[Federal Register Volume 77, Number 65 (Wednesday, April 4, 2012)]
[Notices]
[Page 20380]
[FR Doc No: 2012-8030]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER12-1329-000]

Wildcat Wind Farm I, LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
Wildcat Wind Farm I, LLC's application for market-based rate authority,
with an accompanying rate tariff, noting that such application includes
a request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is April 17, 2012.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also 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 email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

    Dated: March 28, 2012.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-8030 Filed 4-3-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 83, Number 148 (Wednesday, August 1, 2018)]
[Notices]
[Pages 37570-37579]
[FR Doc No: 2018-16417]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83714; File No. SR-OCC-2018-803]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of No Objection to Advance Notice, as Modified by Amendments No.
1 and 2, Concerning Proposed Changes to the Options Clearing
Corporation's Stress Testing and Clearing Fund Methodology

July 26, 2018.

I. Introduction
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    \8\ 17 CFR 200.30-3(a)(12).
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    On May 30, 2018, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') advance
notice SR-OCC-2018-803 (``Advance Notice'') pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled Payment, Clearing and Settlement
Supervision Act of 2010 (``Act'') \1\ and Rule 19b-4(n)(1)(i) \2\ under
the Securities Exchange Act of 1934 (``Exchange Act'') \3\ to propose
changes to OCC's By-Laws and Rules, the formalization of a
substantially new Clearing Fund Methodology Policy (``Policy''), and
the adoption of a document describing OCC's new Clearing Fund and
stress testing methodology (``Methodology Description'').\4\ The
proposed changes are primarily designed to enhance OCC's overall
resiliency, particularly with respect to the level of OCC's pre-funded
financial resources. Specifically, the proposed changes would:
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
    \4\ See Notice of Filing infra note 6, at 83 FR 31594.
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    (1) Reorganize, restate, and consolidate the provisions of OCC's
By-Laws and Rules relating to the Clearing Fund into a newly revised
Chapter X of OCC's Rules;
    (2) modify the coverage level of OCC's Clearing Fund sizing
requirement to protect OCC against losses stemming from the default of
the two Clearing Member Groups that would potentially cause the largest
aggregate credit exposure for OCC in extreme but plausible market
conditions (i.e., adopt a ``Cover 2 Standard'' for sizing the Clearing
Fund);
    (3) adopt a new risk tolerance for OCC to cover a 1-in-50 year
hypothetical market event at a 99.5% confidence level over a two-year
look-back period;
    (4) adopt a new Clearing Fund and stress testing methodology, which
would be underpinned by a new scenario-based one-factor risk model
stress testing approach, as detailed in the newly proposed Policy and
Methodology Description;
    (5) document governance, monitoring, and review processes related
to Clearing Fund and stress testing;
    (6) provide for certain anti-procyclical limitations on the
reduction in Clearing Fund size from month to month;
    (7) increase the minimum Clearing Fund contribution requirement for
Clearing Members to $500,000;
    (8) modify OCC's allocation weighting methodology for Clearing Fund
contributions;
    (9) reduce from five to two business days the timeframe within
which Clearing Members are required to fund Clearing Fund deficits due
to monthly or intra-month resizing or due to Rule amendments;
    (10) provide additional clarity in OCC's Rules regarding certain
anti-procyclicality measures in OCC's margin model; and
    (11) make a number of other non-substantive clarifying, conforming,
and organizational changes to OCC's By-Laws, Rules, Collateral Risk
Management Policy, Default Management Policy, and filed procedures,
including retiring OCC's existing Clearing Fund Intra-Month Re-sizing
Procedure, Financial Resources Monitoring and Call Procedure (``FRMC
Procedure''), and Monthly Clearing Fund Sizing Procedure, as these
procedures would no longer be relevant to OCC's proposed Clearing Fund
and stress testing methodology and would be replaced by the proposed
Rules, Policy, and Methodology Description described herein.
    On June 7, 2018, OCC filed Amendment No. 1 to the Advance
Notice.\5\ The Advance Notice, as amended, was published for public
comment in the Federal Register on July 6, 2018.\6\ On July 11, 2018,
OCC filed Amendment No. 2 to the Advance Notice.\7\ The Commission
received five comment letters in support of the proposal contained in
the Advance Notice.\8\ This publication serves as notice of no
objection to the Advance Notice.
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    \5\ In Amendment No. 1, OCC corrected formatting errors in
Exhibits 5A and 5B without changing the substance of the proposed
rule change.
    \6\ Securities Exchange Act Release No. 83561 (Jun. 29, 2018),
83 FR 31594 (Jul. 6, 2018) (``Notice of Filing''). On May 30, 2018,
OCC also filed a related proposed rule change (SR-OCC-2018-008) with
the Commission pursuant to Section 19(b)(1) of the Exchange Act and
Rule 19b-4 thereunder, seeking approval of changes to its rules
necessary to implement the Advance Notice (``Proposed Rule
Change''). 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-4, respectively.
The Proposed Rule Change was published in the Federal Register on
June 15, 2018. Securities Exchange Act Release No. 83406 (Jun. 11,
2018), 83 FR 28018 (Jun. 15, 2018).
    \7\ In Amendment No. 2, OCC made three non-substantive changes
to the proposal. Specifically, OCC (1) updated a cross-reference in
Article VI, Section 27 of the OCC By-Laws to reflect the relocation
of OCC's clearing fund-related rules, (2) added an Interpretation
and Policy to proposed Rule 1001 to clarify the applicability of the
5 percent month-over-month limitation in the reduction of clearing
fund size is not intended to apply to the initial changes in to
OCC's clearing fund sizing resulting from implementation of the
proposed methodology, and (3) clarified an implementation date of
September 1, 2018 for the proposed changes in the filing.
    \8\ See letter from Andrej Bolkovic, CEO, ABN AMRO Clearing
Corporation LLC (``AACC''), dated June 26, 2018, to Brent Fields,
Secretary, Commission (AACC Letter I) ; letter from Chris Concannon,
President and COO, Cboe Global Markets (``CBOE''), dated July 6,
2018, to Brent Fields, Secretary, Commission (CBOE Letter I); letter
from Matthew R. Scott, President, Merrill Lynch Professional
Clearing Corp. (``MLPRO''), dated July 6, 2018, to Brent J. Fields,
Secretary, Commission (MLPRO Letter I); letter from Kurt Eckert,
Partner, Wolverine Execution Services (``WEX''), dated July 12,
2018, to Brent Fields, Secretary, Commission (WEX Letter I); and
letter from Mark Dehnert, Managing Director, Goldman Sachs & Co. LLC
(``GS''), dated July 17, 2018, to Brent J. Fields, Secretary,
Commission (GS Letter I), available at https://www.sec.gov/comments/sr-occ-2018-008/occ2018008.htm.
    Since the proposal contained in the Advance Notice was also
filed as a proposed rule change, all public comments received on the
proposal are considered regardless of whether the comments are
submitted on the proposed rule change or the Advance Notice.
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II. Background

    The Advance Notice concerns proposed changes to OCC's By-Laws \9\
and Rules,\10\ the formalization of the substantially new Policy, and
the adoption of OCC's new Methodology Description.\11\ According to
OCC, the changes comprising the Advance Notice are primarily designed
to enhance OCC's overall resiliency, particularly with respect to the
level of OCC's pre-funded financial resources.\12\
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    \9\ OCC's By-Laws are available at https://www.theocc.com/components/docs/legal/rules_and_bylaws/occ_bylaws.pdf.
    \10\ OCC's Rules are available at https://www.theocc.com/components/docs/legal/rules_and_bylaws/occ_rules.pdf.
    \11\ See Notice of Filing, 83 FR at 31594.
    \12\ See id.

