[Federal Register Volume 82, Number 144 (Friday, July 28, 2017)]
[Notices]
[Pages 35241-35244]
[FR Doc No: 2017-15907]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81194; File Nos. SR-DTC-2017-004; SR-NSCC-2017-005; SR-
FICC-2017-008]

Self-Regulatory Organizations; The Depository Trust Company;
National Securities Clearing Corporation; Fixed Income Clearing
Corporation; Notice of Filing Amendment No. 2, Notice of Filing
Amendment No. 3, and Order Instituting Proceedings To Determine Whether
To Approve or Disapprove Proposed Rule Changes, as Previously Modified
by Amendment No. 1, To Adopt the Clearing Agency Liquidity Risk
Management Framework

July 24, 2017.

I. Introduction

    On April 6, 2017, The Depository Trust Company (``DTC''), National
Securities Clearing Corporation (``NSCC''), and Fixed Income Clearing
Corporation (``FICC,'' each a ``Clearing Agency,'' and collectively,
the ``Clearing Agencies''), filed with the Securities and Exchange
Commission (``Commission'') proposed rule changes SR-DTC-2017-004, SR-
NSCC-2017-005, and SR-FICC-2017-008, respectively, pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder.\2\ On April 13, 2017, the Clearing Agencies each
filed Amendment No. 1 to their respective proposed rule changes.
Amendment No. 1 made technical corrections to each Exhibit 5 of the
proposed rule change filings. The proposed rule changes, as modified in
each instance by Amendment No. 1, were published for comment in the
Federal Register on April 25, 2017.\3\ On June 7, 2017, the Commission
designated a longer period for Commission Action on the proposed rule
changes, as amended in each instance by Amendment No. 1.\4\ As of

July 20, 2017, the Commission did not receive any comment letters on
the proposed rule changes, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 80489 (April 19, 2017),
82 FR 19120 (April 25, 2017) (SR-DTC-2017-004, SR-NSCC-2017-005, SR-
FICC-2017-008) (``Notice'').
    \4\ Securities Exchange Act Release No. 80877 (June 7, 2017), 82
FR 27094 (June 13, 2017) (SR-DTC-2017-004, SR-NSCC-2017-005, SR-
FICC-2017-008).
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    On July 20, 2017, the Clearing Agencies each filed Amendment No. 2
to their respective proposed rule changes, as previously modified by
Amendment No. 1. On July 21, 2017, the Clearing Agencies each filed
Amendment No. 3 to their respective proposed rule changes to supersede
and replace Amendment No. 2 in its entirety, due to a technical defect
of Amendment No. 2. Pursuant to Section 19(b)(1) of the Exchange Act
\5\ and Rule 19b-4 thereunder,\6\ notice is hereby given that the
Commission is publishing this notice to solicit comments on the
proposed rule changes, as modified by Amendment No. 3, from interested
persons (hereinafter, ``Proposed Rule Changes.''). Additionally, this
order institutes proceedings under Section 19(b)(2)(B) of the Act \7\
to determine whether to approve or disapprove the Proposed Rule
Changes.
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Changes

    The Clearing Agencies propose to adopt the Clearing Agency
Liquidity Risk Management Framework (``Framework'') of the Clearing
Agencies, which would set forth the Clearing Agencies' (A) liquidity
resources, and (B) liquidity risk management practices, to include
measurement and monitoring of their respective liquidity risks.\8\ More
specifically, the Framework would describe FICC and NSCC's liquidity
risk management strategy and objectives, which are to maintain
sufficient liquid resources in order to meet the potential amount of
funding required to settle outstanding transactions of a defaulting
Member, or affiliated family (``Affiliated Family'') of Members, in a
timely manner.\9\ For DTC, the Framework would describe how DTC's
liquidity management strategy and controls are designed to maintain
sufficient available liquid resources to complete system-wide
settlement on each business day with a high degree of confidence
notwithstanding the failure to settle of a Participant or Affiliated
Family of Participants.\10\ The Framework would also state that DTC
operates on a fully collateralized basis.\11\
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    \8\ Notice, 82 at 19120-19121.
    \9\ FICC and NSCC refer to their participants as ``Members,''
while DTC refers to its participants as ``Participants.'' These
terms are defined in the rules of each of the Clearing Agencies.
Supra note 4. Notice, 82 at 19121.
    \10\ Notice, 82 at 19121.
    \11\ Id.
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    In addition, the Framework would outline the regulatory
requirements that would be applicable to each Clearing Agency with
respect to liquidity risk management.\12\ The Framework would be owned
and managed by the Liquidity Product Risk Unit (``LPRU'') of DTCC.\13\
Although the Clearing Agencies would consider the Framework to be a
rule of each Clearing Agency, the Proposed Rule Changes do not require
any changes to the Rules, By-laws and Organization Certificate of DTC
(``DTC Rules''), the Rulebook of GSD (``GSD Rules''), the Clearing
Rules of MBSD (``MBSD Rules''), or the Rules & Procedures of NSCC
(``NSCC Rules''), as the Framework would be a standalone document.\14\
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    \12\ Id.
    \13\ The parent company of the Clearing Agencies is The
Depository Trust & Clearing Corporation (``DTCC''). DTCC operates on
a shared services model with respect to the Clearing Agencies. Most
corporate functions are established and managed on an enterprise-
wide basis pursuant to intercompany agreements under which it is
generally DTCC that provides a relevant service to a Clearing
Agency. Id.
    \14\ Available at http://www.dtcc.com/en/legal/rules-and-procedures. FICC is comprised of two divisions: The Government
Securities Division (``GSD'') and the Mortgage-Backed Securities
Division (``MBSD''). Notice, 82 at 19120.
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    The Clearing Agencies each filed Amendment No. 3 to the proposed
rule changes, as previously modified, in order to clarify the three
types of scenarios used in daily liquidity sufficiency testing to
measure each Clearing Agency's available liquidity resources, as
described below.

