentence of
newly redesignated note 2 to Sec.  232.405'' is corrected to read
``Redesignating note 2 to Sec.  232.405 as Note 1 to Sec.  232.405 and
revising the last sentence of newly redesignated Note 1 to Sec.
232.405 ''.
    8. On page 33357, in the second column, in ``Sec.  232.405
Interactive Data File Submissions,'' the introductory text ``note 2 to
this section'' is corrected to read ``Note 1 to this section''.
    9. On page 33358, in the second column, in ``Sec.  232.405
Interactive Data File Submissions,'' ``Note 2 to Sec.  232.405'' is
corrected to read ``Note 1 to Sec.  232.405''.

    Dated: July 9, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-15170 Filed 7-24-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: May 28, 2008 (Volume 73, Number 103)]
[Rules and Regulations]
[Page 30498-30503]
[DOCID:fr28my08-13]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2005-0309; FRL-8365-2]

Hexythiazox; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: This regulation establishes tolerances for combined residues
of hexythiazox in or on corn, field, grain; corn, field, stover; and
corn, field, forage. Gowan Company requested these tolerances under the
Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective May 28, 2008. Objections and
requests for hearings must be received on or before July 28, 2008, and
must be filed in accordance with the instructions provided in 40 CFR
part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2005-0309. To access the
electronic docket, go to http://www.regulations.gov, select ``Advanced
Search,'' then ``Docket Search.'' Insert the docket ID number where
indicated and select the ``Submit'' button. Follow the instructions on
the regulations.gov website to view the docket index or access
available documents. All documents in the docket are listed in the
docket index available in regulations.gov. Although listed in the
index, some information is not publicly available, e.g., Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are

available in the electronic docket at http://www.regulations.gov, or,
if only available in hard copy, at the OPP Regulatory Public Docket in
Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr.,
Arlington, VA. The Docket Facility is open from 8:30 a.m. to 4 p.m.,
Monday through Friday, excluding legal holidays. The Docket Facility
telephone number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Olga Odiott, Registration Division
(7505P), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone
number:<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this Action Apply to Me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
Potentially affected entities may include, but are not limited to those
engaged in the following activities:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).
    This listing is not intended to be exhaustive, but rather to
provide a guide for readers regarding entities likely to be affected by
this action. Other types of entities not listed in this unit could also
be affected. The North American Industrial Classification System
(NAICS) codes have been provided to assist you and others in
determining whether this action might apply to certain entities. If you
have any questions regarding the applicability of this action to a
particular entity, consult the person listed under FOR FURTHER
INFORMATION CONTACT.

B. How Can I Access Electronic Copies of this Document?

    In addition to accessing an electronic copy of this Federal
Register document through the electronic docket at http://
www.regulations.gov, you may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr. You may also access a
frequently updated electronic version of EPA's tolerance regulations at
40 CFR part 180 through the Government Printing Office's pilot e-CFR
site at http://www.gpoaccess.gov/ecfr.

C. Can I File an Objection or Hearing Request?

    Under section 408(g) of FFDCA, any person may file an objection to
any aspect of this regulation and may also request a hearing on those
objections. You must file your objection or request a hearing on this
regulation in accordance with the instructions provided in 40 CFR part
178. To ensure proper receipt by EPA, you must identify docket ID
number EPA-HQ-OPP-2005-0309 in the subject line on the first page of
your submission. All requests must be in writing, and must be mailed or
delivered to the Hearing Clerk as required by 40 CFR part 178 on or
before July 28, 2008.
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing that does not contain any CBI for inclusion in the public
docket that is described in ADDRESSES. Information not marked
confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA
without prior notice. Submit this copy, identified by docket ID number
EPA-HQ-OPP-2005-0309, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only
accepted during the Docket's normal hours of operation (8:30 a.m. to 4
p.m., Monday through Friday, excluding legal holidays). Special
arrangements should be made for deliveries of boxed information. The
Docket Facility telephone number is<PHONE_NUMBER>.

II. Petition for Tolerance

    In the Federal Register of March 1, 2006 (71 FR 10506) (FRL-7756-
4), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
5F6953) by Gowan Company, 370 South Main Street, Yuma, AZ 85364. The
petition requested that 40 CFR 180.448 be amended by establishing
tolerances for combined residues of the insecticide hexythiazox, trans-
5-(4-chlorophenyl)-N-cyclohexyl-4-methyl-2-oxothiazolidine-3-
carboxamide and its metabolites containing the (4-chlorophenyl)-4-
methyl-2-oxo-3-thiazolidine moiety, in or on corn, field, grain at 0.05
parts per million (ppm); corn, field, stover at 2.0 ppm; and corn,
field, forage at 2.0 ppm. That notice referenced a summary of the
petition prepared by Gowan Company, the registrant, which is available
to the public in the docket, http://www.regulations.gov. Comments were
received on the notice of filing. EPA's response to these comments is
discussed in Unit IV.C.
    Based upon review of the data supporting the petition, EPA has
revised the tolerance levels to 0.02 ppm for corn, field, grain; 2.5
ppm for corn, field, stover; and 6.5 ppm for corn, field, forage. The
reasons for these changes are explained in Unit IV.D.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical
residue....''
    Consistent with section 408(b)(2)(D) of FFDCA, and the factors
specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the
available scientific data and other relevant information in support of
this action. EPA has sufficient data to assess the hazards of and to
make a determination on aggregate exposure for the petitioned-for
tolerances for combined residues of hexythiazox on corn, field, grain
at 0.02 ppm; corn, field, stover at 2.5 ppm; and corn, field, forage at
6.0 ppm. EPA's assessment of exposures and risks associated with
establishing tolerances follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    Hexythiazox has a low order of acute toxicity for the oral, dermal
and inhalation routes of exposure. It produces mild eye irritation, is
not a dermal irritant, and is negative for dermal sensitization. The
target organs of hexythiazox are the liver and adrenal glands, with the
dog being the most sensitive species. In a subchronic toxicity study in
rats, increased liver and adrenal weights as well as adrenal
histopathology (fatty degeneration of the adrenal zone fasciculata)
were seen. In a 4-week range-finding study in dogs, effects included
increased liver and adrenal weights (reported in the chronic dog
study). Chronic studies in dogs, rats, and mice support the liver and
adrenal effects seen in the subchronic studies. In the chronic dog
study, increased liver and adrenal weights were observed, along with
associated histopathology of the liver (hypertrophy) and adrenal glands
(adrenal cortex hypertrophy). In the chronic feeding/carcinogenicity
studies in rats and mice, effects included decreased body weight gain
and increased liver weights. The effects of hexythiazox on the adrenal
glands could be an indication of endocrine disruption. However, in all
studies in which these effects were seen, a NOAEL was determined. The
data provided no indication of increased susceptibility in rats or
rabbits from in utero and post-natal exposure to hexythiazox. There was
no evidence of carcinogenicity in male and female rats; however, there
were increased incidences of malignant and combined benign/malignant
liver tumors in female B6C3FT mice. Hexythiazox was not mutagenic in
bacteria or Chinese hamster ovary (CHO) cells. It was negative for
chromosomal aberrations in CHO and did not cause unscheduled DNA
synthesis (UDS) in primary rat hepatocytes. In an acceptable
micronucleus assay, there was no statistically significant increase in
the frequency of micronucleated polychromatic erythrocytes in bone
marrow of treated mice after any dose or treatment time. Hexythiazox
has been found classified as nonmutagenic.
    Specific information on the studies received and the nature of the
adverse effects caused by hexythiazox as well as the no-observed-
adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-
level (LOAEL) from the toxicity studies are discussed in the final rule
published in the Federal Register of December 30, 2005 (70 FR 77363)
(FRL-7752-1).