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    As enumerated in the Notice of Filing, the specific modifications
that OCC proposes are as follows: (1) Reorganize, restate, and
consolidate the provisions of OCC's By-Laws and Rules relating to the
clearing fund into a revised Chapter X of OCC's Rules; (2) modify the
coverage level of OCC's clearing fund sizing requirement to protect OCC
against losses stemming from the default of the two clearing member
groups that would potentially cause the largest aggregate credit
exposure for OCC in extreme but plausible market conditions (i.e.,
adopt a ``Cover 2 Standard'' for sizing the clearing fund); (3) adopt a
new risk tolerance for OCC to cover a 1-in-50 year hypothetical market
event at a 99.5% confidence level over a two-year look-back period; (4)
adopt a new clearing fund and stress testing methodology, which would
be underpinned by a new scenario-based one-factor risk model stress
testing approach, as detailed in the proposed Policy and Methodology
Description; (5) document governance, monitoring, and review processes
related to the clearing fund and stress testing; (6) provide for
certain anti-procyclical limitations on the reduction in clearing fund
size from month to month; (7) increase the minimum clearing fund
contribution requirement for clearing members from $150,000 to
$500,000; (8) modify OCC's allocation weighting methodology for
clearing fund contributions; (9) reduce from five to two business days
the timeframe within which clearing members are required to fund
clearing fund deficits due to monthly or intra-month resizing; (10)
provide additional clarity in OCC's Rules regarding certain anti-
procyclicality measures in OCC's margin model; and (11) make a number
of other non-substantive clarifying, conforming, and organizational
changes to OCC's By-Laws, Rules and filed procedures, including
retiring OCC's existing Clearing Fund Intra-Month Re-sizing Procedure,
Financial Resources Monitoring and Call Procedure, and Monthly Clearing
Fund Sizing Procedure, as these procedures would be replaced by the
proposed Rules, Policy, and Methodology Description.\13\
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    \13\ See id. at 31594-95.
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    The remainder of this section will first provide an overview of
OCC's current process for sizing the clearing fund, followed by a more
detailed discussion of the specific changes to that process being
proposed in the Advance Notice, with particular focus on the following
categories: (a) Stress testing; (b) total financial resources; (c)
financial resource sufficiency; (d) allocation of clearing fund
contributions; and (e) textual clarification and consolidation.

A. OCC's Current Process for Sizing the Clearing Fund

    OCC's process for determining the size of its clearing fund was
initially approved in 2011,\14\ and enhanced in 2015,\15\ resulting in
OCC's current process. Currently, OCC resizes its clearing fund at the
beginning of each month to maintain financial resources, in excess of
margin, to cover its credit exposures to its clearing members. The
current process is effectively an extension of OCC's daily margin
process, in which OCC calculates what it refers to as the ``daily
draw'' based on observations from its margin model at specific
confidence levels each day.\16\ OCC tracks the rolling five-day average
of these daily draws and, at the beginning of each month, sets the
clearing fund size to the sum of (1) the largest five-day rolling
average observed over the last three months and (2) a $1.8 billion
buffer.\17\
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    \14\ See Securities Exchange Act Release No. 65386 (Sep. 23,
2011), 76 FR 60572 (Sep. 29, 2011) (Order Approving Clearing Fund
I).
    \15\ See Securities Exchange Act Release No. 75528 (Jul. 27,
2015), 80 FR 45690 (Jul. 31, 2015) (Order Approving Clearing Fund
II).
    \16\ See Order Approving Clearing Fund I, 76 FR at 60572-60573.
Each day, OCC estimates credit exposures under the stressed margin
model for two scenarios: the greater of the two estimates is the
daily draw. The two scenarios are of (1) the single largest credit
exposure that would arise out of the default of a single clearing
member group (``idiosyncratic default'') and (2) the credit exposure
that would arise out of the default of two-randomly selected
clearing member groups (``minor systemic default''). See Notice of
Filing, 83 FR at 31595.
    \17\ See Order Approving Clearing Fund II, 80 FR at 45691.
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    As described in detail below, OCC is proposing three primary
changes to the existing approach. First, instead of simply relying on
its margin model, OCC would rely on the proposed stress testing
framework, including both sizing and sufficiency stress tests. Second,
OCC would set the size of its clearing fund based on a Cover 2
Standard. Third, OCC would eliminate the current $1.8 billion static
buffer because it would be obsolete in light of the new sizing stress
tests and increased coverage afforded by the move to a Cover 2 Standard
that, together, would function as a dynamic buffer.

B. Stress Testing

    OCC proposes to adopt a new stress testing methodology, as detailed
in both the proposed Policy and the proposed Methodology
Description.\18\ OCC believes that its proposed methodology would
enable it to measure its credit exposure at a level sufficient to cover
potential losses under extreme but plausible market conditions.\19\ To
do so, OCC proposes to conduct daily stress tests that consider a range
of relevant stress scenarios and related price changes, including but
not limited to: (1) Relevant peak historic price volatilities; (2)
shifts in other market factors including, as appropriate, price
determinants and yield curves; and (3) the default of one or multiple
clearing members.\20\
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    \18\ See Notice of Filing, 83 FR at 31597.
    \19\ See id.
    \20\ See id. at 31598.
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    The stress scenarios used in OCC's proposed methodology would
consist of two types of scenarios: historical scenarios and
hypothetical scenarios.\21\ Historical Scenarios would replicate
historical events in current market conditions, which include the set
of currently existing securities and their prices and volatility
levels.\22\ Hypothetical scenarios, rather than replicating past
events, would simulate events in which market conditions change in ways
that may have not yet been observed.\23\ Hypothetical Scenarios,
constructed using statistical methods, would generally include price
shocks specific to various instruments, such as equity products,
volatility products, and fixed income products. Each scenario would
represent a draw from a multivariate distribution fitted to historical
data regarding the relevant instrument (e.g., returns of the S&P
500).\24\ In a hypothetical scenario, the shock to a risk driver would
be used to determine the relative shock to each associated risk factor
(i.e., related underlying security).\25\ For example, OCC would
establish the size of its clearing fund according to a scenario that is
based on statistically generated up or down price shocks for the SPX
assuming a 1-in-80 year market event.\26\
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    \21\ See id. Because not all of the underlying securities in
current portfolios existed during the events on which historical
scenarios are based, OCC has developed methodologies to approximate
the past price and volatility movements as appropriate. See id. at
31600.
    \22\ See id. at 31598.
    \23\ See id.
    \24\ See id. at 31599. Risk drivers are a selected set of
securities or market indices (e.g., the Cboe S&P 500 Index (``SPX'')
or the Cboe Volatility Index (``VIX'')) that are used to represent
the main sources or drivers for the price changes of the risk
factors. See id. at 31597, n. 26. The term risk factor refers
broadly to all of the individual underlying securities (such as
Google, IBM and Standard & Poor's Depositary Receipts (``SPDR''),
S&P 500 Exchange Traded Funds (``SPY''), etc.) listed on a market.
See id.
    \25\ See id. at 31598.
    \26\ See id. at 31599.
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    OCC's proposed stress testing framework would categorize OCC's

inventory of stress tests by each stress test's intended purpose:
Adequacy, sizing, sufficiency, and informational.\27\ Specifically, OCC
would use the (1) ``Adequacy Stress Tests'' to determine whether the
financial resources collected from all clearing members collectively
are adequate to cover OCC's risk tolerance; (2) ``Sizing Stress Tests''
to establish the monthly size of the clearing fund; (3) ``Sufficiency
Stress Tests'' to monitor whether OCC's credit exposure to the
portfolios of individual clearing member groups is at a level
sufficiently large enough to necessitate OCC calling for additional
resources so that OCC continues to maintain sufficient financial
resources to guard against potential losses under a wide range of
stress scenarios, including extreme but plausible market conditions;
and (4) ``Informational Stress Tests'' to monitor and assess the size
of OCC's pre-funded financial resources against a wide range of stress
scenarios that may include extreme but implausible and reverse stress
testing scenarios.\28\
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    \27\ See id. at 31600.
    \28\ See id. at 31600-02.
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C. Total Financial Resources