A. Liquidity Resources

    The Framework would address how each of the Clearing Agencies meets
its requirement to hold qualifying liquid resources, as defined by Rule
17Ad-22(a)(14) under the Act,\15\ sufficient to meet its minimum
liquidity resource requirement in each relevant currency for which it
has payment obligations owed to its Members or Participants, as
applicable.\16\ The Framework also would identify each of the
qualifying liquid resources available to each Clearing Agency. Such
qualifying liquid resources include, for example, (1) deposits to the
Clearing Agencies' respective Clearing Funds, or, for DTC, its
Participants Fund, made by Members or Participants pursuant to the
respective rules; \17\ (2) for DTC and NSCC, an annual committed credit
facility; \18\ (3) for NSCC, its Members' Supplemental Liquidity
Deposits; \19\ and (4) for GSD and MBSD, a rule-based Capped
Contingency Liquidity Facility (``CCLF'') program.\20\ The Framework
also would state that the Clearing Agencies may have access to other
available liquidity resources that may not meet the definition of
qualifying liquid resources.\21\
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    \15\ 17 CFR 240.17Ad-22(a)(14).
    \16\ Notice, 82 at 19121.
    \17\ DTC Rule 4 (Participants Fund and Participants Investment),
GSD Rule 4 (Clearing Fund and Loss Allocation), MBSD Rule 4
(Clearing Fund and Loss Allocation), NSCC Rule 4 (Clearing Fund).
Supra note 8. Notice, 82 at 19121.
    \18\ See Securities Exchange Act Release No. 77750 (April 29,
2016), 81 FR 27181 (May 5, 2016) (SR-DTC-2016-801, SR-NSCC-2016-
801). Notice, 82 at 19121.
    \19\ NSCC Rule 4A (Supplemental Liquidity Deposits). Supra note
8. Notice, 82 at 19121.
    \20\ MBSD Rule 17, Section 2a (Procedures for When the
Corporation Ceases to Act). Supra note 8. GSD has filed a proposed
rule change and related advance notice to adopt a CCLF program. See
Securities Exchange Act Release No. 80234 (March 14, 2017), 82 FR
14401 (March 20, 2017) (SR-FICC-2017-002). The Notice of No
Objection to Advance Notice Filing to Implement the Capped
Contingency Liquidity Facility in the Government Securities Division
Rulebook was issued. Securities Exchange Act Release No. 81054 (June
29, 2017), 82 FR 13876 (March 15, 2017) (SR-FICC-2017-802). Upon
Commission approval of this proposed rule change, GSD's CCLF program
will become a qualifying liquid resource of GSD. Notice, 82 at
19121.
    \21\ Notice, 82 at 19121.
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B. Liquidity Measurement and Monitoring

    The Framework would describe the manner in which FICC and NSCC
measure and monitor the sufficiency of their respective qualifying
liquid resources to meet the cash settlement obligations of their
respective largest Affiliated Family, through daily liquidity studies,
across a range of stress scenarios.\22\ The Framework would state that
FICC and NSCC would perform daily liquidity sufficiency testing using
three types of scenarios: (1) Normal market scenarios, as a baseline
reference point to assess other stress assumptions; \23\ (2) scenarios
designed to meet the requirements set forth in Rule 17Ad-22(e)(7)(i);
\24\ and (3) scenarios designed to meet the requirements set forth in
Rule 17Ad-22(e)(7)(vi).\25\ The Framework would describe the manner in
which scenarios reflecting these three sets of conditions are developed
and selected for testing.\26\ The Framework would also describe how the
summary results of certain scenario analyses are escalated to Clearing
Agency management on at least a monthly basis, and how these results
are used to evaluate the adequacy of the liquidity resources of FICC or
NSCC.\27\
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    \22\ Id.
    \23\ Id.
    \24\ 17 CFR 240.17Ad-22(e)(7)(i).
    \25\ 17 CFR 240.17Ad-22(e)(7)(vi).
    \26\ Notice, 82 at 19121.
    \27\ Id.

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    With respect to DTC's measurement of the sufficiency of its
liquidity resources, the Framework would set forth that DTC's risk
management tools, including the Collateral Monitor and Net Debit
Cap,\28\ limit DTC's liquidity exposure and, thus, DTC's liquidity
requirement in default scenarios.\29\ The Framework would describe how
these risk management tools enable DTC to regularly test the
sufficiency of its liquid resources on an intraday and end-of-day basis
and adjust to stressed circumstances during a settlement day to protect
DTC and its Participants against liquidity exposure under normal and
stressed market conditions.\30\
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    \28\ ``Collateral Monitor'' and ``Net Debit Cap'' are defined in
DTC Rule 1, Section 1 (Definitions), and their calculations are
further provided for in the DTC Settlement Service Guide of the DTC
Rules. Supra note 8.
    \29\ Notice, 82 at 19121.
    \30\ Id.
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    The Framework would describe how the Clearing Agencies review the
limits of outstanding investments and collateral held (if applicable)
of each Clearing Agency's investment counterparties, and conduct formal
reviews of the reliability of their qualified liquidity providers in
extreme but plausible market conditions.\31\ The Framework would
further describe how the Clearing Agencies undertake due diligence with
respect to their liquidity providers, and how NSCC and DTC conduct
operational testing with their committed credit facility lenders at
least annually.\32\
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    \31\ Id.
    \32\ Id.
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    The Framework would describe how the Clearing Agencies would
address foreseeable liquidity shortfalls that would not be covered by
their existing liquid resources, and would describe how their existing
qualified liquid resources may be replenished.\33\ The Framework would
state that the Clearing Agencies' liquidity risk models are subject to
independent model validation on at least an annual basis.\34\ The
Framework would describe the manner in which Clearing Agency liquidity
risks are assessed and escalated through liquidity risk management
controls that include a statement of risk tolerances that are specific
to liquidity risk (``Liquidity Risk Tolerance Statement''), and an
operational risk profile of LPRU, which contains consolidated risk and
control data.\35\ Finally, the Framework would state that the Liquidity
Risk Tolerance Statement is reviewed by management within the LPRU
annually, and is escalated to the Risk Committee of the Boards for
review and approval at least annually.\36\
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    \33\ Id.
    \34\ Id.
    \35\ Notice, 82 at 19121-19122.
    \36\ Notice, 82 at 19122.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act,\37\ to determine whether the Proposed Rule
Changes should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the Proposed Rule Changes. As noted above, institution
of proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, the
Commission seeks and encourages interested persons to comment on the
Proposed Rule Changes, and provide arguments to support the
Commission's analysis as to whether to approve or disapprove the
Proposed Rule Changes.
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    \37\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\38\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of, and input from commenters with respect to, the Proposed
Rule Changes' consistency with the Act and the rules thereunder.
Specifically, the Commission believes that the Proposed Rule Changes
raise questions as to whether they are consistent with (i) Section
17A(b)(3)(F) of the Act,\39\ which requires, in part, that the rules of
the Clearing Agencies be designed to promote the prompt and accurate
clearance and settlement of securities transactions, and to assure the
safeguarding of securities and funds which are in the custody or
control of the Clearing Agencies or for which they are responsible, and
(ii) Rule 17Ad-22(e)(7) under the Act, which requires, in general, that
each covered clearing agency establish, implement, maintain and enforce
written policies and procedures reasonably designed to, among other
things effectively measure, monitor, and manage the liquidity risks
that arise in or are borne by the covered clearing agency, including
measuring, monitoring, and managing its settlement and funding flows on
an ongoing and timely basis, and its use of intraday liquidity.\40\
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    \38\ Id.
    \39\ 15 U.S.C. 78q-1(b)(3)(F).
    \40\ 17 CFR 240.17Ad-22(e)(7).
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IV. Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
Proposed Rule Changes. In particular, the Commission invites the
written views of interested persons concerning whether the Proposed
Rule Changes are consistent with Section 17A(b)(3)(F) of the Act,\41\
Rule 17Ad-22(e)(7) under the Act,\42\ or any other provision of the
Act, rules, and regulations thereunder.
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    \41\ 15 U.S.C. 78q-1(b)(3)(F).
    \42\ 17 CFR 240.17Ad-22(e)(7).
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    Interested persons are invited to submit written data, views, and
arguments regarding whether the Proposed Rule Changes should be
approved or disapproved on or before August 18, 2017. Any person who
wishes to file a rebuttal to any other person's submission must file
that rebuttal on or before September 1, 2017. Comments may be submitted
by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-DTC-2017-004, SR-NSCC-2017-005, or SR-FICC-2017-008 on
the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2017-004, SR-NSCC-
2017-005, or SR-FICC-2017-008. One of these file numbers should be
included on the subject line if email is used. To help the Commission
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to the Proposed Rule Changes that are filed with the
Commission, and all written communications relating to the Proposed
Rule Changes between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549 on official