B. Toxicological Endpoints

    For hazards that have a threshold below which there is no
appreciable risk, a toxicological point of departure (POD) is
identified as the basis for derivation of reference values for risk
assessment. The POD may be defined as the highest dose at which no
adverse effects are observed (the NOAEL) in the toxicology study
identified as appropriate for use in risk assessment. However, if a
NOAEL cannot be determined, the lowest dose at which adverse effects of
concern are identified (the LOAEL) or a Benchmark Dose (BMD) approach
is sometimes used for risk assessment. Uncertainty/safety factors (UFs)
are used in conjunction with the POD to take into account uncertainties
inherent in the extrapolation from laboratory animal data to humans and
in the variations in sensitivity among members of the human population
as well as other unknowns. Safety is assessed for acute and chronic
dietary risks by comparing aggregate food and water exposure to the
pesticide to the acute population adjusted dose (aPAD) and chronic
population adjusted dose (cPAD). The aPAD and cPAD are calculated by
dividing the POD by all applicable UFs. Aggregate short-, intermediate-
, and chronic-term risks are evaluated by comparing food, water, and
residential exposure to the POD to ensure that the margin of exposure
(MOE) called for by the product of all applicable UFs is not exceeded.
This latter value is referred to as the Level of Concern (LOC).
    For non-threshold risks, the Agency assumes that any amount of
exposure will lead to some degree of risk. Thus, the Agency estimates
risk in terms of the probability of an occurrence of the adverse effect
greater than that expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www.epa.gov/
pesticides/factsheets/riskassess.htm.
    A summary of the toxicological endpoints for hexythiazox used for
human risk assessment can be found at http://www.regulations.gov in
document Hexythiazox- Human Health Risk Assessment for the Section 3
Registration for Application to Field Corn; 14- February-2008, page 11
in docket ID number EPA-HQ-OPP-2005-0309.

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to hexythiazox, EPA considered exposure under the petitioned-
for tolerances as well as all existing hexythiazox tolerances in (40
CFR 180.448). EPA assessed dietary exposures from hexythiazox in food
as follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure.
    In estimating acute dietary exposure, EPA used food consumption
information from the United States Department of Agriculture (USDA)
1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by
Individuals (CSFII). As to residue levels in food, EPA tolerance-level
residues, 100% crop treated (PCT), and DEEM-FCID\\ (ver 7.81) default
processing factors for all plant and livestock residues.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the food consumption data from the USDA 1994-1996
and 1998 CSFII. As to residue levels in food, EPA used PCT estimates,
average field trial residues, experimentally determined processing
factors when available, and anticipated livestock residues (dietary
burden calculated using average field trial residues).
    iii. Cancer. Cancer risk was assessed using the same estimates as
discussed in Unit III.C.1.ii., chronic exposure.
    iv. Anticipated residue and PCT information.Section 408(b)(2)(E) of
FFDCA authorizes EPA to use available data and information on the
anticipated residue levels of pesticide residues in food and the actual
levels of pesticide residues that have been measured in food. If EPA
relies on such information, EPA must require pursuant to FFDCA section
408(f)(1) that data be provided 5 years after the tolerance is
established, modified, or left in effect, demonstrating that the levels
in food are not above the levels anticipated. For the present action,
EPA will issue such data call-ins as are required by FFDCA section
408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be
required to be submitted no later than 5 years from the date of
issuance of these tolerances.

    Section 408(b)(2)(F) of FFDCA states that the Agency may use data
on the actual percent of food treated for assessing chronic dietary
risk only if:
     Condition a. The data used are reliable and provide a valid basis
to show what percentage of the food derived from such crop is likely to
contain the pesticide residue.
     Condition b. The exposure estimate does not underestimate exposure
for any significant subpopulation group.
     Condition c. Data are available on pesticide use and food
consumption in a particular area, the exposure estimate does not
understate exposure for the population in such area.
In addition, the Agency must provide for periodic evaluation of any
estimates used. To provide for the periodic evaluation of the estimate
of PCT as required by FFDCA section 408(b)(2)(F), EPA may require
registrants to submit data on PCT.
    The Agency used PCT information as follows:
    1% for apples, cherries, and prunes; 5% for almonds, apricots,
mint, peaches, pears, plums, and walnuts; 10% for dates, caneberries,
and nectarines; 25% for strawberries; and 50% for hops.
    In most cases, EPA uses available data from United States
Department of Agriculture/National Agricultural Statistics Service
(USDA/NASS), proprietary market surveys, and the National Pesticide Use
Database for the chemical/crop combination for the most recent 6 years.
EPA uses an average PCT for chronic dietary risk analysis. The average
PCT figure for each existing use is derived by combining available
public and private market survey data for that use, averaging across
all observations, and rounding to the nearest 5%, except for those
situations in which the average PCT is less than one. In those cases,
1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA
uses a maximum PCT for acute dietary risk analysis. The maximum PCT
figure is the highest observed maximum value reported within the recent
6 years of available public and private market survey data for the
existing use and rounded up to the nearest multiple of 5%.
    The Agency used projected percent crop treated (PPCT) information
as follows:
    15% for grapes and 18% for oranges.
    EPA estimates PPCT for a new pesticide use by assuming that the PCT
during the pesticide's initial five years of use on a specific site
will not exceed the average PCT of the dominant pesticide (i.e., the
one with the greatest PCT) on that site over the most recent surveys.
Comparisons are only made among pesticides of the same pesticide types
(i.e., the dominant insecticide on the use site is selected for
comparison with a new insecticide). The PCTs included in the average
may be each for the same pesticide or for different pesticides since
the same or different pesticides may dominate for each year selected.
Typically, EPA uses USDA/NASS as the source for raw PCT data because it
is publicly available and does not have to be calculated from other
available data sources. When a specific use site is not surveyed by
USDA/NASS, EPA uses proprietary data and calculates the estimated PCT.
    This estimated PPCT, based on the average PCT of the market leader,
is appropriate for use in the chronic dietary risk assessment. This
method of estimating a PPCT for a new use of a registered pesticide or
a new pesticide produces a high-end estimate that is unlikely, in most
cases, to be exceeded during the initial five years of actual use. The
predominant factor that bears on whether the estimated PPCT could be
exceeded is whether there are concerns with pest pressures as indicated
in emergency exemption requests or other readily available information.
All information currently available has been considered for
hexythiazox, and it is the opinion of EPA that it is unlikely that the
actual PCT for hexythiazox will exceed the estimated PPCT during the
next five years.
    The Agency believes that the three conditions discussed in Unit
III.C.1.iv. have been met. With respect to Condition a, PCT estimates
are derived from Federal and private market survey data, which are
reliable and have a valid basis. The Agency is reasonably certain that
the percentage of the food treated is not likely to be an
underestimation. As to Conditions b and c, regional consumption
information and consumption information for significant subpopulations
is taken into account through EPA's computer-based model for evaluating
the exposure of significant subpopulations including several regional
groups. Use of this consumption information in EPA's risk assessment
process ensures that EPA's exposure estimate does not understate
exposure for any significant subpopulation group and allows the Agency
to be reasonably certain that no regional population is exposed to
residue levels higher than those estimated by the Agency. Other than
the data available through national food consumption surveys, EPA does
not have available reliable information on the regional consumption of
food to which hexythiazox may be applied in a particular area.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for hexythiazox in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of hexythiazox. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www.epa.gov/oppefed1/models/water/index.htm.
    Based on the Pesticide Root Zone Model /Exposure Analysis Modeling
System (PRZM/EXAMS) and Screening Concentration in Ground Water (SCI-
GROW) models, the estimated drinking water concentrations (EDWCs) of
hexythiazox
    1. The EDWCs for acute exposures are estimated to be 4.23 parts per
billion (ppb) for surface water and 0.00503 ppb for ground water.
    2. The EDWCs for chronic exposures for non-cancer assessments are
estimated to be 2.26 ppb for surface water and 0.00503 ppb for ground
water.
    3. The EDWCs for chronic exposures for cancer assessments are
estimated to be 1.72 ppb for surface water and 0.00503 ppb for ground
water.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model.
    1. For acute dietary risk assessment, the water concentration value
of 4.23 ppb was used to assess the contribution to drinking water.
    2. For chronic dietary risk assessment, the water concentration of
value 2.26 ppb was used to assess the contribution to drinking water.
    3. For cancer dietary risk assessment, the water concentration of
value 1.72 ppb was used to assess the contribution to drinking water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets).
    Hexythiazox is not registered for any specific use patterns that
would result in residential exposure.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other