    As noted above, OCC proposes to (i) to adopt a new clearing fund
methodology, which would be underpinned by a new scenario-based one-
factor risk model stress testing approach,\29\ modify the coverage
level of OCC's clearing fund sizing requirement to a Cover 2 Standard;
(iii) provide for certain anti-procyclical limitations on the reduction
in clearing fund size from month to month; and (iv) reduce from five
business days to two business days the timeframe within which clearing
members are required to satisfy clearing fund deficits due to monthly
or intra-month resizing.\30\
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    \29\ OCC detailed the new methodology in the proposed Policy and
Methodology Description.
    \30\ See Notice of Filing, 83 FR at 31596.
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1. Proposal To Change the Monthly Clearing Fund Size Calculation
    As discussed above, OCC proposes to replace the methodology by
which it determines the monthly clearing fund size with an approach
based on hypothetical stress scenarios that assume SPX shocks (up and
down) associated with a 1-in-80-year market event.\31\ Under the
proposal, OCC would continue determining the size of its clearing fund
each month based on the peak-five daily rolling average of estimated
stress exposures; however, such exposures would be based on the output
from OCC's stress testing framework going forward as opposed to the
margin-derived approach described above.\32\
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    \31\ See id. at 31599.
    \32\ See id. at 31600. Specifically, OCC would identify its
exposures under a 1-in-80-year hypothetical event. See id.
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    As its benchmark for identifying extreme but plausible market
conditions, OCC proposes to adopt a credit risk tolerance defined by
OCC's largest potential aggregate credit exposure to two clearing
member groups under a 1-in-50-year hypothetical market event as opposed
to the greater of exposures arising under an idiosyncratic default or a
minor systemic default.\33\ OCC further proposes to base its daily draw
on the aggregate credit exposures estimated under a 1-in-80-year
hypothetical market event.\34\ Additionally, OCC proposes to size the
clearing fund to a Cover 2 Standard.\35\
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    \33\ See id. at 31597. As discussed above, OCC's hypothetical
stress scenarios represent draws from a fitted distribution of 2-day
log returns for a given risk driver. OCC noted in its proposal that
a 1-in-50-year hypothetical market event corresponds to a 99.9921
percent confidence interval under OCC's chosen distribution of 2-day
logarithmic S&P 500 index returns. See id., n. 25.
    \34\ See id. at 31600.
    \35\ See id. at 31597.
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    OCC believes that sizing the clearing fund to cover a 1-in-80-year
event would provide sufficient coverage in excess of the exposures
estimated under a 1-in-50-year event to justify no longer collecting
the $1.8 prudential margin of safety.\36\
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    \36\ See id., n. 23.
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2. Proposal To Limit Reductions in Clearing Fund Size From Month to
Month
    Currently, OCC does not constrain month-over-month changes in the
size of the clearing fund. OCC proposes to adopt two limitations on
month-over-month decreases in the size of the clearing fund. First, OCC
proposes to prohibit a clearing fund decrease of more than 5 percent
month-over-month.\37\ Second, OCC proposes to limit the clearing fund
decreases based on its daily monitoring of OCC's financial resources.
When determining the size of the clearing fund at the beginning of a
given month, OCC would not allow that size to be less than 90 percent
of the peak credit exposures estimated under the stress tests used for
daily monitoring during the last five business days of the preceding
month.\38\ These limitations are designed to reduce the potential for
cyclical movements in the size of the clearing fund, as well as reduce
the need for OCC to call for additional financial resources intra-
month.\39\
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    \37\ See id. at 31603.
    \38\ See id. As discussed below, OCC proposes to monitor the
sufficiency of its financial resources daily by comparing the size
of the clearing fund to the output of several historical stress
tests.
    \39\ See id.
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3. Timing of Clearing Fund Contributions
    In addition to revising the methodology for sizing OCC's total
financial resources, OCC proposes generally to reduce the time in which
each clearing member must make its clearing fund contribution.\40\
Clearing members currently have five business days to satisfy a
clearing fund deficiency arising out of the monthly sizing or intra-
month resizing processes. OCC proposes to reduce that time to two
business days.\41\ OCC also proposes to require clearing members to
satisfy any clearing fund deficit resulting from a decrease in the
value of the clearing member's existing contribution within one hour of
notification by OCC.\42\
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    \40\ See id. at 31605.
    \41\ See id.
    \42\ See id.
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D. Financial Resource Sufficiency

    As noted above, OCC proposes to (i) adopt a new clearing fund
methodology, as detailed in the newly-proposed Policy and Methodology
Description and (ii) document governance, monitoring, and review
processes related to the clearing fund and stress testing.\43\ Proposed
changes to OCC's clearing fund methodology include the assessment of
OCC's clearing fund against a wide range of historical scenarios.\44\
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    \43\ See id. at 31596.
    \44\ See id.
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1. Proposal To Monitor the Sufficiency of OCC's Financial Resources
    Currently, OCC monitors the sufficiency of its financial resources
daily by estimating whether the size of the clearing fund is sufficient
to cover a maximum potential loss from a simulated idiosyncratic
default.\45\ Under its current procedures, when OCC observes credit
exposures estimated under the idiosyncratic default in excess of 75
percent of the clearing fund size, OCC issues a margin call against the
clearing member group generating the credit exposures.\46\ The size of
such a margin call is the difference between the idiosyncratic default
exposure and the

base clearing fund amount.\47\ The margin call is allocated among the
individual clearing members in the clearing member group based on each
clearing member's proportionate share of the risk to OCC.\48\ OCC may
limit the size of the margin call to each clearing member to the lesser
of $500 million or 100 percent of such clearing member's net
capital.\49\
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    \45\ See id. at 31595-96. As noted above, an idiosyncratic
default is one of the two scenarios that OCC currently uses to
determine the size of the clearing fund each month. See supra note
16. Specifically, the single largest credit exposure that would
arise out of the default of a single clearing member group.
    \46\ See id. at 31595.
    \47\ See id. As noted above in section II.A., the base clearing
fund amount is the size of the clearing fund less the $1.8 billion
prudential margin of safety.
    \48\ See id., n. 13.
    \49\ See id. at 31595.
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    OCC's current procedures also call for increases to the total size
of the clearing fund in more extreme scenarios. When OCC observes
credit exposures estimated under the idiosyncratic default \50\
exceeding 90 percent of the clearing fund size OCC must, under its
procedures, increase the size of the clearing fund.\51\ The size of the
increase to the clearing fund is the greater of $1 billion or 125
percent of the difference between the idiosyncratic default exposure
and the clearing fund.\52\
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    \50\ OCC would reduce the size of the idiosyncratic default
exposure by factoring in margin calls issued due to a breach of the
75 percent threshold described above. See id. at 31596.
    \51\ See id.
    \52\ See id.
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    OCC proposes to revise this process by replacing the above-
described idiosyncratic default approach with an approach that compares
the size of the clearing fund to the exposures estimated under a set of
historical scenario stress tests (``Sufficiency Stress Tests'').\53\
The Sufficiency Stress Tests proposed by OCC include the largest market
moves up and down during 2008 on a cover 2 basis and the market moves
associated with the 1987 market crash on a cover 1 basis.\54\
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    \53\ See id. at 31600.
    \54\ See id. at 31601. OCC proposes to measure the clearing fund
against the two largest exposures under the 2008-like events and the
one largest exposure under a 1987-like event. See id.
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    OCC proposes to call for additional margin when it observes that
one or more clearing member groups' exposure under a Sufficiency Stress
Test exceeds 75 percent of the clearing fund.\55\ Under the proposal,
the size of the margin call would be the amount by which the
Sufficiency Stress Test exposure exceeds the 75 percent threshold.\56\
Similar to the current process, OCC proposes to retain authority to
limit such margin calls to each clearing member to $500 million or 100
percent of the clearing member's net capital.\57\
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    \55\ See id.
    \56\ See id.
    \57\ See id. at 31601-02.
---------------------------------------------------------------------------

    OCC also proposes to revise the process for increasing the size of
the clearing fund under more extreme scenarios. OCC proposes to
increase the size of the clearing fund when it observes a Sufficiency
Stress Test exposure in excess of 90 percent of the clearing fund.\58\
Similar to the current process, the size of the clearing fund increase
would be the greater of $1 billion or 125 percent of the difference
between the Sufficiency Stress Test exposure and the clearing fund.\59\
OCC also proposes to provide new authority to its Chief Executive
Officer, Chief Administrative Officer, and Chief Operating Officer to
temporarily increase the size of the clearing fund, subject to notice
and later review by OCC's Board Risk Committee (``RC'').\60\
---------------------------------------------------------------------------

    \58\ See id.
    \59\ See id.
    \60\ See id. at 31602.
---------------------------------------------------------------------------

    Additionally, OCC proposes to add a new threshold at which it would
commence enhanced monitoring of a clearing member group.\61\ Where OCC
observes that a clearing member group's Sufficiency Stress Test
exposure exceeds 65 percent of the clearing fund, OCC would commence
enhanced monitoring of, and provide notice to the clearing member
group.\62\
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    \61\ See id. at 31601. Based on OCC's procedures, staff
understands that such monitoring would entail escalation within
OCC's Financial Risk Management group noting the relevant clearing
member, the future potential for breach of the 75 percent margin
call threshold, and a summary of the apparent risk drivers resulting
in the stress exposures.
    \62\ See id.
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2. Proposal To Document Governance Processes Related to the Clearing
Fund and Stress Testing
    OCC proposes to establish, as part of its rules, processes for the
governance, monitoring, and review of the stress testing framework and
clearing fund methodology described above.\63\ Such processes would
cover daily, monthly, and annual review of OCC's stress testing
framework and clearing fund methodology.
---------------------------------------------------------------------------

    \63\ See id. at 31602.
---------------------------------------------------------------------------