business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Clearing Agencies, and on DTCC's Web site
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.
    All submissions should refer to File Number SR-DTC-2017-004, SR-
NSCC-2017-005, or SR-FICC-2017-008 and should be submitted on or before
August 18, 2017. If comments are received, any rebuttal comments should
be submitted on or before September 1, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-15907 Filed 7-27-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 139 (Friday, July 19, 2013)]
[Notices]
[Pages 43263-43268]
[FR Doc No: 2013-17363]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2013-0124, Notice No. 13-7]

Paperless Hazard Communications Pilot Program

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
DOT.

ACTION: Notice and request for comments.

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SUMMARY: PHMSA invites volunteers for a pilot program to evaluate the
effectiveness of paperless hazard communications systems and comments
on an information collection activity associated with the pilot
program. ``Moving Ahead for Progress in the 21st Century Act'' (MAP-21)
authorizes PHMSA to conduct a pilot program to evaluate the feasibility
and effectiveness of using paperless hazard communications systems. In
accordance with MAP-21, in conducting the pilot projects, PHMSA may not
waive the current shipping paper requirements. In addition, MAP-21
indicates that PHMSA must consult with organizations representing fire
and other emergency responders, law enforcement, and regulated
entities. Upon completion of the pilot projects, PHMSA must evaluate
the feasibility and effectiveness of paperless hazard communications
systems and make a recommendation to Congress regarding regulatory
changes that would permanently authorize the use of paperless hazard
communications systems. The report is due to Congress by October 1,
2014. The intent of this notice is to: (1) Describe the current
regulatory requirements for shipping papers; (2) describe authority
granted under MAP-21; (3) explain the goal, scope, and intent of the
pilot program; (4) seek volunteers to participate in the pilot projects
and describe criteria for selecting pilot participants from the
volunteers; and (5) seek comment on the request for information to be
collected in conducting the pilot projects and in consulting with
organizations representing fire and other emergency responders, law
enforcement, and regulated entities. Information gathered will enable
PHMSA to generate a report to Congress detailing: (1) The performance
of each paperless hazard communications system tested during the pilot
projects; (2) PHMSA's assessment of the safety and security impacts on
stakeholders; (3) the associated costs and benefits; and (4) PHMSA's
regulatory recommendation(s).

DATES: Interested persons are invited to submit comments on or before
September 17, 2013.

ADDRESSES: You may submit comments, and statements of interest to
volunteer, identified by the docket number (PHMSA-2013-0124) by any of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments.
     FAX: 1-202-493-2251.
     Mail: Docket Management System, U.S. Department of
Transportation, Docket Operations, Routing Symbol M-30, West Building,
Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC
20590.
     Hand Delivery: Docket Operations, West Building, Ground
Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590,
from 9:00 a.m. to 5:00 p.m., Monday through Friday, except Federal
holidays.
    Instructions: All submissions must include the agency name and
docket number for this notice at the beginning of the comment. To avoid
duplication, please use only one of these four methods. All comments
received will be posted without change to http://www.regulations.gov
and will include any personal information you provide.
    Docket: For access to the dockets to read background documents or
comments received, go to http://www.regulations.gov or DOT's Docket
Operations Office (see ADDRESSES).

    Privacy Act: Anyone is able to search the electronic form of any
written communications and comments received into any of our dockets by
the name of the individual submitting the document (or signing the
document, if submitted on behalf of an association, business, labor
union, etc.). You may review DOT's complete Privacy Act Statement in
the Federal Register published on April 11, 2000 (65 FR 19477) or you
may visit http://www.gpo.gov/fdsys/pkg/FR-2000-04-11/pdf/00-8505.pdf

FOR FURTHER INFORMATION CONTACT: James O. Simmons, U.S. Department of
Transportation, Engineering and Research Division (PHH-23), Pipeline
and Hazardous Materials Safety Administration, 1200 New Jersey Avenue
SE., East Building, 2nd Floor, Washington, DC 20590-0001, Telephone
(202) 366-4545. Requests for a copy of the information collection
should be directed to T. Glenn Foster, U.S. Department of
Transportation, Standards and Rulemaking Division (PHH-12), Pipeline
and Hazardous Materials Safety Administration, 1200 New Jersey Avenue
SE., East Building, 2nd Floor, Washington, DC 20590-0001, Telephone
(202) 366-8553.

SUPPLEMENTARY INFORMATION: Section 1320.8 (d), Title 5, Code of Federal
Regulations (CFR) requires that PHMSA provide interested members of the
public and affected agencies an opportunity to comment on information
collection and recordkeeping requests. This notice identifies an
information collection activity PHMSA is undertaking to evaluate the
effectiveness of a paperless hazard communications pilot program
authorized under Title III, Section 33005, of the Hazardous Materials
Transportation Safety Improvement Act of 2012 (H.R. 4348), also
referenced as the ``Moving Ahead for Progress in the 21st Century Act''
(H.R. 4348, ``MAP-21''). This notice also seeks volunteers (shippers,
carriers, law enforcement, and emergency response personnel) who are
interested in participating in the pilot projects. The pilot projects
and the information collection activity identified in this notice have
been designed to ensure full collaboration with modal administrations,
law enforcement personnel, fire services and emergency response
providers, and regulated entities (shippers and carriers who transport
hazardous materials by air, highway, rail, and water) to test the
feasibility and then evaluate both the feasibility and effectiveness of
using paperless hazardous materials (e-HM) communications systems (e-
systems). The following sections describe the: (1) Current regulatory
requirements for shipping papers; (2) authority granted under MAP-21;
(3) goal, scope, and intent of the pilot program and request for
volunteers to participate in the pilots; (4) criteria used for
selecting pilot participants; and (5) request for information to be
collected in conducting the pilot projects and in consulting with
organizations representing fire and other emergency responders, law
enforcement, and regulated entities.