substances that have a common mechanism of toxicity.''
    EPA has not found hexythiazox to share a common mechanism of
toxicity with any other substances, and hexythiazox does not appear to
produce a toxic metabolite produced by other substances. For the
purposes of this tolerance action, therefore, EPA has assumed that
hexythiazox does not have a common mechanism of toxicity with other
substances. For information regarding EPA's efforts to determine which
chemicals have a common mechanism of toxicity and to evaluate the
cumulative effects of such chemicals, see EPA's website at http://
www.epa.gov/pesticides/cumulative.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(c) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity
and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the FQPA safety
factor (SF). In applying this provision, EPA either retains the default
value of 10X, or uses a different additional safety factor when
reliable data available to EPA support the choice of a different
factor.
    2. Prenatal and postnatal sensitivity. The prenatal and postnatal
toxicology data base indicates no increased susceptibility of rats or
rabbits to in utero and/or postnatal exposure to hexythiazox.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X. That decision is based on the following
findings:
    i. The toxicity database for hexythiazox is adequate for selecting
toxicity endpoints for risk assessment. The toxicity profile of
hexythiazox can be characterized for all effects, including potential
developmental, reproductive, and neurotoxic effects.
    ii. There is no evidence that hexythiazox is a neurotoxic chemical
and there is no need for a developmental neurotoxicity study or
additional UFs to account for neurotoxicity.
    iii. There is no evidence that hexythiazox results in increased
susceptibility in in utero rats or rabbits in the prenatal
developmental studies or in young rats in the 2-generation reproduction
study.
    iv. The concern for endocrine related effects (increase in ovarian
weight and adrenal weights and/or adrenal pathology) seen in various
species is low because there is a well established NOAEL protecting
from the effects, no reproductive parameters were affected in the 2-
generation reproduction study at the highest dose tested (180 mg/kg/
day), there is no evidence of increased susceptibility of infants and
children in the database and the doses selected for the cRfD and
intermediate and long-term dermal and inhalation exposure assessments
are based on the NOAELs protecting from the endocrine related effects.
EPA concluded that the selected endpoints adequately account for these
potential effects and no additional data are required.
    v. There are no residual uncertainties identified in the exposure
databases. Although the chronic food exposure assessment is refined,
EPA believes that the assessment is based on reliable data and will not
underestimate exposure/risk. EPA made conservative (protective)
assumptions in the ground and surface water modeling used to assess
exposure to hexythiazox in drinking water. These assessments will not
underestimate the exposure and risks posed by hexythiazox.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic pesticide exposures are
safe by comparing aggregate exposure estimates to the aPAD and cPAD.
The aPAD and cPAD represent the highest safe exposures, taking into
account all appropriate SFs. EPA calculates the aPAD and cPAD by
dividing the POD by all applicable UFs. For linear cancer risks, EPA
calculates the probability of additional cancer cases given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the POD to ensure that the MOE called for
by the product of all applicable UFs is not exceeded.
    1. Acute risk. Using the exposure assumptions discussed in this
unit for acute exposure, the acute dietary exposure from food and water
to hexythiazox will occupy <1% of the aPAD for (females 13-49 years
old) the population group receiving the greatest exposure.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
hexythiazox from food and water will utilize 1% of the cPAD for
(children 1-2 years old) the population group receiving the greatest
exposure. There are no residential uses for hexythiazox.
    3. Short-term risk. Short-term aggregate exposure takes into
account short-term residential exposure plus chronic exposure to food
and water (considered to be a background exposure level).
    Hexythiazox is not registered for any use patterns that would
result in residential exposure. Therefore, the short-term aggregate
risk is the sum of the risk from exposure to hexythiazox through food
and water and will not be greater than the chronic aggregate risk.
    4. Intermediate-term risk. Intermediate-term aggregate exposure
takes into account intermediate-term residential exposure plus chronic
exposure to food and water (considered to be a background exposure
level).
    Hexythiazox is not registered for any use patterns that would
result in intermediate-term residential exposure. Therefore, the
intermediate-term aggregate risk is the sum of the risk from exposure
to hexythiazox through food and water, which has already been
addressed, and will not be greater than the chronic aggregate risk.
    5. Aggregate cancer risk for U.S. population. Using the exposure
assumptions described in this unit for chronic exposure, EPA has
estimated increased cancer risk from exposure to hexythiazox at 2 in 1
million (2 x 10\-\6). Based on a critical commodity
analysis, the major contributors to the cancer risk were water (38% of
total exposure), strawberry (20% of total exposure), and field corn
syrup (16% of total exposure).
     Under the reasonable certainty of no harm standard in FFDCA
section 408(b)(2)(A)(ii), cancer risks must be no greater than
negligible. EPA interprets negligible cancer risks to be risks within
the range of an increased cancer risk of 1 in 1 million. Risks as high
as 3 in 1 million have been considered to be within this risk range.
EPA concludes that the estimated cancer risk for hexythiazox is within
the negligible risk range. The Agency notes that hexythiazox has been
classified as a possible human carcinogen based on increased incidence
of liver tumors in female mice. No chemical-related oncogenic effects
were reported in male mice or in male and female rats, and hexythiazox
has been classified as nonmutagenic.
    6. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general

population or to infants and children from aggregate exposure to
hexythiazox residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology (Method AMR-985-87,) is available
to enforce the tolerance expression. The method may be requested from:
Chief, Analytical Chemistry Branch, Environmental Science Center, 701
Mapes Rd., Ft. Meade, MD 20755-5350; telephone number:<PHONE_NUMBER>;
e-mail address<EMAIL_ADDRESS>
B. International Residue Limits

    There are no currently established CODEX, Canadian, or Mexican MRLs
for residues of hexythiazox in/on the subject commodities.