    On a daily basis, OCC's staff would monitor the size of the
clearing fund against OCC's risk tolerance and sufficiency stress
tests.\64\ OCC staff would be required to report material issues to the
Executive Vice President of OCC's Financial Risk Management group
(``EVP-FRM''). The EVP-FRM would further escalate issues with OCC
management as applicable.
---------------------------------------------------------------------------

    \64\ See id.
---------------------------------------------------------------------------

    On a monthly basis, OCC's staff would provide reports and analyses
of the daily stress tests to OCC's Management Committee and RC.\65\
OCC's staff would also be responsible for conducting a comprehensive
analysis of stress test results, scenarios, models, parameters, and
assumptions monthly or more frequently when the products cleared or
markets served by OCC display high volatility or become less liquid or
when the size or concentration of positions held by OCC's participants
increases significantly.\66\
---------------------------------------------------------------------------

    \65\ See id. at 31602-03.
    \66\ See id.
---------------------------------------------------------------------------

    On an annual basis, OCC's Model Validation Group would be required
to perform a model validation of OCC's clearing fund methodology.\67\
The RC would review such validations.\68\ The RC would also be
responsible for annual review and approval of the Policy.\69\
---------------------------------------------------------------------------

    \67\ See id. at 31603.
    \68\ See id.
    \69\ See id.
---------------------------------------------------------------------------

E. Allocation of Clearing Fund Contributions

    As noted above, OCC proposes to (i) increase the minimum clearing
fund contribution requirement for clearing members to $500,000 and (ii)
modify OCC's allocation weighting methodology for clearing fund
contributions.\70\
---------------------------------------------------------------------------

    \70\ See id. at 31596.
---------------------------------------------------------------------------

1. Proposal To Increase the Minimum Clearing Fund Contribution
    Currently, the minimum amount a clearing member must contribute to
OCC's clearing fund (the ``fixed amount'') is $150,000.\71\ OCC
proposes to increase the fixed amount to $500,000.\72\ The minimum
contribution requirement has been in place since June 5, 2000,\73\ and
has remained static while the average size of OCC's clearing fund has
increased significantly.\74\ OCC also noted that other CCPs' minimum
requirements are well in excess of OCC's minimum contribution
requirement.\75\ OCC analyzed the impact of the proposed change on its
clearing members and discussed such impacts with the potentially
affected clearing members, the majority of which did not express
concerns over the proposed increase.\76\
---------------------------------------------------------------------------

    \71\ See id. at 31604. The initial amount that a new clearing
member must contribute to OCC's clearing fund is also $150,000. See
id. at 31603.
    \72\ See id. at 31604. OCC similarly proposes to increase the
initial contribution. See id. at 31603.
    \73\ See id. (citing Securities Exchange Act Release No. 42897
(June 5, 2000), 65 FR 36750 (June 9, 2000) (SR-OCC-99-9)).
    \74\ See id. at 31603-04.
    \75\ See id. at 31603.
    \76\ See id. at 31604.

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

2. Proposal To Modify the Clearing Fund Allocation Weighting
    In addition to the fixed amount described above, most clearing
members are required to contribute an additional amount to OCC's
clearing fund (the ``variable amount''). The variable amount is based
on the weighted average of each clearing member's proportionate share
of total risk, open interest, and volume.\77\ Currently, OCC uses the
following weighting in its allocation of clearing fund requirements: 35
percent total risk; 50 percent open interest; and 15 percent
volume.\78\ OCC proposes to modify the allocation weighting as follows:
70 percent total risk; 15 percent open interest; and 15 percent
volume.\79\
---------------------------------------------------------------------------

    \77\ See id. Total risk refers to a clearing member's margin
requirement. See id., n. 44. Additionally, the current methodology
calculates volume based on executed volume. See id. at 31604.
    \78\ See id.
    \79\ See id. The definition of total risk would remain the same,
but OCC would calculate volume based on cleared volume as opposed to
executed volume. See id.
---------------------------------------------------------------------------

F. Textual Clarification and Consolidation

    Finally, as noted above, OCC proposes to (i) reorganize, restate,
and consolidate the provisions of OCC's By-Laws and Rules relating to
the Clearing Fund into a newly-revised Chapter X of OCC's Rules; (ii)
provide additional clarity in OCC's Rules regarding certain anti-
procyclicality measures in OCC's margin model; and (iii) make a number
of other non-substantive clarifying, conforming, and organizational
changes to OCC's By-Laws, Rules, and filed procedures, including
retiring OCC's existing Clearing Fund Intra-Month Re-sizing Procedure,
Financial Resources Monitoring and Call Procedure, and Monthly Clearing
Fund Sizing Procedure, as these procedures would be replaced by the
proposed Rules, Policy, and Methodology Description.\80\
---------------------------------------------------------------------------

    \80\ See id. at 31596.
---------------------------------------------------------------------------

1. Proposal To Reorganize, Restate, and Consolidate Certain Rule Text
    The primary provisions that address OCC's Clearing Fund are
currently located in Article VIII of the By-Laws and Chapter X of the
Rules.\81\ OCC believes that consolidating all of the Clearing Fund-
related provisions of its By-Laws and Rules into one place would
provide more clarity around, and enhance the readability of, OCC's
Clearing Fund requirements.\82\ Given the scope of changes described
above, OCC believes that it is appropriate to make such revisions at
this time.\83\
---------------------------------------------------------------------------

    \81\ See id.
    \82\ See id.
    \83\ See id.
---------------------------------------------------------------------------

    The changes to the provisions currently residing in OCC's By-Laws
require an affirmative vote of two-thirds of the directors then in
office, but not less than a majority of the number of directors fixed
by the By-Laws; however, changes to OCC's rules generally require only
a majority vote of OCC's Board of Directors.\84\ OCC proposes to amend
its By-Laws to maintain the existing requirements for modifying those
rules that would be moved from Article VIII of OCC's By-Laws to Chapter
X of its Rules.\85\
---------------------------------------------------------------------------

    \84\ See id.
    \85\ See id. at 31596-97.
---------------------------------------------------------------------------

2. Proposal To Add Rule Text Clarifying Anti-Procyclicality Measures in
OCC's Margin Model
    OCC's existing methodology for calculating margin requirements
incorporates measures designed to ensure that margin requirements are
not lower than those that would be calculated using volatility
estimated over a historical look-back period of at least ten years.\86\
OCC now proposes to amend its Rule 601(c) to reflect this practice.\87\
OCC believes that the proposed change would provide more clarity and
transparency in its rules.\88\
---------------------------------------------------------------------------

    \86\ See id. at 31606.
    \87\ See id.
    \88\ See id.
---------------------------------------------------------------------------

3. Proposal To Make Other Non-Substantive Changes to OCC's Rules
    OCC proposes a number of clarifying, conforming, and organizational
changes to its By-Laws, Rules, Collateral Risk Management Policy,
Default Management Policy, and Clearing Fund-related procedures in
connection with the proposed enhancements to its Pre-Funded Financial
Resources and the relocation of OCC's Clearing Fund-related By-Laws
into Chapter X of the Rules.\89\
---------------------------------------------------------------------------

    \89\ See id.
---------------------------------------------------------------------------

    In addition to the relocation of rules described above, OCC would
also make minor, non-substantive revisions. For example, OCC would
replace text referencing ``computed contributions to the Clearing
Fund'' and ``as fixed at the time'' with text stating ``required
contributions to the Clearing Fund'' and ``as calculated at the time''
to more accurately reflect that these rules are intended to refer to a
Clearing Member's required Clearing Fund contribution amount as
calculated under the proposed rules.\90\
---------------------------------------------------------------------------

    \90\ See id. at 31607, n. 52.
---------------------------------------------------------------------------

    Further, OCC proposes to update references to Article VIII of the
By-Laws in its Collateral Risk Management Policy and Default Management
Policy to reflect the relocation of OCC's Clearing Fund-related By-Laws
into Chapter X of the Rules.\91\
---------------------------------------------------------------------------

    \91\ See id. at 31607.
---------------------------------------------------------------------------

    Finally, OCC proposes to replace procedures regarding its processes
for (i) the monthly resizing of its Clearing Fund, (ii) the addition of
financial resources, and (iii) the execution of any intra-month
resizing of the Clearing Fund.\92\ OCC proposes to retire its existing
procedures because the relevant rule requirements would be maintained
in the proposed rules as well as the Clearing Fund Methodology Policy
and Clearing Fund Methodology Description included as part of the
Advance Notice.\93\
---------------------------------------------------------------------------