1. History of and Current Regulatory Requirements for Shipping Papers

    The Hazardous Materials Regulations (HMR; 49 CFR Parts 171-180)
require a person who offers hazardous materials for transportation in
commerce to describe the hazardous materials on a shipping paper in the
manner required in 49 CFR Part 172, Subpart C. The shipping paper
requirements identify key hazard communication information (e.g., UN
number, proper shipping name, hazard class, packing group, type and
quantity of packaging, and emergency response telephone number). Unless
an exception from the shipping paper requirements is provided in the
regulations, a paper copy of the shipping paper must accompany a
hazardous material during transportation. A shipping paper includes ``a
shipping order, bill of lading, manifest or other shipping document
serving a similar purpose and containing the information required by
Sec. Sec.  172.202, 172.203, and 172.204'' (49 CFR 171.8, definition of
``shipping paper''). A hazardous waste manifest ``may be used as the
shipping paper'' if it contains all the information required by Part
172, Subpart C (49 CFR 172.205(h)).
    In 1994, Congress amended the Federal hazardous materials
transportation law (Federal hazmat law) to require that, after a
hazardous material ``is no longer in transportation,'' all offerors and
carriers of a hazardous material must retain the shipping paper ``or
electronic image thereof for a period of 1 year to be accessible
through their respective principal places of business'' (49 U.S.C.
5110(e), added by Pub. L. 103-311, Title I, Sec.  115, 108 Stat. 1678
(Aug. 26, 1994)). That section also requires that the offeror and
carrier ``shall, upon request, make the shipping paper available to a
Federal, State, or local government agency at reasonable times and
locations.''
    On September 12, 2001, the Research and Special Programs
Administration (the predecessor to PHMSA) issued a notice of proposed
rulemaking (NPRM) to amend the HMR to conform with Sec.  5110(e) (66 FR
47443). The 2001 NPRM indicated an electronic image includes an image
transmitted by a facsimile (FAX) machine, an image on the screen of a
computer, or an image generated by an optical imaging machine. To
facilitate compliance with, and enforcement of, the hazardous materials
shipping paper requirement, in 2002 PHMSA further amended the HMR
regarding the retention and information requirements associated with
shipping papers. Amendments included extending the retention period to
375 days; requiring the copy to include the date that the shipment is
accepted for transportation by the initial carrier; and requiring that
the shipping paper copy or its electronic image be accessible at or
through the principal place of business of each person required to
prepare or maintain it during transportation. Consideration for
allowing the use of electronic communication while hazardous materials
are actually in transportation is the next step in the evolution of
hazard communication.
    The implementation of e-systems has already begun and will evolve
if industry determines that investing in technology is economically
beneficial for its businesses. Spurred by competitive demands, just-in-
time delivery requirements, and the globalization of supply chains,
many transportation and logistics industries have embraced modern
innovations to communicate. However, the HMR requires the use of a
paper copy of the shipping document. The rationale behind a paper-based
system is to convey the necessary information in a consistent manner
that is widely understood and accepted by all regulated entities, law
enforcement, and emergency responders.

2. Authority Granted Under MAP-21

    Section 33005 of MAP-21 provided PHMSA the authority to conduct
paperless hazard communications pilot projects. PHMSA will conduct the
pilot projects to evaluate the feasibility of using e-systems to convey
the same information that is contained on a paper copy of a shipping
document. MAP-21, Section 33005 states that PHMSA: (1) Cannot waive the
current statutory shipping paper requirements, and (2) must consult
with organizations representing fire and other emergency responders,
law enforcement, and regulated entities. In addition, at least one
pilot project must take place in a rural area.

    Upon completion of the pilot projects, PHMSA must prepare a report
that provides: (1) A detailed description of the pilot projects; (2) an
evaluation of each pilot project to include an evaluation of the
performance of the e-systems; (3) an assessment of the safety and
security impacts of using e-systems to include the impact on the
public, emergency responders, law enforcement, and on conducting
inspections and investigations; (4) an analysis of the associated
benefits and costs of using e-systems for each mode of transportation;
and (5) a recommendation whether e-systems should be permanently
incorporated into the Federal hazmat regulations. The Secretary shall
submit the report to the Committee on Commerce, Science, and
Transportation of the U.S. Senate and to the Committee on
Transportation and Infrastructure of the U.S. House of Representatives
by October 2014, two years after the enactment of the Hazardous
Materials Transportation Safety Improvement Act of 2012.

3. Goal, Scope, and Intent of the Pilot Program and Request for
Volunteers To Participate in the Pilot Projects

    Beginning in 2007, PHMSA initiated actions to implement paperless
hazard communications. PHMSA has conducted activities including: (1)
Building a cooperative effort between transportation entities and
regulatory agencies; (2) publishing a notice on the use of electronic
data sharing; (3) conducting stakeholder public meetings to receive
feedback on the use of electronic data sharing to communicate hazardous
material shipping information; (4) collaborating with the
Transportation Research Board on a study on the use of electronic
hazardous materials shipping papers; (5) hosting workshops for
stakeholders to communicate outreach findings of paperless hazardous
communications; and (6) publishing e-HM information papers, which
highlight the collective hazardous material transportation community's
priorities, gaps, and concerns for implementing paperless hazard
communications.
    PHMSA strongly believes, through its prior efforts and activities,
paperless hazard communication is possible and that this pilot program
will demonstrate the capabilities of e-systems. PHMSA has developed a
strategy for conducting the pilot projects that will enable PHMSA to
evaluate paperless hazard communication systems capabilities from a
real-world perspective.
    The goal of the paperless hazard communications pilot program is to
determine if e-systems are a feasible and effective means of providing
hazard communication. In addition, if they are feasible and effective,
PHMSA will use the information it gathers to assess the level of safety
and security, as well as the associated benefits and costs, of e-
systems as compared to the current hazardous materials shipping paper
requirements. It is PHMSA's intent that any pilot project (test)
conducted under the authority granted by MAP-21 will study the
performance, safety and security impacts, and the associated benefits
and costs of using e-systems for hazardous materials shipments, without
disrupting the normal flow of commerce. During the pilot projects,
emergency response providers and law enforcement officials will
continue to perform their duties and respective roles according to
existing emergency and inspection requirements, procedures, and
policies. The emergency responders and law enforcement officials may
continue to rely on the written shipping paper, even if companies are
operating under a pilot project.
    MAP-21 indicates that PHMSA must consider both the feasibility and
the effectiveness of paperless hazard communications. Under this pilot
program, PHMSA will be collaborating with regulated entities, law
enforcement personnel, emergency response providers, and modal
administrations to evaluate the feasibility and effectiveness of
allowing e-HM communication for hazardous materials shipments. The
pilot projects will focus on the use of e-systems:
     While shipping hazardous materials from point of origin to
final destination using different transportation conveyances (i.e.,
trucks, railcars, maritime vessels, and airplanes), and
     During inspections and emergency response simulations.
    PHMSA is seeking shippers, carriers, law enforcement personnel, and
emergency responders that may be interested in volunteering to
participate in the pilot projects. In response to a web posted
announcement entitled, ``Defining the HM ACCESS Pilot Test,'' 64
entities expressed interest in participating. Some of these entities
may satisfy the pilot project and MAP-21 qualification criteria and
possess the capability and capacity to aid in testing a variety of
scenarios. PHMSA strongly encourages the 64 entities that previously
expressed interest in participating in the pilot projects to respond to
this notice and provide the information identified within this notice.
To ensure that we have the broadest range of participation in the pilot
projects, PHMSA encourages other interested entities who have not
previously expressed an interest in participating to volunteer. PHMSA
will evaluate all volunteers (the previous 64 and those who respond to
this notice) according to the criteria and qualifications identified in
the following section and will select participants that satisfy the
pilot test qualification requirements, meet the criteria specified in
MAP-21, and are best able to aid in testing a variety of scenarios.
Shippers, carriers, law enforcement, and emergency responders
interested in participating in the pilot projects should provide
statements of interest to the addresses identified in this notice. The
statement of interest should include information describing the
organization, point(s) of contact (name, title, address, phone, and
email), self-identification of stakeholder type (shipper, carrier, law
enforcement, or emergency responder), location, and capabilities. It
should be noted, however, that responding to this notice does not
guarantee selection for participation in the pilot projects.