C. Response to Comments

    There was one comment received on the notice of filing. The
commenter, B. Sachua, requested that a zero tolerance be set for
hexythiazox based on the commenter's generalized criticisms of EPA's
risk assessment process. EPA has responded to B. Sachua's generalized
comments for hexythiazox and other chemicals on several occasions. (See
the Federal Register of March 22, 2006 (71 FR 14409) (FRL-7768-3); and
the Federal Register January 7, 2005 (70 FR 1349) (FRL-7691-4).

D. Revisions to Petitioned-For Tolerances

    EPA revised the proposed tolerance levels (from 0.05 to 0.02 ppm
for corn, field, grain; 2.0 to 2.5 ppm for corn, field, stover; and 2.0
to 6.5 ppm for corn, field, forage) based on the field trial data and
the maximum residue limit (MRL) tolerance calculator.

V. Conclusion

    Therefore, tolerances are established for combined residues of
hexythiazox, trans-5-(4-chlorophenyl)-N-cyclohexyl-4-methyl-2-
oxothiazolidine-3-carboxamide and its metabolites containing the (4-
chlorophenyl)-4-methyl-2-oxo-3-thiazolidine moiety (expressed as
parent), in or on corn, field, grain at 0.02 ppm; corn, field, stover
at 2.5 ppm; and corn, field, forage at 6.0 ppm.

VI. Statutory and Executive Order Reviews

    This final rule establishes tolerances under section 408(d) of
FFDCA in response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled Regulatory Planning and
Review (58 FR 51735, October 4, 1993). Because this final rule has been
exempted from review under Executive Order 12866, this final rule is
not subject to Executive Order 13211, Actions Concerning Regulations
That Significantly Affect Energy Supply, Distribution, or Use (66 FR
28355, May 22, 2001) or Executive Order 13045, entitled Protection of
Children from Environmental Health Risks and Safety Risks (62 FR 19885,
April 23, 1997). This final rule does not contain any information
collections subject to OMB approval under the Paperwork Reduction Act
(PRA), 44 U.S.C. 3501 et seq., nor does it require any special
considerations under Executive Order 12898, entitled Federal Actions to
Address Environmental Justice in Minority Populations and Low-Income
Populations (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under section 408(d) of FFDCA, such as the tolerance in
this final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) do not apply.
    This final rule directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of section 408(n)(4) of FFDCA. As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
Consultation and Coordination with Indian Tribal Governments (65 FR
67249, November 9, 2000) do not apply to this final rule. In addition,
this final rule does not impose any enforceable duty or contain any
unfunded mandate as described under Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) (Public Law 104-4).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note).

VII. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report to each House of the Congress and to
the Comptroller General of the United States. EPA will submit a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States prior to publication of this final rule in the Federal
Register. This final rule is not a ``major rule'' as defined by 5
U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.

    Dated: May 16, 2008.
Daniel J. Rosenblatt,
Acting Director, Registration Division, Office of Pesticide Programs.

0
Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

0
1. The authority citation for part 180 continues to read as follows:

    Authority: 21 U.S.C. 321(q), 346a and 371.

0
2. Section 180.448 is amended by alphabetically adding the following
commodities to the table in paragraph (c) to read as follows:

Sec.  180.448  Hexythiazox, tolerances for residues.

* * * * *
    (c) * * *

------------------------------------------------------------------------
                      Commodity                        Parts per million
------------------------------------------------------------------------
Corn, field, grain...................................               0.02
Corn, field, stover..................................                2.5
Corn, field, forage..................................                6.0
                                * * * * *
------------------------------------------------------------------------

* * * * *

[FR Doc. E8-11892 Filed 5-27-08; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register: July 18, 2006 (Volume 71, Number 137)]
[Notices]
[Page 40713]
[DOCID:fr18jy06-50]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RP99-301-143]

ANR Pipeline Company; Notice of Negotiated Rate Filing

July 12, 2006.
    Take notice that on July 10, 2006, ANR Pipeline Company (ANR)
tendered for filing and acceptance six copies and amended negotiated
rate arrangement between ANR and Wisconsin Gas LLC. ANR requests that
the negotiated rate arrangement become effective pursuant to the
agreement's term provision.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed in accordance with the provisions of
section 154.210 of the Commission's regulations (18 CFR 154.210).
Anyone filing an intervention or protest must serve a copy of that
document on the Applicant. Anyone filing an intervention or protest on
or before the intervention or protest date need not serve motions to
intervene or protests on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov.
 Persons unable to file electronically should submit an

original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For

TTY, call<PHONE_NUMBER>.

Magalie R. Salas,
Secretary.
 [FR Doc. E6-11352 Filed 7-17-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 88, Number 115 (Thursday, June 15, 2023)]
[Notices]
[Pages 39295-39300]
[FR Doc No: 2023-12757]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97687; File No. SR-NASDAQ-2023-005]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To
Establish Listing Standards Related to Recovery of Erroneously Awarded
Executive Compensation

June 9, 2023.

I. Introduction

    On February 22, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt Nasdaq Rule 5608 to establish listing
standards related to recovery of erroneously awarded executive
compensation as required by Rule 10D-1 under the Act (``Rule 10D-1'').
The proposed rule change was published for comment in the Federal
Register on March 13, 2023.\3\ On April 24, 2023, the Commission
extended the time period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to approve or disapprove the proposed rule
change.\4\ On June 6, 2023, the Exchange filed partial Amendment No. 1
to the proposed rule change.\5\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendment No. 1, from interested persons and is approving the proposed
rule change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 97060 (March 7,
2023), 88 FR 15500 (``Notice''). Comments received on the proposed
rule change are available at: https://www.sec.gov/comments/sr-nasdaq-2023-005/srnasdaq2023005.htm.
    \4\ See Securities Exchange Act Release No. 97353, 88 FR 26369
(April 28, 2023).
    \5\ Amendment No. 1 is available on the Commission's website at
https://www.sec.gov/comments/sr-nasdaq-2023-005/srnasdaq2023005-200459-401302.pdf. In Amendment No. 1, the Exchange proposes to
amend Rule 5608(e) to (i) provide that the effective date of Rule
5608 would be October 2, 2023; and (ii) clarify, consistent with the
requirements of Rule 10D-1 and the rule language as originally
proposed, that each company is required to comply with its recovery
policy for all incentive-based compensation received (as such term
is defined in proposed Rule 5608(d)) by executive officers on or
after October 2, 2023.
---------------------------------------------------------------------------

II. Background and Description of the Proposal, as Modified by
Amendment No. 1

    On October 26, 2022, the Commission adopted final Rule 10D-1 \6\ to
implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (``Dodd-Frank Act''), which added Section 10D to
the Act. Section 10D of the Act requires the Commission to adopt rules
directing the national securities exchanges to prohibit the listing of
any security of an issuer that is not in compliance with the
requirements of Section 10D of the Act. Rule 10D-1 requires national
securities exchanges that list securities to establish listing
standards that require each issuer to adopt and comply with a written
executive compensation recovery policy and to provide the disclosures
required by Rule 10D-1 and in the applicable Commission filings.\7\
Under Rule 10D-1, listed companies must recover from current and former
executive officers incentive-based compensation received during the
three completed fiscal years preceding the date on which the issuer is
required to prepare an accounting restatement.
---------------------------------------------------------------------------