    \92\ See id. at 31607-08.
    \93\ See id. at 31608.
---------------------------------------------------------------------------

III. Summary of Comments

    As noted above, the Commission received five comment letters--AACC
Letter I, CBOE Letter I, MLPRO Letter I, WEX Letter I, and GS Letter
I--supporting the changes proposed in the Advance Notice.\94\ Two of
the commenters urge the Commission to approve the proposal as
expeditiously as possible.\95\ AACC believes that the proposal would
remediate two problems with the current clearing fund methodology: (1)
OCC's current clearing fund sizing methodology failing to contain
sufficient anti-procyclicality measures, and (2) OCC's current clearing
fund contribution allocation methodology failing to appropriately
incentivize clearing member risk management.\96\
---------------------------------------------------------------------------

    \94\ See supra note 8.
    \95\ AACC Letter I at 1; MLPRO Letter I at I.
    \96\ AACC Letter I at 1.
---------------------------------------------------------------------------

    Regarding the clearing fund sizing methodology, AACC believes that
the proposal would implement a number of measures intended to provide
stability and consistency to the size of OCC's clearing fund.\97\
Specifically, AACC supports (1) sizing the clearing fund based on a
variety of risk factors, and (2) testing the size of the clearing fund
on a daily basis against extreme but plausible market events, thereby
lowering the likelihood that OCC's clearing fund would be insufficient
to protect OCC and market participants in the event of a clearing
member default.\98\ MLPRO believes that the proposed changes would
create a more transparent and predictable model.\99\

Similarly, GS supports OCC's proposal to include more comprehensive
testing scenarios by including observed market events over a longer
historical period, which would improve the overall quality of OCC's
stress testing and strengthen OCC's ability to model risk
scenarios.\100\ Additionally, WEX believes that the proposed changes,
specifically changes regarding how the monthly clearing fund sizing
process will address anti-procyclicality, should help reduce
operational issues related to a clearing member's obligations
increasing and decreasing.\101\
---------------------------------------------------------------------------

    \97\ Id. at 2.
    \98\ Id. at 2-3.
    \99\ MLPRO Letter I at 2.
    \100\ GS Letter I at 2. In its letter, GS refers to OCC's
movement to a 1-in-80-year period from a 1-in-50-year model. The
Commission notes that OCC's current process is not based on a 1-in-
50-year model, and that OCC is now proposing to adopt a new risk
tolerance based on a 1-in-50-year hypothetical event. See Notice of
Filing, 83 FR at 31596. Further, OCC proposes to base the size of
the clearing fund on the aggregate credit exposures estimated under
a 1-in-80-year hypothetical market event (as opposed to an
historical market event). See id. at 31600.
    \101\ WEX Letter I at 1.
---------------------------------------------------------------------------

    AACC states that, from a theoretical perspective, OCC's proposed
sizing methodology constitutes a significant improvement over the
current sizing methodology in that the size of the clearing fund would
be less influenced by changes in volatility because OCC is introducing
other risk drivers into the sizing methodology as well as monitoring
and augmenting such risk drivers on a daily basis based on market
conditions.\102\ AACC also comments that the proposal would cause the
size of OCC's clearing fund to become more stable because OCC would
test for adequacy and sufficiency on a daily basis using a series of
historical and hypothetical stress tests that are rooted in extreme but
plausible market events.\103\
---------------------------------------------------------------------------

    \102\ AACC Letter I at 3.
    \103\ Id.
---------------------------------------------------------------------------

    Commenters also believe that the proposal would improve OCC's risk
models by correcting existing shortcomings.\104\ CBOE comments that the
adoption of a Cover 2 standard would ensure that the size of the
clearing fund is sufficient to protect OCC against losses from the
simultaneous default of its two largest Clearing Members under extreme,
but plausible market conditions.\105\ GS also agrees with OCC's
proposal to adopt a Cover 2 Standard.\106\ MLPRO comments that the
adoption of a Cover 2 standard in establishing a new model to measure
the adequacy of the clearing fund and address potential default
scenarios would address issues that MLPRO identifies with OCC's current
model.\107\ MLPRO also supports OCC's (1) adopting risk tolerance and
stress testing assumptions that are developed from extreme, but
plausible scenarios, and (2) calibrating individual equity price
movements to the price shock for the applicable equity index to address
issues with the current model.\108\
---------------------------------------------------------------------------

    \104\ CBOE Letter I at 1; MLPRO Letter I at 1-2.
    \105\ CBOE Letter I at 1.
    \106\ GS Letter I at 2.
    \107\ MLPRO Letter I at 1-2.
    \108\ Id.
---------------------------------------------------------------------------

    Regarding the changes to the clearing fund allocation methodology,
commenters believe that the proposal would better align clearing
members' required clearing fund contribution to the risk they present
to OCC and other market participants.\109\ AACC states that the
proposed changes would place more emphasis on the economic risk
presented by a clearing member's cleared contracts than the operational
risk presented by a high volume clearing member, thereby better
recognizing that certain types of clearing members present a relatively
lower risk to OCC even though they may represent a higher percentage of
overall activity (i.e., clearing members with market-maker and other
risk-neutral customers).\110\ Similarly, WEX supports allocation based
on cleared volumes as opposed to executed volumes in consideration of
where a positon is cleared as opposed to where it is executed.\111\
MLPRO also supports increases the weighting of total risk in the
allocation process.\112\ Commenters also believe that the proposed
changes make sense from a default and liquidation perspective.\113\
---------------------------------------------------------------------------

    \109\ AACC Letter I at 4; WEX Letter I at 1; GS Letter I at 1.
    \110\ AACC Letter I at 4.
    \111\ WEX Letter I at 2.
    \112\ MLPRO Letter I at 2.
    \113\ AACC Letter I at 4; GS Letter I at 1.
---------------------------------------------------------------------------

    Commenters AACC and WEX believe that the proposed changes would
have positive effects on the listed options market.\114\ Similarly,
MLPRO believes that the proposed changes would increase liquidity in
the listed options market.\115\ Additionally, GS believes that the
proposed changes will greatly enhance OCC's resiliency and risk
management.\116\
---------------------------------------------------------------------------

    \114\ AACC Letter I at 5; WEX Letter I at 2.
    \115\ MLPRO Letter I at 1.
    \116\ GS Letter I at 2.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    Although the Act does not specify a standard of review for an
advance notice, the stated purpose of the Act is instructive: to
mitigate systemic risk in the financial system and promote financial
stability by, among other things, promoting uniform risk management
standards for SIFMUs and strengthening the liquidity of SIFMUs.\117\
---------------------------------------------------------------------------

    \117\ See 12 U.S.C. 5461(b).
---------------------------------------------------------------------------

    Section 805(a)(2) of the Act \118\ authorizes the Commission to
prescribe regulations containing risk-management standards for the
payment, clearing, and settlement activities of designated clearing
entities engaged in designated activities for which the Commission is
the supervisory agency. Section 805(b) of the Act \119\ provides the
following objectives and principles for the Commission's risk-
management standards prescribed under Section 805(a):
---------------------------------------------------------------------------

    \118\ 12 U.S.C. 5464(a)(2).
    \119\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     To promote robust risk management;
     to promote safety and soundness;
     to reduce systemic risks; and
     to support the stability of the broader financial system.
    Section 805(c) provides, in addition, that the Commission's risk-
management standards may address such areas as risk-management and
default policies and procedures, among others areas.\120\
---------------------------------------------------------------------------

    \120\ 12 U.S.C. 5464(c).
---------------------------------------------------------------------------

    The Commission has adopted risk-management standards under Section
805(a)(2) of the Act and Section 17A of the Exchange Act (the
``Clearing Agency Rules'').\121\ The Clearing Agency Rules require,
among other things, each covered clearing agency to establish,
implement, maintain, and enforce written policies and procedures that
are reasonably designed to meet certain minimum requirements for its
operations and risk-management practices on an ongoing basis.\122\ As
such, it is appropriate for the Commission to review advance notices
against the Clearing Agency Rules and the objectives and principles of
these risk management standards as described in Section 805(b) of the
Act. As discussed below, the Commission believes the proposal in the
Advance Notice is consistent with the objectives and principles
described in Section 805(b) of the Act,\123\ and in the Clearing

Agency Rules, in particular Rules 17Ad-22(e)(1) and 17Ad-22(e)(4).\124\
---------------------------------------------------------------------------