4. Criteria Used for Selecting Pilot Project Participants

    PHMSA intends that any pilot conducted under the authority granted
by MAP-21 will study the performance, safety and security impacts, and
associated benefits and costs of using e-systems for hazardous
materials shipments, without disrupting the normal flow of commerce.
Further, hardcopy shipping documents will still be required to
accompany each shipment during the pilot projects, in accordance with
the HMR.
    PHMSA will conduct pilot tests in three, and potentially four,
regions of the U.S.: The Northeast, Southeast, Northwest, and
Southwest, with at least one pilot test conducted in a rural area
within one or more of the regions, as prescribed by MAP-21. PHMSA will
focus the pilot tests in geographical regions possessing high
concentrations of hazardous materials registrants and presenting
historically high numbers of hazardous material incidents resulting in
deaths and injuries.

Law Enforcement and Emergency Response Volunteers

    Desired law enforcement and emergency responder pilot test
participants are those that operate within the regions of the pilot
tests and are willing to assist in the collection of information during
the tests, as described later in this document.

Shipper and Carrier Volunteers

    Desired shipper and carrier pilot test participants are those who
offer hazardous materials for transportation

and/or transport hazardous materials by a variety of modes and interact
with other intermodal carriers for hazardous materials transfers. It is
not PHMSA's intention to test vendors of electronic communication
technologies or products. To volunteer and be selected as a volunteer,
interested shipper and carrier participants will need to ship and/or
transport hazardous materials within areas of high concentrations of
hazardous materials registrants and hazardous materials incidents. In
addition to the regions and modal criteria, potential participants
must, at a minimum, satisfy the following requirements:
     Possess e-system(s) capable of managing and communicating
the hazardous materials shipping paper information at their own
expense,
     Possess their own equipment and personnel and/or
contractor resources necessary to transport hazardous materials
shipments,
     Be willing to allow, and participate in, inspections and
emergency response simulations during the pilot tests,
     Be willing to provide feedback on experiences regarding e-
HM communication during the pilot tests, including providing actual e-
HM communications data from the pilot tests,
     Be willing to provide information on the basic function
and capabilities of their e-system(s),
     Be willing to provide information on administrative,
business, training, equipment, and operational-related benefits and
costs associated with implementing e-system(s),
     Transport hazardous materials within the targeted test
regions of the U.S., and
     Be in good standing with all levels of government and
demonstrate compliance with all applicable regulations governing the
safe and secure transportation of hazardous materials.
    As part of PHMSA's participant evaluation and selection process,
each shipper and carrier submitting a statement of interest will need
to answer a list of on-line participant questions to verify its
qualifications and capabilities. These questions will help PHMSA select
those shipper and carrier participants that are best positioned to aid
in testing a variety of test scenarios and criteria as specified in
MAP-21. PHMSA anticipates the burden on shipper and carrier volunteers
will be low and will involve the use of on-line questions (no more than
35 questions) with answers to most questions designed to be ``yes,''
``no,'' or multiple choice.

Shipper and Carrier Participant Questions

    PHMSA will publish a 30-day Notice in response to comments received
to this 60-day Notice; the 30-day Notice will provide the shipper and
carrier questions for those shippers and carriers who express an
interest in volunteering in the pilot tests. PHMSA will use these
questions to collect the following types of information from each
shipper and carrier volunteer:
     Organization's name and general information.
     Hazardous material transport role (shipper, carrier, or
both).
     Geographic area of business.
     Understanding of and ability to satisfy pilot test
requirements and data needs.
     Technology of e-system(s).
     Capability of e-system(s) (scalability, accessibility,
etc.).
     Equipment and process for transmitting data.
     Format of electronic data exchange.
     Class(es) of HM being shipped.
     Type of shipments(s) (less than truck load, bulk, etc.).
     Shipment route information (origin, destination, etc.).
     Mode(s) of transport associated with shipment(s).
    PHMSA does not anticipate that completing the participant questions
will impose a significant burden on shipper and carrier respondents.
PHMSA estimates no more than 80 regulated entities (including those
that have already replied to the web announcement and the additional
volunteers that may reply to this Notice) will be asked to answer a
list of shipper and carrier participant questions. PHMSA estimates it
will take each respondent approximately 30 minutes to answer the list
of participant questions. The resulting estimated total burden is 40
hours (80 respondents x 0.5 hour per respondent = 40 hours) for the
shipper and carrier participant question data collection.

5. Request for Information (Following Selection of Pilot Test
Participants)

    PHMSA is seeking to collect: (1) Information and data as part of
the pilot tests to support evaluation; and (2) data and information
outside of the pilot tests for analyzing potential impacts (safety,
security, benefits, and costs) of using e-systems.
    PHMSA understands that this information collection effort may
impose a burden on respondents. The information obtained will:
     Assist the agency in improving safety, hazard
communication products, and/or hazard communication materials, and in
potentially reducing current burden hours for completing shipping
papers;
     Be provided strictly on a voluntary basis; and
     Be collected primarily utilizing on-line questions with
answers to most questions designed to be ``yes,'' ``no,'' or multiple
choice.
    Volunteer modal inspectors and emergency responders will be
responsible for conducting inspection and emergency response
simulations and the majority of the data collection during the pilot
tests. This approach limits the information burden on regulated
entities, while minimizing information bias. Modal inspectors
(typically law enforcement) will test the feasibility and effectiveness
of e-systems by performing simulated modal inspections of regulated
entities (shippers and carriers) participating in the pilot tests
utilizing e-HM shipping papers. The inspectors will conduct each
simulation following their established inspection protocols using their
own existing equipment and resources. The only difference during the
simulations will be that the shipping paper information will be
communicated electronically. Following each inspection simulation, the
participating inspector will answer a list of on-line questions related
to the simulation and submit to PHMSA a copy of the e-HM shipping paper
received. Emergency responders will follow a similar process to test
the feasibility and effectiveness of e-systems during a simulated
incident response involving HM shipments using electronic shipping
papers. PHMSA will use the answers to the on-line questions and the e-
HM shipping papers provided by the inspectors and emergency responders
to evaluate the feasibility and effectiveness of the e-system involved.
    PHMSA plans to administer the questions on-line q, with a maximum
of 50 questions, and with answers to most questions designed to be
``yes,'' ``no,'' or multiple choice. The following sections summarize
the types of information that will be requested as part of the pilot
program.