    \6\ 17 CFR 240.10D-1.
    \7\ See Securities Exchange Act Release No. 96159, 87 FR 73076
(November 28, 2022) (``Adopting Release''). Rule 10D-1 requires such
exchange listing rules to be effective no later than one year after
November 28, 2022. Rule 10D-1 further requires that each listed
issuer: (i) adopt the required recovery policy no later than 60 days
following the effective date of the listing standard; (ii) comply
with the recovery policy for all incentive-based compensation
received by executive officers on or after the effective date of the
applicable listing standard; and (iii) provide the required
disclosures on or after the effective date of the listing standard.
---------------------------------------------------------------------------

    As required by Rule 10D-1, Nasdaq proposed to adopt Nasdaq Rule
5608

entitled ``Recovery of Erroneously Awarded Compensation.'' Proposed
Nasdaq Rule 5608 (the ``Rule'') mirrors the text of Rule 10D-1.
Specifically, proposed Nasdaq Rule 5608(a) would require companies \8\
to adopt a compensation recovery policy, comply with that policy, and
provide the compensation recovery policy disclosures required by the
Rule and in the applicable Commission filings.
---------------------------------------------------------------------------

    \8\ For purposes of this order, ``companies'' or ``company''
refers to the issuer of a security listed or an issuer who is
applying to list on Nasdaq. See, e.g., Nasdaq Rule 5005(a)(6).
---------------------------------------------------------------------------

    Proposed Nasdaq Rule 5608(b)(1) would require that each company
adopt and comply with a written policy providing that the company will
recover reasonably promptly the amount of erroneously awarded
incentive-based compensation in the event that the company is required
to prepare an accounting restatement due to the material noncompliance
of the company with any financial reporting requirement under the
securities laws, including any required accounting restatement to
correct an error in previously issued financial statements that is
material to the previously issued financial statements, or that would
result in a material misstatement if the error were corrected in the
current period or left uncorrected in the current period.
    The company's recovery policy must apply to all incentive-based
compensation received by a person: (A) after beginning service as an
executive officer; (B) who served as an executive officer at any time
during the performance period for that incentive-based compensation;
(C) while the company has a class of securities listed on a national
securities exchange or a national securities association; and (D)
during the three completed fiscal years immediately preceding the date
that the company is required to prepare an accounting restatement as
described in paragraph (b)(1) of the Rule.\9\ A company's obligation to
recover erroneously awarded compensation is not dependent on if or when
the restated financial statements are filed.
---------------------------------------------------------------------------

    \9\ See proposed Rule 5608(b)(1)(i). In addition to these last
three completed fiscal years, the recovery policy must apply to any
transition period (that results from a change in the company's
fiscal year) within or immediately following those three completed
fiscal years. However, a transition period between the last day of
the company's previous fiscal year end and the first day of its new
fiscal year that comprises a period of nine to 12 months would be
deemed a completed fiscal year.
---------------------------------------------------------------------------

    For purposes of determining the relevant recovery period, the date
that a company is required to prepare an accounting restatement as
described in paragraph (b)(1) of the Rule is the earlier to occur of:
(A) the date the company's board of directors, a committee of the board
of directors, or the officer or officers of the company authorized to
take such action if board action is not required, concludes, or
reasonably should have concluded, that the company is required to
prepare an accounting restatement as described in paragraph (b)(1) of
this Rule; or (B) the date a court, regulator, or other legally
authorized body directs the company to prepare an accounting
restatement as described in paragraph (b)(1) of the Rule.\10\
---------------------------------------------------------------------------

    \10\ See proposed Rule 5608(b)(1)(ii).
---------------------------------------------------------------------------

    The amount of incentive-based compensation that must be subject to
the company's recovery policy (``erroneously awarded compensation'') is
the amount of incentive-based compensation received that exceeds the
amount of incentive-based compensation that otherwise would have been
received had it been determined based on the restated amounts, and must
be computed without regard to any taxes paid. For incentive-based
compensation based on stock price or total shareholder return, where
the amount of erroneously awarded compensation is not subject to
mathematical recalculation directly from the information in an
accounting restatement, the amount must be based on a reasonable
estimate of the effect of the accounting restatement on the stock price
or total shareholder return upon which the incentive-based compensation
was received, and the company must maintain documentation of the
determination of that reasonable estimate and provide such
documentation to Nasdaq.\11\
---------------------------------------------------------------------------

    \11\ See proposed Rule 5608(b)(1)(iii).
---------------------------------------------------------------------------

    The company must recover erroneously awarded compensation in
compliance with its recovery policy except to the extent that one of
the conditions set forth below is met, and the company's Compensation
Committee, or in the absence of such a committee, a majority of the
independent directors serving on the board, has made a determination
that recovery would be impracticable.
     The direct expense paid to a third party to assist in
enforcing the policy would exceed the amount to be recovered. Before
concluding that it would be impracticable to recover any amount of
erroneously awarded compensation based on expense of enforcement, the
company must make a reasonable attempt to recover such erroneously
awarded compensation, document such reasonable attempt(s) to recover,
and provide that documentation to Nasdaq.
     Recovery would violate home country law where that law was
adopted prior to November 28, 2022. Before concluding that it would be
impracticable to recover any amount of erroneously awarded compensation
based on violation of home country law, the company must obtain an
opinion of home country counsel, acceptable to Nasdaq, that recovery
would result in such a violation, and must provide such opinion to
Nasdaq.
     Recovery would likely cause an otherwise tax-qualified
retirement plan, under which benefits are broadly available to
employees of the registrant, to fail to meet the requirements of 26
U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.\12\
---------------------------------------------------------------------------

    \12\ See proposed Rule 5608(b)(1)(iv).
---------------------------------------------------------------------------

    The company is prohibited from indemnifying any executive officer
or former executive officer against the loss of erroneously awarded
compensation.\13\
---------------------------------------------------------------------------

    \13\ See proposed Rule 5608(b)(1)(v).
---------------------------------------------------------------------------

    Proposed Nasdaq Rule 5608(b)(2) would require that each company
file all disclosures with respect to such recovery policy in accordance
with the requirements of the federal securities laws, including the
disclosure required by the applicable Commission filings.
    Proposed Nasdaq Rule 5608(c) would provide that the requirements of
the Rule do not apply to the listing of: (1) any security issued by a
unit investment trust, as defined in 15 U.S.C. 80a-4(2); and (2) any
security issued by a management company, as defined in 15 U.S.C. 80a-
4(3), that is registered under section 8 of the Investment Company Act
of 1940 (15 U.S.C. 80a-8), if such management company has not awarded
incentive-based compensation to any executive officer of the company in
any of the last three fiscal years, or in the case of a company that
has been listed for less than three fiscal years, since the listing of
the company.
    Proposed Nasdaq Rule 5608(d) would provide that, unless the context
otherwise requires, the following definitions apply for purposes of the
Rule (and only for purposes of Rule 5608):
     Executive Officer. An executive officer is the company's
president, principal financial officer, principal accounting officer
(or if there is no such accounting officer, the controller), any vice-
president of the company in charge of a principal business unit,
division, or function (such as sales, administration, or finance), any
other officer who performs a policy-making function, or