    \121\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release
No. 68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-08-
11). See also Securities Exchange Act Release No. 78961 (September
28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14) (``Covered
Clearing Agency Standards''). The Commission established an
effective date of December 12, 2016, and a compliance date of April
11, 2017, for the Covered Clearing Agency Standards. OCC is a
``covered clearing agency'' as defined in Rule 17Ad-22(a)(5).
    \122\ 17 CFR 240.17Ad-22.
    \123\ 12 U.S.C. 5464(b).
    \124\ 17 CFR 240.17Ad-22(e)(1); 17 CFR 240.17Ad-22(e)(4).
---------------------------------------------------------------------------

A. Consistency With Section 805(b) of the Act

    The Commission believes that the proposal contained in OCC's
Advance Notice is consistent with the stated objectives and principles
of Section 805(b) of the Act. Specifically, as discussed below, the
Commission believes that the changes proposed in the Advance Notice are
consistent with promoting robust risk management in the area of credit
risk, promoting safety and soundness, reducing system risks, and
supporting the stability of the broader financial system.\125\
---------------------------------------------------------------------------

    \125\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

    First, as described above, OCC's current process for sizing the
clearing fund was established in 2011 and strengthened under a 2015
interim approach. The current process is essentially an extension of
OCC's margin model. In general, margin requirements for clearing
members are very reactive to market movements and changes in clearing
member portfolios. Because OCC's current process for sizing the
clearing fund is based on a relatively dynamic daily margin process,
the size of the clearing fund can at times be volatile and cyclical in
nature. The changes proposed in the Advance Notice based the sizing and
monitoring of OCC's clearing fund on a stable inventory of stress tests
rather than continuing to rely on a dynamic margin model. The
Commission believes this new approach would provide OCC with a more
precise, rigorous, and stable assessment of the financial resources it
would need to hold in its clearing fund to cover its credit risk
exposure to its members in extreme but plausible market conditions,
which in turn would enhance OCC's overall risk management.
    Second, with respect to the robustness of the new stress testing
framework itself, the Commission believes that the stress tests
proposed in OCC's framework are an improvement over OCC's current
approach in this area, as the stress tests comprise a wide range of
foreseeable stress scenarios. The scenarios cover historical events as
extreme as the 2008 financial crisis and 1987 market crash as well as
hypothetical events derived from a dataset of historical S&P returns.
OCC's proposed stress testing framework would also include a category
of stress tests designed specifically for review of OCC's financial
resources against implausible scenarios and reverse stress tests. Such
stress tests would not directly affect the total amount of OCC's
financial resources, but would facilitate a more forward looking risk
management process. Accordingly, while as an ongoing supervisory matter
the Commission expects OCC to consider and, as necessary, implement
future enhancements to its suite of stress tests, the Commission
believes that the suite of stress tests that OCC proposes to establish
in its risk management framework pursuant to the Advance Notice
represents a material improvement to OCC's current risk management
practices for estimating potential future losses in extreme but
plausible market conditions.
    Third, as described above, OCC proposes to adopt several
enhancements to its methodology for determining the size of its
clearing fund. OCC proposes to adopt an internal credit risk tolerance
based on hypothetical stress scenarios, which would provide OCC with a
benchmark that it believes represents extreme but plausible market
conditions. The Commission believes that establishing such a tolerance
is a valuable step in accurately estimating the total financial
resources necessary to cover OCC's exposures in extreme but plausible
market conditions. Next, OCC proposes to set the size of its clearing
fund to cover a scenario that is more extreme than its internal
tolerance to ensure consistent coverage, which the Commission believes
would be another valuable step in accurately estimating OCC's necessary
total financial resources. Further, OCC proposes to cover its two
largest credit exposures when setting the size of the clearing fund,
which goes further than OCC's current practice of covering the greater
of OCC's single largest exposure or two random exposures. For the same
reasons, the Commission believes this, too, would improve OCC's risk
management practices. Finally, OCC proposes to limit the potential
reductions in the size of the clearing fund month-over-month. Such
limitations would avoid large drops in the clearing fund size over a
short period of time and unnecessary reductions followed by immediate
calls for additional resources at the beginning of each month. Taken
together, the Commission believes that all of these enhancements to the
calculation of OCC's clearing fund requirements would enhance OCC's
risk management practices and allow it to more accurately estimate the
total financial resources necessary to cover its exposures in extreme
but plausible market conditions.
    Fourth, the proposal discussed above would expand and improve upon
the scope of stress scenarios against which OCC monitors is financial
resources. Under the proposal OCC would continue to review the size of
its clearing fund against exposures under a stress scenario designed to
replicate the 1987 market crash, and would also introduce monitoring
against other historical scenarios such as the largest market moves up
and down observed during the 2008 financial crisis. In addition, OCC
would continue its practice of collecting additional resources in
margin collateral and clearing fund requirements where stress exposures
exceed 75 percent and 90 percent, respectively, of the size of the
clearing fund. Based on a review of the parameters of the scenario
replicating the 1987 market crash, the Commission believes that the
scenario presents potential losses that are extreme while also
plausible in light of their historical basis. Additionally, the
Commission believes that the scenario would provide stress exposure
estimates that would be meaningful for the monitoring of OCC's total
financial resources. The Commission also believes that the introduction
of new historical scenarios, such as those replicating the financial
crisis, would provide additional depth to the monitoring of OCC's
financial resources. The Commission believes, therefore, that the
changes proposed in the Advance Notice include the adoption of a wide
range of stress scenarios for the testing of OCC's financial resources.
Consequently, the Commission believes that the expansion of the scope
of stress scenarios, along with the inclusion of a scenario replicating
the 1987 market crash, will result in a stress testing framework that
promotes robust risk management at OCC.
    Fifth, OCC would document its periodic review and analysis of its
stress testing framework and clearing fund methodology, which would
include (1) daily review of stress test outputs, (2) monthly (or more
frequently as needed) analysis of the stress test results, scenarios,
models, parameters, and assumptions, and (3) annual validation of the
clearing fund methodology. OCC also would clearly define the process
for escalating the results of its daily and monthly analyses and
require on an annual basis Board level review and approval of the
Clearing Fund Methodology Policy. The Commission believes that these
governance processes would help ensure that OCC is in a position to
continuously monitor,

analyze, and adjust as necessary both the stress testing framework and
the clearing fund methodology, thereby helping to ensure the accuracy
and reliability of the methodology by which OCC tests the sufficiency
of its financial resources.
    Taken together, and for the reasons discussed above, the Commission
believes that these proposals would promote robust risk management at
OCC by better ensuring that OCC maintains sufficient financial
resources in excess of margin to enable it to cover a wide range of
stress scenarios that include, but are not limited to the default of
the participant family that would potentially cause the largest
aggregate credit exposure for OCC in extreme but plausible market
conditions.
    By enhancing the precision with which OCC estimates the total
financial resources that it must maintain, reducing the time it takes
OCC to fund clearing fund contributions, and limiting month-to-month
reductions in the size of the clearing fund, the Commission also
believes the changes proposed in the Advance Notice promote safety and
soundness. The Commission agrees that, by shortening the timeframe
within which each clearing member must make its required clearing fund
contribution, OCC would be able to better ensure that it is able to
obtain the funds owed from clearing members in a timely fashion so that
OCC can continue to meet its overall financial resource
requirements.\126\ Reducing the period of time between the
identification of credit exposures and the collection of collateral to
cover such exposures reduces the period of time during which OCC could
be under collateralized. Ensuring that OCC is able to obtain collateral
in a timely manner promotes safety and soundness. Similarly, limiting
large reductions and cyclical swings in the size of OCC's clearing fund
reduces the potential for OCC to give up resources only to find that
they are necessary to cover its credit exposures to participants.
Consequently, the Commission believes that the proposed reduction in
funding time and limitations designed to constrain procyclical changes
in the size of the clearing fund promote safety and soundness.
---------------------------------------------------------------------------

    \126\ See Notice of Filing, 83 FR at 31605.
---------------------------------------------------------------------------

    In addition, the Commission believes that the limitations on
clearing fund size reductions described above, as well as the proposed
allocation methodology changes, are designed to reduce systemic risk
and promote the stability of the broader financial system. Reducing the
likelihood of procyclical swings in the size of OCC's clearing fund
should provide more certainty and stability to OCC's clearing members.
For example, such increased certainty should help reduce the risk that
clearing members would be surprised and destabilized by a request from
OCC for a clearing fund size increase, thereby limiting the likelihood
that such requests could destabilize the broader financial system or
heighten systemic risk. The Commission believes that the increases of
the initial and minimum contributions to the clearing fund are
commensurate with the growth of OCC's clearing fund over time.\127\
Finally, the Commission believes that the proposed changes to OCC's
allocation weighting will allow OCC to better manage its credit
exposures to its clearing members by better aligning each clearing
member's contributions to the credit risk it poses to OCC, thereby
allowing OCC to better manage its credit exposures to its participants.
The Commission believes that increased certainty and the alignment of
obligations with risk would both reduce potential systemic risks and
promote the stability of the broader financial system by reducing the
likelihood of unexpected and potentially destabilizing clearing fund
obligations for clearing members.
---------------------------------------------------------------------------