Shipper and Carrier Information

    Shippers and carriers will not be required to answer the list of
on-line inspection and emergency response simulation questions
described in the next section as part the pilot project. However, PHMSA
does anticipate that the information provided by inspectors and
emergency responders in conducting the simulations may

necessitate follow-up discussions with the shippers and/or carriers
involved. Limited information may need to be collected from shippers
and carriers as a result of these follow-up discussions, potentially
including copies of e-HM shipping papers.
    PHMSA does not anticipate that follow-up discussions with shippers
and carriers and the associated information collection will impose a
significant burden on respondents. PHMSA anticipates a total of 30
shippers and carriers (assuming 10 respondents for each of three test
regions) and a burden of no more than four hours per shipper and
carrier for the entirety of the test period. The resulting estimated
total burden is 120 hours (30 respondents x 4.0 hour per respondent =
120 hours) for follow-up discussions and associated information
collection with shippers and carriers.

Inspection Simulation Questions

    For each hazardous materials inspection simulation, inspectors (law
enforcement and/or Federal and state modal inspectors) involved in the
simulation will answer a list of online inspection simulation questions
and provide an electronic copy of the hazardous materials shipping
paper they received during the simulation. Analysis of the e-HM
shipping papers for required hazard communication information will
enable PHMSA to verify the integrity of the data transfer. PHMSA will
provide the list of inspection simulation questions with the 30-day
Notice PHMSA will publish in response to comments received to this 60-
day Notice. The inspection simulation questions will be designed to
collect the following types of information:
     Organization's name and general information.
     Mode of transport inspected during simulation.
     Information about the organization's e-system(s).
     Activity triggering data transfer.
     Process and equipment used for data receipt and
transmission.
     Hazardous materials data received from carrier or shipper.
     Hazardous materials data transmitted (to home office,
other entity, etc.).
     Electronic data exchange format used.
     Actual time for data receipt (and transmission, if
applicable).
     Human involvement.
     ``Readability'' of data.
     Electronic connectivity.
     Impacts to stakeholders (regulated entities, law
enforcement, emergency responders, and the public).
     Impediments to using e-systems.
     Actual and potential benefits realized by stakeholders
(regulated entities, law enforcement, emergency responders, and the
public).
    PHMSA does not anticipate that answering the list of inspection
simulation questions will impose a significant burden on inspectors.
PHMSA anticipates no more than 240 inspection simulations will be
conducted (encompassing all pilot tests, all participants, and each
test region throughout the entirety of the test period), resulting in a
total of 240 respondents. PHMSA estimates it will take each inspector
approximately 60 minutes to answer the list of inspection simulation
questions and to submit a copy of the e-HM shipping paper to PHMSA. The
resulting estimated total burden is 240 hours (240 respondents x 1.0
hour per respondent = 240 hours) for the inspection simulation question
data collection.

Emergency Response Simulation Questions

    For each hazardous materials emergency response simulation,
emergency response providers and/or investigators involved in the
simulation will answer a list of online emergency response simulation
questions and provide an electronic copy of the hazardous materials
shipping paper as received during the simulation. Analysis of the e-HM
shipping papers for required hazard communication information will
enable PHMSA to verify the integrity of the data transfer. PHMSA will
provide the list of emergency response simulation questions with the
30-day Notice PHMSA will publish in response to comments received to
this 60-day Notice. The emergency response simulation questions will be
designed to collect the following types of information:
     Organization's name and general information.
     Mode of transport involved in the emergency response
simulation.
     Information about the emergency response organization's e-
system(s).
     Activity triggering data transfer.
     Process and equipment used for data receipt and
transmission.
     Hazardous materials data received from carrier or shipper.
     Hazardous materials data transmitted (to first responders,
etc.).
     Electronic data exchange format used.
     Actual time for data receipt (and transmission, if
applicable).
     Human involvement.
     ``Readability'' of data.
     Electronic connectivity.
     Impacts to stakeholders (regulated entities, law
enforcement, emergency responders, and the public).
     Impediments to using e-systems.
     Actual and potential benefits realized by stakeholders
(regulated entities, law enforcement, emergency responders, and the
public).
    PHMSA does not anticipate that answering the list of emergency
response simulation questions will impose a significant burden on
investigators and emergency responders. PHMSA anticipates no more than
12 emergency response simulations will be conducted, resulting in a
total of no more than 24 respondents (12 emergency response providers
and 12 investigators). PHMSA estimates it will take each respondent
approximately 60 minutes to answer the list of emergency response
simulation questions and to submit a copy of the electronic shipping
paper to PHMSA. The resulting estimated total burden is 24 hours (24
respondents x 1.0 hour per respondent = 24 hours) for the emergency
response simulation question data collection.

Impact Analysis Questions

    PHMSA is seeking to collect information and data from shippers,
carriers, law enforcement, and emergency responders to aid in the
assessment of potential impacts associated with using e-systems for
each mode of transportation, as required under MAP-21. Potential
impacts to be assessed include benefits, costs, safety, and security
impacts on the public, emergency responders, and law enforcement.
Similar to the pilot test simulation questions, PHMSA is planning to
develop a list of impact analysis questions to be administered on-line,
with a maximum of 75 questions, with answers to most questions designed
to be ``yes,'' ``no,'' or multiple choice. PHMSA anticipates the list
of impact analysis questions will not be limited to pilot test
participants but will be available to all hazardous materials
stakeholders to voluntarily answer. PHMSA will post the list of online
impact analysis questions to the HM-ACCESS public Web site and
distribute to industry via the HM-ACCESS email serve list. PHMSA will
provide the list of impact analysis questions with the 30-day Notice
PHMSA will publish in response to comments received to this 60-day
Notice. The following list summarizes the types of information PHMSA
plans to request as part of the impact analysis questions:
     Costs for required technology, including up-front capital
costs for