any other person who performs similar policy-making functions for the
company. Executive officers of the company's parent(s) or subsidiaries
are deemed executive officers of the company if they perform such
policy making functions for the company. In addition, when the company
is a limited partnership, officers or employees of the general
partner(s) who perform policy-making functions for the limited
partnership are deemed officers of the limited partnership. When the
company is a trust, officers, or employees of the trustee(s) who
perform policy-making functions for the trust are deemed officers of
the trust. Policy-making function is not intended to include policy-
making functions that are not significant. Identification of an
executive officer for purposes of the Rule would include at a minimum
executive officers identified pursuant to 17 CFR 229.401(b).
     Financial Reporting Measures. Financial reporting measures
are measures that are determined and presented in accordance with the
accounting principles used in preparing the company's financial
statements, and any measures that are derived wholly or in part from
such measures. Stock price and total shareholder return are also
financial reporting measures. A financial reporting measure need not be
presented within the financial statements or included in a filing with
the Commission.
     Incentive-Based Compensation. Incentive-based compensation
is any compensation that is granted, earned, or vested based wholly or
in part upon the attainment of a financial reporting measure.
     Received. Incentive-based compensation is deemed received
in the company's fiscal period during which the financial reporting
measure specified in the incentive-based compensation award is
attained, even if the payment or grant of the incentive-based
compensation occurs after the end of that period.
    Proposed Nasdaq Rule 5608(e) would provide that the effective date
of the Rule (``effective date'') is October 2, 2023, and that each
company is required to (i) adopt a policy governing the recovery of
erroneously awarded compensation as required by the Rule no later than
60 days following October 2, 2023; (ii) comply with its recovery policy
for all incentive-based compensation received (as such term is defined
in Rule 5608(d)) by executive officers on or after October 2, 2023; and
(iii) provide the disclosures required by the Rule and in the
applicable Commission filings on or after October 2, 2023.\14\ Proposed
Nasdaq Rule 5605(e) also states that notwithstanding the look-back
requirement in proposed Rule 5608(b)(1)(i)(D), a company is only
required to apply the recovery policy to incentive-based compensation
received on or after October 2, 2023.\15\
---------------------------------------------------------------------------

    \14\ See Amendment No. 1, supra note 5. In support of proposing
an effective date of October 2, 2023, the Exchange states it
believes this is consistent with Section 10D ``and the goal of
implementing the proposed rule promptly while also being consistent
with the expectations of listed issuer that the proposed rules would
take effect a year after the adoption of SEC Rule 10D-1 based on the
issuers' understanding of a statement made . . . in the Listing
Standards Release.'' See id.
    \15\ As described above, a Nasdaq listed company would have to
comply with its recovery policy for all incentive-based compensation
received by executive officers on or after the effective date of the
applicable listing standard (i.e. Nasdaq Rule 5608). Incentive-based
compensation that is the subject of a compensation contract or
arrangement that existed prior to the effective date of Rule 10D-1
would still be subject to recovery under the Exchange's rule if such
compensation was received on or after the effective date of Rule
5608, as required by Rule 10D-1. See Adopting Release, supra note 6,
and also definitions of ``incentive based compensation'' and
``received'' in proposed Nasdaq Rule 5608(d).
---------------------------------------------------------------------------

    Nasdaq also proposes additional clarifying changes to Nasdaq Rule
5210 (Prerequisites for Applying to List on the Nasdaq Stock Market),
Nasdaq Rule 5701 (Preamble to the Listing Requirements to Other
Securities) and Nasdaq Rule 5702 governing listing requirements for
debt securities to make clear the application of proposed Nasdaq Rule
5608 under these provisions.\16\
---------------------------------------------------------------------------

    \16\ Nasdaq states that the change to Nasdaq Rule 5210 will
clarify that any company newly listing on Nasdaq must comply with
these requirements. The proposed amendments to Nasdaq Rules 5701 and
5702 make clear that proposed Nasdaq Rule 5608 would apply, except
to the extent exempted as set forth above. See supra discussion of
proposed Rule 5608(c).
---------------------------------------------------------------------------

    Nasdaq states that the new requirements described above will help
facilitate effective oversight of executive compensation and promote
accountability to investors by not allowing executive officers to
retain compensation that they were awarded erroneously.\17\
---------------------------------------------------------------------------

    \17\ See Notice, supra note 3, 88 FR at 15502.
---------------------------------------------------------------------------

    As described above, Rule 10D-1 requires national securities
exchanges to prohibit the initial or continued listing of any security
of an issuer not in compliance with its rules adopted to comply with
Rule 10D-1. Nasdaq proposes therefore to require that a company will be
subject to delisting if it does not adopt a compensation recovery
policy that complies with the applicable listing standard, disclose the
policy in accordance with Commission rules or comply with its recovery
policy. Nasdaq states that the administrative process for a company
that fails to comply with proposed Nasdaq Rule 5608 will follow the
established pattern used for similar corporate governance
deficiencies.\18\ Specifically, Nasdaq proposes to amend Nasdaq Rule
5810(c)(2)(A)(iii) to provide that a company that fails to comply with
proposed Nasdaq Rule 5608 may submit to Nasdaq Staff \19\ a plan to
regain compliance and, consistent with its process for similar
corporate governance deficiencies, Nasdaq Staff may provide the issuer
up to 180 days to cure the deficiency.\20\ Nasdaq Rule 5810(c)(2)(B)
further provides that notifications of deficiencies that allow for
submission of a compliance plan may also result, after review of the
compliance plan, in issuance of a Staff Delisting Determination or a
Public Reprimand Letter. However, Nasdaq proposes to amend Nasdaq Rules
5810(c)(4), 5815(c)(1)(D), 5820(d)(1) and 5825(d) to provide that a
Public Reprimand Letter may not be issued for violations of a listing
standard required by Rule 10D-1 or upon appeal of such violations.\21\
If Nasdaq Staff provides the issuer with a period to cure the
deficiency, and if the company does not regain compliance within the
time period provided, Nasdaq Staff would be required to issue a Staff
Delisting Determination,\22\ which the issuer could appeal to the
Hearings Panel, as provided in Nasdaq Rule 5815. The Hearings Panel
could allow the issuer up to an additional 180 days to cure the
deficiency.\23\
---------------------------------------------------------------------------

    \18\ See id. See also Nasdaq Rule 5805(c)(2)(B).
    \19\ Nasdaq Rule 5805(g) defines the term ``Staff'' as employees
of the Listing Qualifications Department (the department of Nasdaq
responsible for evaluating company compliance with quantitative and
qualitative listing standards and determining eligibility for
initial and continued listing of a company's securities). See also
Nasdaq Rule 5805(h).
    \20\ See Notice, supra note 3, 88 FR at 15502. See also Nasdaq
Rule 5805(c)(2)(B).
    \21\ Nasdaq also proposes to amend the definition of ``Public
Reprimand Letter'' in Rule 5805(j) to provide that a Public
Reprimand Letter may not be issued for violations of a listing
standard required by Rule 10D-1. Under the existing definition in
Rule 5805(j), Public Reprimand Letters can be issued for violations
of Nasdaq corporate governance or notification listing standards
except for violations of a listing standard required by Rule 10A-3
of the Act.
    \22\ See Nasdaq Rule 5805(c)(2)(E).
    \23\ See Nasdaq Rule 5815(c).
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national

securities exchange.\24\ In particular, the Commission finds that the
proposed rule change is consistent with the requirements of Section
6(b) of the Act.\25\ Specifically, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\26\
which requires, among other things, that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest, and are not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
In addition, the Commission finds that the proposed rule change is
consistent with Section 6(b)(7) of the Act,\27\ which requires, among
other things, that the rules of a national securities exchange provide
a fair procedure for the prohibition or limitation by the exchange of
any person with respect to access to services offered by the exchange.
The proposed rule change, as modified by Amendment No. 1, is also
consistent with Section 10D of the Act \28\ and Rule 10D-1 thereunder,
as further described below.\29\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
    \27\ 15 U.S.C. 78(b)(7).
    \28\ 15 U.S.C. 78j-4.
    \29\ 17 CFR 240.10D-1.
---------------------------------------------------------------------------