    \127\ OCC's overall clearing fund size has increased
significantly since the current initial and minimum contributions
were set in 2000. See id. at 31603-04.
---------------------------------------------------------------------------

    Finally, the Commission believes that OCC's proposed textual
clarifications and reorganization would also support the stability of
the broader financial system. The reorganization and consolidation of
rule provisions related to OCC's clearing fund would enhance the
readability of OCC's public-facing rules, and additional clarification
of OCC's margin rules would promote transparency by providing the
public with information about OCC's risk management processes. The
Commission believes that the additional clarity and transparency
provided by these proposed change would support the stability of the
broader financial system by removing potential sources of confusion or
misunderstanding regarding the operations and potential consequences of
OCC's risk management processes in respect of the clearing fund.
    Accordingly, and for the reasons stated, the Commission believes
the changes proposed in the Advance Notice are consistent with Section
805(b) of the Act.\128\
---------------------------------------------------------------------------

    \128\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(4) Under the Exchange Act

1. Total Financial Resources
    Rules 17Ad-22(e)(4)(i) and (iii) under the Exchange Act requires,
among other things, that OCC establish, implement, maintain, and
enforce written policies and procedures reasonably designed to
effectively identify, measure, monitor, and manage its credit exposures
to participants and those arising from its payment, clearing, and
settlement processes by, among other things, maintaining financial
resources at the minimum to enable OCC to cover a wide range of
foreseeable stress scenarios that include, but are not limited to, the
default of the participant family that would potentially cause the
largest aggregate credit exposure for OCC in extreme but plausible
market conditions.\129\
---------------------------------------------------------------------------

    \129\ 17 CFR 240.17Ad-22(e)(4)(i) and (iii).
---------------------------------------------------------------------------

    As described above, the proposal includes enhancements to OCC's
methodology for sizing its clearing fund to ensure that it maintains
sufficient financial resources, including: (i) Adoption of an internal
credit risk tolerance that OCC believes represents extreme but
plausible market conditions; (ii) sizing the clearing fund to cover
credit exposures under scenarios that are more extreme than OCC's risk
tolerance, (iii) sizing the clearing fund to cover the default of the
two clearing member groups that that would potentially cause the
largest aggregate credit exposure for OCC; (iv) limiting the potential
reduction in clearing fund size month-over-month; and (v) shortening
the time by which each clearing member must fund its clearing fund
contribution.
    Taken together, the Commission believes that proposed changes
described above are designed to improve the process by which OCC sizes
its total financial resources and are consistent with the requirements
of Rules 17Ad-22(e)(4)(i) and (iii) under the Exchange Act. First, the
proposal is designed to cover credit exposures in excess of those posed
by any one clearing member group because OCC is proposing to cover the
largest aggregate exposure to two clearing member groups. Second, the
proposal is designed to cover credit exposures in extreme but plausible
market conditions because OCC proposes to size its clearing fund based
on scenarios that are more extreme than those that OCC believes to
represent extreme but plausible market conditions. Further, based on
the Commission's detailed analysis of the relevant scenarios

through the supervisory process, the Commission believes that OCC has
defined extreme but plausible scenarios in an acceptable manner for the
markets served. Finally, the Commission believes that proposal would
support the consistent and stable maintenance of an appropriate level
of total financial resources by limiting month-over-month reductions in
the size of clearing fund and requiring clearing members to make
clearing fund contributions within two business days. Accordingly, the
Commission believes that the proposed modifications to OCC's clearing
fund sizing methodology are consistent with Exchange Act Rule 17Ad-
22(e)(4)(i) and (iii).\130\
---------------------------------------------------------------------------

    \130\ Id.
---------------------------------------------------------------------------

2. Financial Resource Sufficiency
    Rule 17Ad-22(e)(4)(vi) under the Exchange Act requires OCC to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes by testing
the sufficiency of its total financial resources available to meet the
minimum financial resource requirements under paragraphs Rules 17Ad-
22(e)(4)(i) through (iii).\131\ Such testing must include (A)
conducting stress testing of OCC's total financial resources once each
day using standard predetermined parameters and assumptions; (B)
conducting a comprehensive analysis on at least a monthly basis of the
existing stress testing scenarios, models, and underlying parameters
and assumptions, and considering modifications to ensure they are
appropriate for determining the covered clearing agency's required
level of default protection in light of current and evolving market
conditions; (C) conducting a comprehensive analysis of stress testing
scenarios, models, and underlying parameters and assumptions more
frequently than monthly when the products cleared or markets served
display high volatility or become less liquid, or when the size or
concentration of positions held by the covered clearing agency's
participants increases significantly; and (D) reporting the results of
such analyses to appropriate decision makers at OCC, including but not
limited to, its risk management committee or board of directors, and
using these results to evaluate the adequacy of and adjust its margin
methodology, model parameters, models used to generate clearing or
guaranty fund requirements, and any other relevant aspects of its
credit risk management framework, in supporting compliance with the
minimum financial resources requirements set forth in paragraphs
(e)(4)(i) through (iii) of Rule 17Ad-22.\132\ Additionally, pursuant to
Rule 17Ad-22(e)(4)(vii) of the Exchange Act, the policies and
procedures required under Rule 17Ad-22(e)(4) must include the
performance of a model validation of OCC's credit risk models not less
than annually or more frequently as may be contemplated by OCC's risk
management framework.\133\
---------------------------------------------------------------------------

    \131\ 17 CFR 240.17Ad-22(e)(4)(vi) (citing 17 CFR 240.17Ad-
22(e)(4)(i)-(iii)).
    \132\ 17 CFR 240.17Ad-22(e)(4)(vi)(A)-(D).
    \133\ 17 CFR 240.17Ad-22(e)(4)(vii).
---------------------------------------------------------------------------

    After reviewing and assessing the proposal, the Commission believes
that the proposed changes described above are consistent with Rules
17Ad-22(e)(4)(vi) and (vii) under the Exchange Act,\134\ because, among
other reasons, (i) they are designed to improve the testing of OCC's
financial resources; (ii) expanding the scope of stress scenarios
against which OCC monitors its financial resources would increase the
likelihood that OCC maintains sufficient financial resources at all
times; and (iii) the formalization of OCC's processes for the periodic
review and analysis its stress testing framework and clearing fund
methodology is designed to support OCC's monitoring of its financial
resources.
---------------------------------------------------------------------------

    \134\ 17 CFR 240.17Ad-22(e)(4)(vi) and (vii).
---------------------------------------------------------------------------

    In addition, the Commission believes that (i) the daily testing of
OCC's financial resources against the sufficiency stress tests,
including stress tests based on market movements in the 2008 financial
crisis and the 1987 market crash included in the proposal would be
consistent with the daily stress testing requirements of Rule 17Ad-
22(e)(4)(vi)(A), as described above; (ii) the at least monthly analysis
of stress test results, scenarios, models, parameters, and assumptions,
with more frequent review and analysis as required would be consistent
with the monthly comprehensive analysis requirements set forth in Rule
17Ad-22(e)(4)(vi)(B) and (C) as described above; and (iii) the annual
validation of OCC's clearing fund methodology discussed in more detail
above would be consistent with model validation requirements of Rule
17Ad-22(e)(4)(vii). The proposal also contemplates the reporting and
escalation of such testing, analyses, and validations to OCC's
management and Board of Directors, which the Commission believes would
be consistent with the reporting requirements of Rule 17Ad-
22(e)(4)(vi)(D).
    Accordingly, taken together and for the reasons discussed above,
the Commission believes that the proposed stress testing and clearing
fund methodology governance changes are consistent with Exchange Act
Rules 17Ad-22(e)(4)(vi) and (vii).\135\
---------------------------------------------------------------------------

    \135\ Id.
---------------------------------------------------------------------------

3. Proposal To Modify the Clearing Fund Allocation Methodology
    As noted above, Rule 17Ad-22(e)(4) under the Exchange Act requires
that OCC establish, implement, maintain, and enforce written policies
and procedures reasonably designed to, among other things, effectively
manage its credit exposures to participants.\136\
---------------------------------------------------------------------------