equipment and ongoing costs for operations and maintenance (including
telecommunications, any third-party service providers, maintenance of
equipment, etc.).
     Costs for training personnel.
     Costs for conducting outreach/education to customers on
the new approach.
     Changes in administrative costs and time requirements for:
     Generating e-HM shipping papers (vs. current hardcopy
approach), including data entry.
     Filing, storing, and retrieving hardcopy shipping papers.
     Coordinating between shipper and carrier and between
different carriers/modes in the supply chain (e.g., any changes in the
paperwork that is created when a shipment goes from rail to truck).
     Impacts on operations (e.g. transport times, vehicle
utilization, employee productivity, etc.).
     Any associated changes to other business processes (e.g.,
switching from paper to electronic invoices) and their costs/impacts.
     Changes in error rates for shipping papers.
     Information on the administrative, business, training,
equipment, and operational-related costs and benefits associated with
implementing e-system(s).
     Insurance and risk management issues/cost impacts.
     Any associated information that must be included to
communicate hazard information.
     Limitation of e-system capability to communicate
information and identifying the redundancy if failure exists.
     Information concerning the release of commercially-
sensitive information.
     Unintentional release of information from unauthorized
access.
    PHMSA does not anticipate that answering the list of impact
analysis questions will impose a significant burden on respondents
(shippers, carriers, law enforcement, and emergency responders). PHMSA
estimates no more than 200 respondents will complete the impact
analysis questions, and that it will take each respondent approximately
90 minutes to answer the questions. The resulting estimated total
burden is 300 hours (200 respondents x 1.5 hours per respondent = 300
hours) for the impact analysis question data collection.
    The information previously described is intended to ensure that
evaluation and feasibility reports focus on results and include
quantitative data on the recommendation and possible implementation of
e-systems into the Federal hazardous materials transportation safety
program. This information and data will enable PHMSA to more accurately
assess the safety and security impacts of using e-systems and to
analyze the associated benefits and cost of using the e-systems.

6. Total Information Collection Burden

    The total information collection burden for the Paperless Hazard
Communication Pilot Program is as follows:

Participant Questions:........  80 respondents x 0.5   =   40 hours
                                 hr..
Shipper and Carrier             30 respondents x 4.0   =   120 hours
 Information:.                   hr..
Inspection Questions:.........  240 respondents x      =   240 hours
                                 1.0 hr..
Emergency Response Questions:.  24 respondents x 1.0   =   24 hours
                                 hr..
Impact Analysis Questions:....  200 respondents x      =   300 hours
                                 1.5 hr..
Total Information Collection    574 respondents.....  ...  724 hours
 Burden:.

    Title: Paperless Hazard Communications Pilot Program.
    Type of Request: Request for Comments to Information Collection
Burden for Paperless Hazard Communications Pilot Program.
    Abstract: PHMSA is submitting an information collection to OMB in
support of a paperless hazard communications pilot program under Title
III, Section 33005 of the Hazardous Materials Transportation Safety
Improvement Act of 2012 (MAP-21).
    Affected Public: Carriers, Shippers, Emergency Response Providers,
and Law Enforcement Personnel
    Estimated Number of Respondents: 574.
    Estimated Number of Responses: 574.
    Estimated Annual Burden Hours: 724.
    Estimated Annual Burden Costs: $24,300.
    Frequency of collection: Single occasion.

    Issued in Washington, DC, on July 16, 2013.
Magdy El-Sibaie,
Associate Administrator for Hazardous Materials Safety.
[FR Doc. 2013-17363 Filed 7-18-13; 8:45 am]
BILLING CODE 4910-60-P


[Federal Register: August 15, 2007 (Volume 72, Number 157)] [CORRECTIONS]                [Page 45866] [DOCID:fr15au07-150]

SECURITIES AND EXCHANGE COMMISSION

  Proposed Collection; Comment Request

    Upon Written Request, Copies Available from: Securities and  Exchange Commission, Office of Investor Education and Assistance,  Washington, DC 20549-0213.     Extension: Form N-8F, SEC File No. 270-136, OMB Control No. 3235- 0157.

Correction

    In notice document E7-14563 beginning on page 41531 in the issue of  July 30, 2007, make the following correction:     On page 41531, in the third column, the document heading and the  next three lines are corrected to read as set forth above.

[FR Doc. Z7-14563 Filed 8-14-07; 8:45 am]

BILLING CODE 1505-01-D


[Federal Register Volume 74, Number 80 (Tuesday, April 28, 2009)]
[Notices]
[Pages 19251-19253]
[FR Doc No: E9-9561]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59807; File No. SR-NASDAQ-2009-036]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Order Routing

April 21, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 17, 2009, The NASDAQ Stock Market LLC (``NASDAQ'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by NASDAQ. NASDAQ has designated the proposed rule change as
constituting a non-controversial rule change under Rule 19b-4(f)(6)
under the Act,\3\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    NASDAQ proposes to modify Rule 4758, Order Routing, to provide
market participants with the option of entering orders that do not
check the Nasdaq Market Center book prior to routing. NASDAQ proposes
to implement the change with respect to Rule 4758(a)(1)(A)(i) on or
about May 1, 2009, and will announce the exact date of implementation
in a NASDAQ Equity Trader Alert. NASDAQ proposes to implement the
change with respect to Rules 4758(a)(1)(A)(ii) and (iii) on a date in
May or June 2009, to be announced in a NASDAQ Equity Trader Alert.
    The text of the proposed rule change is below. Proposed new
language is italicized and proposed deletions are in brackets.
4758. Order Routing
    (a) Order Routing Process.
    (1) The Order Routing Process shall be available to Participants
from 7:00 a.m. until 8:00 p.m. Eastern Time, and shall route orders as
described below: All routing of orders shall comply with Rule 611 of
Regulation NMS under the Exchange Act.
    (A) The System provides three routing options. Of these three, DOT
is only available for orders ultimately sought to be directed to either
the New York Stock Exchange (``NYSE'') or [the American Stock Exchange
(``AMEX'')] NYSE Amex. The System will consider the quotations only of
accessible markets. The three System routing options are:
    (i) DOT (``DOT'')--under this option, after checking the System for
available shares if so instructed by the entering firm, orders are sent
to other available market centers for potential execution, per entering
firm's instructions, before being sent to the destination exchange, so
long as the price at such market centers would not violate the Order
Protection Rule. Any un-executed portion will thereafter be sent to the
NYSE or [AMEX] NYSE Amex, as appropriate, at the order's original limit
order price. This option may only be used for orders with time-in-force
parameters of either SDAY, SIOC, MDAY, MIOC, GTMC or market-on-open/
close. Notwithstanding the foregoing, orders designated for
participation in the NYSE or [AMEX] NYSE Amex opening or closing
processes will not check the System for available shares prior to
routing.
    (ii) Reactive Electronic Only (``STGY'')--under this option, after
checking the System for available shares if so instructed by the
entering firm, orders are sent to other available market centers for
potential execution, per entering firm's instructions. When checking
the book, the System will seek to execute at the price it would send
the order to a destination market center. If shares remain un-executed
after routing, they are posted on the book. Once on the book, should
the order subsequently be locked or crossed by another accessible
market center, the System shall route the order to the locking or
crossing market center. With the exception of the Minimum Quantity
order type, all time-in-force parameters and order types may be used in
conjunction with this routing option.
    (iii) Electronic Only Scan (``SCAN'')--under this option, after
checking the System for available shares if so instructed by the
entering firm, orders are sent to other available market centers for
potential execution, per entering firm's instructions, in compliance
with Rule 611 under Regulation NMS. When checking the book, the System
will seek to execute at the price it would send the order to a
destination market center. If shares remain un-executed after routing,
they are posted on the book. Once on the book, should the order
subsequently be locked or crossed by another market center, the System
will not route the order to the locking or crossing market center. With
the exception of the Minimum Quantity order type, all time-in-force
parameters and order types may be used in conjunction with this routing
option.
    Orders that do not check the System for available shares prior to
routing may not be sent to a facility of an exchange that is an
affiliate of Nasdaq, except for orders that are sent to the NASDAQ OMX
BX Equities Market.
    (B) No change.
    (b) No change.
* * * * *