    The development and enforcement of meaningful listing standards for
a national securities exchange is of substantial importance to
financial markets and the investing public. Meaningful listing
standards are especially important given investor expectations
regarding the nature of companies that have achieved an exchange
listing for their securities, and the role of an exchange in overseeing
its market and assuring compliance with its listing standards.\30\ The
corporate governance standards embodied in the listing rules of
national securities exchanges, in particular, play an important role in
assuring that companies listed for trading on the exchanges' markets
observe good governance practices, including a fair approach and
greater accountability for the recovery of erroneously awarded
compensation.\31\
---------------------------------------------------------------------------

    \30\ See, e.g., Securities Exchange Release Nos. 65708 (November
8, 2011), 76 FR 70799 70802 (November 15, 2011) (SR-NASDAQ-2011-
073); 63607 (December 23, 2010), 75 FR 82420, 82422 (December 30,
2010) (SR-NASDAQ-2010-137); 57785 (May 6, 2008), 73 FR 27597, 27599
(May 13, 2008) (SR-NYSE-2008-17); and 93256 (October 4, 2021), 86 FR
56338 (October 8, 2021) (SR-NASDAQ-2021-007).
    \31\ See, e.g., Securities Exchange Release No. 68639 (January
11, 2013), 78 FR 4570, 4579 (January 22, 2013) (SR-NYSE-2012-49)
(stating, in connection with the modification of exchange rules for
compensation committees of listed issuers to comply with Rule 10C-1
of the Act, that corporate governance listing standards ``play an
important role in assuring that companies listed for trading on the
exchanges' markets observe good governance practices, including a
reasoned, fair, and impartial approach for determining the
compensation of corporate executives'' and stating that the proposal
would foster ``greater transparency, accountability and
objectivity'' in oversight of compensation practices).
---------------------------------------------------------------------------

    In enacting Section 10D of the Act,\32\ Congress resolved to
require national securities exchanges to establish listing standards to
require listed issuers to develop and comply with a policy to recover
incentive-based compensation erroneously awarded on the basis of
financial information that requires an accounting restatement.\33\ In
October 2022, as required by this legislation, the Commission adopted
Rule 10D-1 under the Act, which directs the national securities
exchanges to establish listing standards that require issuers to: (i)
develop and comply with written policies for recovery of incentive-
based compensation based on financial information required to be
reported under the securities laws, applicable to the issuers'
executive officers, during the three completed fiscal years immediately
preceding the date that the issuer is required to prepare an accounting
restatement; and (ii) disclose those compensation recovery policies in
accordance with Commission rules. In response, the Exchange has filed
the proposed rule change, which includes rules intended to comply with
the requirements of Rule 10D-1.
---------------------------------------------------------------------------

    \32\ Public Law 111-203, sec. 954, 124 Stat. 1376, 1904 (2010)
(codified at 15 U.S.C. 78j-4).
    \33\ As a part of the Dodd-Frank Act legislative process, in a
2010 report, the Senate Committee on Banking, Housing and Urban
Affairs stated that it is ``unfair to shareholders for corporations
to allow executive officers to retain compensation that they were
awarded erroneously.'' See Report of the Senate Committee on
Banking, Housing, and Urban Affairs, S.3217, Report No. 111-176 at
135-36 (Apr. 30, 2010) (``Senate Report'') at 135. See also Adopting
Release, supra note 7, 87 FR at 73077 (citing to the Senate Report)
(``The language and legislative history of the Dodd-Frank Act make
clear that Section 10D is premised on the notion that an executive
officer should not retain incentive-based compensation that, had the
issuer's accounting been correct in the first instance, would not
have been received by the executive officer, regardless of any fault
of the executive officer for the accounting errors. The Senate
Report also indicates that shareholders should not `have to embark
on costly legal expenses to recoup their losses' and that
`executives must return monies that should belong to the
shareholders.''').
---------------------------------------------------------------------------

    The Exchange's proposed Rule 5608 incorporates the requirements of
Rule 10D-1. The Commission believes that the Exchange's proposal will
foster greater fairness, accountability, and transparency to
shareholders of listed issuers by advancing the recovery of incentive-
based compensation that was erroneously awarded on the basis of
financial information that requires an accounting restatement,
consistent with Section 10D of the Act \34\ and Rule 10D-1
thereunder,\35\ and will therefore further the protection of investors
consistent with Section 6(b)(5) of the Act.\36\ In addition, as the
Commission stated in the Adopting Release, the recovery requirements
may provide executive officers with an increased incentive to take
steps to reduce the likelihood of inadvertent misreporting and will
reduce the financial benefits to executive officers who choose to
pursue impermissible accounting methods, which can further discourage
such behavior.\37\ The Commission believes that these benefits of the
Exchange's new rules on the recovery of erroneously awarded
compensation will protect investors and the public interest as required
under Section 6(b)(5) of the Act.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78j-4.
    \35\ 17 CFR 240.10D-1.
    \36\ 15 U.S.C. 78f(b)(5).
    \37\ See Adopting Release, supra note 7, 87 FR at 73077. See
also Notice, supra note 3, 88 FR at 15502, agreeing with the
Commission's statement on the benefits of the recovery policy.
---------------------------------------------------------------------------

    Rule 10D-1 and proposed Rule 5608 require that a listed issuer
recover the amount of erroneously awarded incentive-based compensation
``reasonably promptly.'' One commenter requested Nasdaq include
guidance in its proposed listing standards regarding what the exchange
will consider in evaluating whether an issuer is pursuing recovery
``reasonably promptly'' under its policy and provided a non-exclusive
list of factors the Exchange could consider and set forth in its
rules.\38\ As discussed above, Nasdaq's proposed rule mirrors the
language in Rule 10D-1 and such guidance is not included in the rule
text of Rule 10D-1. The Adopting Release stated that whether an issuer
is acting reasonably promptly ``will depend on the particular facts and
circumstances applicable to that issuer'' and ``the final rules do not
restrict exchanges from adopting more prescriptive approaches to the
timing

and method of recovery under their rules in compliance with Section
19(b) of the Exchange Act . . .'' \39\ Rule 10D-1 also does not compel
the exchanges to adopt a more prescriptive approach to the timing and
method of recovery. In its Notice, Nasdaq stated that ``the issuer's
obligation to recover erroneously awarded incentive-based compensation
reasonably promptly will be assessed on a holistic basis with respect
to each such accounting restatement prepared by the issuer'' and that
``[i]n evaluating whether an issuer is recovering erroneously awarded
incentive-based compensation reasonably promptly, the Exchange will
consider whether the issuer is pursuing an appropriate balance of cost
and speed in determining the appropriate means to seek recovery, and
whether the issuer is securing recovery through means that are
appropriate based on the particular facts and circumstances of each
executive officer that owes a recoverable amount.'' \40\ The Commission
believes this guidance provided by the Exchange is consistent with the
Commission's statements regarding when an issuer is acting ``reasonably
promptly'' as expressed in the Adopting Release, with Rule 10D-1 and
with the Act.\41\
---------------------------------------------------------------------------

    \38\ See Letter to Vanessa Countryman, Secretary, Commission,
from Wilson Sonsini Goodrich & Rosati, dated April 4, 2024 [sic]
(``Wilson Sonsini Letter''), at 4.
    \39\ See Adopting Release, supra note 7, 87 FR at 73104. For
example, the Commission stated that after the exchanges have
observed issuer performance they can use any resulting data to
assess the need for further guidelines to ensure prompt and
effective recovery. See id.
    \40\ See Notice, supra note 3, 88 FR at 15502.
    \41\ See Adopting Release, supra note 7, 87 FR 73104.
---------------------------------------------------------------------------

    Rule 10D-1 requires issuers subject to the listing standards to
adopt a recovery policy no later than 60 days following the date on
which the applicable listing standards become effective and to comply
with their recovery policy, and provide the required disclosures, on or
after the effective date. The Commission received comment letters
requesting the Commission not approve the proposal before November 28,
2023, citing burdens to issuers, including with respect to assessing
the impact of the new listing standards on their existing executive
compensation programs, developing and implementing compliant policies,
and obtaining board (and in some cases shareholder) approval.\42\
Commenters stated that listed issuers anticipated an effective date of
November 28, 2023 based on the language in Rule 10D-1 requiring that
the new listing standards become effective by no later than one year
following the publication of the final rules in the Federal
Register.\43\ One commenter stated that the Adopting Release stated
that ``issuers will have more than a year from the date the final rules
are published in the Federal Register to prepare and adopt compliant
recovery policies.'' \44\ The Commission also received comment letters
from individual investors that requested the Commission quickly
implement the proposal.\45\ The Exchange, in Amendment No. 1, is
proposing that the effective date of Rule 5608 be October 2, 2023.\46\
The Exchange believes that setting this date as the effective date will
ensure that issuers have more than a year from the date Rule 10D-1 was
published in the Federal Register to adopt recovery policies.\47\ This
is consistent with language in Rule 10D-1 and the Adopting Release,
while also ensuring prompt implementation of this proposed rule.
---------------------------------------------------------------------------

    \42\ See, e.g., Wilson Sonsini Letter at 5; Letter to Vanessa
Countryman, Secretary, Commission, from Davis Polk Wardwell LLP et
al., submitted on behalf of 39 law firms, dated April 3, 2023
(``Davis Polk Letter''); Letter to Vanessa Countryman, Secretary,
Commission, from C. Edward Allen, Vice President, Policy & Advocacy,
and Christina Maguire, President & CEO, Society for Corporate
Governance, dated April 3, 2023 (``Society Letter''); Letter to
Vanessa Countryman, Secretary, Commission, from American Securities
Association, Business Roundtable, Center On Executive Compensation,
National Association of Manufacturers, and U.S. Chamber of Commerce,
dated April 3, 2023 (``ASA Letter'').
    \43\ See, e.g., Society Letter at 1; ASA Letter at 2.
    \44\ See Davis Polk Letter at 1 n.1 (citing to Adopting Release,
supra note 7, 87 FR at 73111).
    \45\ See, e.g., Letters from Clarissa McLaughlin, dated May 15,
2023; Deborah Temple, dated May 15, 2023; John Leonard, dated May
13, 2023.
    \46\ See Amendment No. 1, supra note 5, amending proposed Nasdaq
Rule 5608(e).
    \47\ Listed issuers will need to have their recovery policy in
place no later than 60 days following the effective date of October
2, 2023, which would be more than a year after publication of Rule
10D-1 in the Federal Register. Listed issuers will also have to
comply with their recovery policy for all incentive-based
compensation received by executive officers on or after the
effective date of October 2, 2023, and provide the required
disclosures in the applicable Commission filings on or after the
effective date of October 2, 2023. See Adopting Release, supra note
6, and also definitions of ``incentive based compensation'' and
``received'' in proposed Nasdaq Rule 5608(d). See also supra note 15
and accompanying text.
---------------------------------------------------------------------------

    With respect to a listed issuer that fails to comply with proposed
Rule 5608, the Exchange has proposed to apply its current procedures
applicable to companies with similar corporate governance deficiencies
in addition to prohibiting the use of a Public Reprimand Letter for
violations of a listing standard required by Rule 10D-1.\48\ The
Commission believes that these procedures for listed issuers out of
compliance with proposed Nasdaq Rule 5608, which are consistent with
the procedures for similar corporate governance deficiencies,
adequately meet the mandate of Rule 10D-1 and are consistent with
investor protection and the public interest, since they give a listed
issuer a reasonable time period to cure non-compliance with these
important requirements before the listed issuer will be delisted while
helping to ensure that listed issuers that are non-compliant will not
remain listed for an inappropriate amount of time.\49\ Additionally,
the proposed delisting process, including the cure period and the right
to appeal a delisting determination to the Exchange's Hearing Panel, is
consistent with Section 6(b)(7) of the Act in that it provides a fair
procedure for the review of delisting determinations based on
violations of the Exchange's rules for recovering erroneous
compensation.
---------------------------------------------------------------------------

    \48\ See supra notes 18-23 and accompanying text.
    \49\ One commenter states its agreement that issuers should be
given an opportunity to submit a plan of compliance and to cure
noncompliance in good faith and states that Nasdaq's proposal
``strikes the right balance'' in deterring issuers from violating
the proposed listing standards without unnecessarily harming
shareholders. See Wilson Sonsini Letter, at 3. Another commenter
that was generally supportive of Nasdaq's proposal states that
Nasdaq's proposed delisting process involves the use of Listing
Qualifications Panels and a Listing and Hearing Review Council with
investor representatives. See Letter to Vanessa Countryman,
Secretary, Commission, from Jeffrey P. Mahoney, General Counsel,
Council of Institutional Investors, dated April 3, 2023, at 4 n.13.
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule
Change

    Interested persons are invited to submit written data, views, and
arguments concerning whether the proposed rule change, as modified by
Amendment No. 1, is consistent with the Exchange Act. Comments may be
submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-NASDAQ-2023-005 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-NASDAQ-2023-005. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://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 website
viewing and printing in the Commission's Public Reference Room, 100 F
Street NE, Washington, DC 20549, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to file number SR-NASDAQ-2023-005, and
should be submitted on or before July 6, 2023.

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
1 in the Federal Register. In Amendment No. 1, the Exchange amended
proposed Rule 5608(e) to (i) provide that the effective date of Rule
5608 would be October 2, 2023; and (ii) clarify, consistent with the
requirements of Rule 10D-1 and the rule language as originally
proposed, that each company is required to comply with its recovery
policy for all incentive-based compensation received (as such term is
defined in proposed Rule 5608(d)) by executive officers on or after
October 2, 2023.\50\ The changes in Amendment No. 1 provide greater
clarity to the proposal. The change to the effective date of the
listing standards is consistent with Rule 10D-1 and language in the
Adopting Release and is responsive to comments stating that listed
issuers anticipated an effective date of November 28, 2023. The
additional clarification to Rule 5608(e) will ensure that the
requirements of that Rule conform to the requirements of Rule 10D-1.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Exchange Act,\51\ to approve the proposed rule change,
as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \50\ See Amendment No. 1, supra note 5.
    \51\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\52\ that the proposed rule change (SR-NASDAQ-2023-005), as
modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2).
    \53\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-12757 Filed 6-14-23; 8:45 am]
BILLING CODE 8011-01-P