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

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

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

1. Purpose
    In SR-NASDAQ-2008-079,\4\ NASDAQ amended Rule 4758 to provide that
if an order is routed to the New York Stock Exchange (``NYSE'') or NYSE
Amex and is designated as eligible for posting to the NYSE or NYSE Amex
book, the order must check the NASDAQ book prior to routing. Routing of
orders eligible to post at NYSE or NYSE Amex is conducted pursuant to
NASDAQ's DOT routing strategy, as described in Rule

4758(a)(1)(A)(i). NASDAQ is now proposing to eliminate the requirement,
as established by SR-NASDAQ-2008-079, that such orders check the NASDAQ
book. The change is a response to requests from market participants for
greater flexibility in the instructions that they may provide with
respect to routing. Under amended Rule 4758(a)(1)(A)(i), a market
participant may opt either to access the NASDAQ book prior to routing
or bypass it. Similarly, the market participant may specify that the
order should access liquidity available on one or more of the trading
venues to which NASDAQ routes, or it may opt to have the order go
directly to its destination exchange. In all cases, the order will
access liquidity available on NASDAQ or other trading venues only if
the price is consistent with the Order Protection Rule of Regulation
NMS. NASDAQ plans to implement the change to Rule 4758(a)(1)(A)(i) on
or about May 1, 2009, and will announce the exact date of
implementation in a NASDAQ Equity Trader Alert.
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 58721 (October 2, 2008),
73 FR 59696 (October 9, 2008) (SR-NASDAQ-2008-079).
---------------------------------------------------------------------------

    The DOT routing strategy is the only strategy under which orders
are eligible for posting to the books of away markets. NASDAQ's STGY
and SCAN routing strategies, as described in Rule 4758(a)(1)(A)(ii) and
(iii), currently contemplate that orders will check the NASDAQ book,
route to away markets on an immediate-or-cancel basis, and return to
the NASDAQ book in accordance with the time-in-force instructions of
the order. Under STGY, the order will again route if the order's price
is subsequently locked or crossed by another market center; under SCAN,
the order remains on the NASDAQ book regardless of the price
subsequently available at away markets. Orders are routed to away
markets only if an execution at the price available at such markets
would not violate the Order Protection Rule of Regulation NMS. At a
later date in May or June 2009, to be announced in a NASDAQ Equity
Trader Alert, NASDAQ will modify these routing strategies to provide
market participants with the option of having their orders not check
the NASDAQ book before initial routing to away markets. In all other
respects, the routing strategies will remain unchanged.
    NASDAQ is also amending Rule 4758 to provide that if an order does
not check the NASDAQ book for available shares prior to routing, it may
not be sent to a facility of an exchange that is an affiliate of
NASDAQ, with the exception of orders that are sent to the NASDAQ OMX BX
Equities Market. In SR-NASDAQ-2008-061,\5\ which was filed in
anticipation of the acquisition of the Boston Stock Exchange (now
NASDAQ OMX BX) and the Philadelphia Stock Exchange (now NASDAQ OMX
PHLX), NASDAQ stipulated that it would not route orders to affiliated
exchanges unless the orders checked the NASDAQ book prior to routing.
Subsequently, in SR-NASDAQ-2008-098,\6\ NASDAQ amended this restriction
to provide that orders that do not check the NASDAQ book may be routed
to the NASDAQ OMX BX Equities Market on a twelve-month pilot basis. As
detailed in that filing and in a related filing by NASDAQ OMX BX,\7\
the lifting of the restriction was premised upon (i) NASDAQ
establishing and maintaining procedures and internal controls
reasonably designed to adequately restrict the flow of confidential and
proprietary information between NASDAQ and its facilities (including
its routing broker) and any other entity, and (ii) NASDAQ OMX BX\\
adopting rules and undertakings to manage the flow of confidential and
proprietary information between NASDAQ's routing broker and NASDAQ OMX
BX and to minimize potential conflicts of interest.
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    \5\ Securities Exchange Act Release No. 58135 (July 10, 2008),
73 FR 40898 (July 16, 2008) (SR-NASDAQ-2008-061).
    \6\ Securities Exchange Act Release No. 59153 (December 23,
2008), 73 FR 80485 (December 31, 2008) (SR-NASDAQ-2008-098).
    \7\ Securities Exchange Act Release No. 59154 (December 23,
2008), 73 FR 80468 (December 31, 2008) (SR-BSE-2008-48).
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    NASDAQ's other affiliated exchange, NASDAQ OMX PHLX, ceased
operation of its system for trading cash equities during the fourth
quarter of 2008. As a result, NASDAQ does not currently route any cash
equities orders to NASDAQ OMX PHLX. If, however, NASDAQ OMX PHLX were
to resume trading of cash equities, the proposed rule language would
restrict routing of orders to NASDAQ OMX PHLX that did not check the
NASDAQ book prior to routing until such time as NASDAQ and NASDAQ OMX
PHLX adopted rules and procedures comparable to those adopted by NASDAQ
and NASDAQ OMX BX.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general, and with Section
6(b)(5) of the Act,\9\ in particular, in that the proposal is 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. The change will provide
functionality that allows members to route to away markets without
first checking the NASDAQ book, in response to members' request for
this added flexibility. This functionality was previously in effect for
NASDAQ's DOT routing strategy. The change places appropriate
restrictions on routing of orders to NASDAQ's affiliated exchanges.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

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

    Written comments on the proposed rule change were neither solicited
nor received.

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

    Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, the proposed rule change has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and
Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\12\
However, Rule 19b-

4(f)(6)(iii) \13\ permits the Commission to designate a shorter time if
such action is consistent with the protection of investors and the
public interest. NASDAQ has requested that the Commission waive the 30-
day operative delay. The Commission notes that NASDAQ's proposal is
substantially similar to the rule of another national securities
exchange and does not raise any new substantive issues.\14\ NASDAQ
states that waiving the operative delay will allow NASDAQ to compete
more effectively by putting its new functionality in effect without
undue delay.\15\ For these reasons, the Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest, and designates the proposed rule
change to be operative upon filing with the Commission.\16\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of filing
of the proposed rule change, or such shorter time as designated by
the Commission. NASDAQ has satisfied this requirement.
    \13\ Id.
    \14\ See BATS Exchange Rule 11.9(c)(12).
    \15\ See SR-NASDAQ-2009-036, Item 7.
    \16\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2009-036 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2009-036. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549 on official business days between the hours
of 10 a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of NASDAQ. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2009-036 and should
be submitted on or before May 19, 2009.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9561 Filed 4-27-09; 8:45 am]
BILLING CODE 8010-01-P