    \136\ 17 CFR 240.17Ad-22(e)(4).
---------------------------------------------------------------------------

    As discussed above, OCC manages its credit exposures not covered by
margin through the allocation of clearing fund requirements to its
clearing members. OCC proposes to determine the size of is clearing
fund based on the measurement of its credit exposures under
hypothetical stress scenarios, and to monitor such exposures under
historical stress scenarios. OCC also proposes to increase the initial
and minimum clearing fund contribution amounts from $150,000 to
$500,000, and to modify the allocation weighting used to determine the
variable amount that most clearing members contribute to the clearing
fund. Specifically, under the proposal, the proposed clearing fund
contribution requirements would be based on an allocation methodology
of 70 percent of total risk, 15 percent of open interest and 15 percent
of open interest (as opposed to the current weighting of 35 percent
total risk, 50 percent open interest, and 15 percent volume).
    The Commission believes that the changes described above are
reasonably designed to improve OCC's management of its credit exposures
to participants. First, OCC's overall clearing fund size has increased
significantly since the current initial and minimum contributions were
set in 2000 and OCC's requirements are lower than the minimum
requirements imposed by other CCPs. The Commission believes that the
proposed changes to OCC's initial and minimum clearing fund
contribution amounts are designed to better manage the risks posed by
clearing members with minimal open interest, and are commensurate with
the growth of OCC's clearing fund over time. The Commission also
believes that the changes to OCC's allocation weighting will allow OCC
to better

manage its credit exposures to its clearing members by better aligning
each clearing member's contributions to the credit risk it poses to
OCC, thereby allowing OCC to better manage its credit exposures to its
participants.
    Accordingly, based on the foregoing, the Commission believes that
the proposed changes pertaining to the sizing, monitoring, and
allocation of clearing fund requirements are consistent with Exchange
Act Rule 17Ad-22(e)(4).\137\
---------------------------------------------------------------------------

    \137\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(1) Under the Exchange Act

    Rule 17Ad-22(e)(1) under the Exchange Act requires that OCC
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to provide for a well-founded, clear,
transparent, and enforceable legal basis for each aspect of its
activities in all relevant jurisdictions.\138\ The Commission has
stated that, in establishing and maintaining policies and procedures to
address legal risk, a covered clearing agency generally should consider
whether its rules, policies and procedures, and contracts are clear,
understandable, and consistent with relevant laws and regulations.\139\
---------------------------------------------------------------------------

    \138\ 17 CFR 240.17Ad-22(e)(1).
    \139\ Covered Clearing Agency Standards at 70802.
---------------------------------------------------------------------------

    The Commission believes that the proposed consolidation and
reorganization of OCC's Rules described above would improve readability
by locating all rules related to the clearing fund in one place,
thereby enhancing the clarity, transparency, consistency, and
understandability of OCC's Rules related to the clearing fund.
Additionally, by amending the Rules to accurately reflect OCC's current
margin practices, the Commission believes OCC's Rules will be more
transparent and understandable.
    Accordingly, the Commission believes that the proposed textual
reorganization and clarifications are consistent with Rule 17Ad-
22(e)(1).\140\
---------------------------------------------------------------------------

    \140\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Payment Supervision Act, that the Commission does not object to Advance
Notice (SR-OCC-2018-803) and that OCC is authorized to implement the
proposed change.

    By the Commission.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-16417 Filed 7-31-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 69 (Monday, April 11, 2022)]
[Proposed Rules]
[Pages 21060-21062]
[FR Doc No: 2022-07586]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2022-0310; Airspace Docket No. 22-ASW-6]
RIN 2120-AA66

Proposed Amendment of the Class E Airspace; Oakwood, TX

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: This action proposes to amend the Class E airspace at Oakwood,
TX. The FAA is proposing this action due to an airspace review
conducted as part of the decommissioning of the Leona very high
frequency (VHF) omnidirectional range (VOR) as part of the VOR Minimal
Operational Network (MON) Program.

DATES: Comments must be received on or before May 26, 2022.

ADDRESSES: Send comments on this proposal to the U.S. Department of
Transportation, Docket Operations, West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590; telephone
(202) 366-9826, or<PHONE_NUMBER>. You must identify FAA Docket No.
FAA-2022-0310/Airspace Docket No. 22-ASW-6, at the beginning of your
comments. You may also submit comments through the internet at https://www.regulations.gov. You may review the public docket containing the
proposal, any comments received, and any final disposition in person in
the Dockets Office between 9:00 a.m. and 5:00 p.m., Monday through
Friday, except federal holidays.
    FAA Order JO 7400.11F, Airspace Designations and Reporting Points,
and subsequent amendments can be viewed online at https://www.faa.gov/air_traffic/publications/. For further information, you can contact the
Airspace Policy Group, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

FOR FURTHER INFORMATION CONTACT: Jeffrey Claypool, Federal Aviation
Administration, Operations Support Group, Central Service Center, 10101
Hillwood Parkway, Fort Worth, TX 76177; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
as it would amend the Class E airspace extending upward from 700 feet
above the surface at Carter Ranch Airport, Oakwood, TX, to support
instrument flight rule operations at this airport.

Comments Invited

    Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments, as
they may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers and be submitted in
triplicate to the address listed above. Commenters wishing the FAA to
acknowledge receipt of their comments on this notice must submit with
those comments a self-addressed, stamped postcard on which the
following statement is made: ``Comments to Docket No. FAA-2022-0310/
Airspace Docket No. 22-ASW-6.'' The postcard will be date/time stamped
and returned to the commenter.
    All communications received before the specified closing date for
comments will be considered before taking action on the proposed rule.
The proposal contained in this notice may be changed in light of the
comments received. A report summarizing each substantive public contact
with FAA personnel concerned with this rulemaking will be filed in the
docket.

Availability of NPRMs

    An electronic copy of this document may be downloaded through the
internet at https://www.regulations.gov. Recently published rulemaking
documents can also be accessed through the FAA's web page at https://www.faa.gov/air_traffic/publications/airspace_amendments/.
    You may review the public docket containing the proposal, any
comments received, and any final disposition in person in the Dockets
Office (see the ADDRESSES section for the address and phone number)
between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal
holidays. An informal docket may also be examined during normal
business hours at the Federal Aviation Administration, Air Traffic
Organization, Central Service Center, Operations Support Group, 10101
Hillwood Parkway, Fort Worth, TX 76177.

Availability and Summary of Documents for Incorporation by Reference

    This document proposes to amend FAA Order JO 7400.11F, Airspace
Designations and Reporting Points, dated August 10, 2021, and effective
September 15, 2021. FAA Order JO 7400.11F is publicly available as
listed in the ADDRESSES section of this document. FAA Order JO 7400.11F
lists Class A, B, C, D, and E airspace areas, air traffic service
routes, and reporting points.

The Proposal

    The FAA is proposing an amendment to 14 CFR part 71 by amending the
Class E airspace extending upward from 700 feet above the surface at
Carter Ranch Airport, Oakwood, TX, by removing the Leona VORTAC and
associated extension from the airspace legal description; removing the
exclusionary language from the airspace legal description as it is not
required; and removing the city associated with the airport to comply
with changes to FAA Order JO 7400.2N, Procedures for Handling Airspace
Matters.
    This action is the result of an airspace review conducted as part
of the decommissioning of the Leona VOR, which provided navigation
information for the instrument procedures at this airport, as part of
the VOR MON Program.
    Class E airspace designations are published in paragraph 6005 of
FAA Order JO 7400.11F, dated August 10, 2021, and effective September
15, 2021, which is incorporated by reference in 14 CFR 71.1. The Class
E airspace designations listed in this document will be published
subsequently in FAA Order JO 7400.11.
    FAA Order JO 7400.11, Airspace Designations and Reporting Points,
is published yearly and effective on September 15.

Regulatory Notices and Analyses

    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current, is
non-controversial and unlikely to result in adverse or negative
comments. It, therefore: (1) Is not a ``significant regulatory action''
under Executive Order 12866; (2) is not a ``significant rule'' under
DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a regulatory evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that will only affect air traffic procedures and air navigation, it is
certified that this rule, when promulgated, would not have a
significant economic impact on a substantial number of small entities
under the criteria of the Regulatory Flexibility Act.

Environmental Review

    This proposal will be subject to an environmental analysis in
accordance with FAA Order 1050.1F, ``Environmental Impacts: Policies
and Procedures'' prior to any FAA final regulatory action.

List of Subjects in 14 CFR 71

    Airspace, Incorporation by reference, Navigation (air).

The Proposed Amendment

    Accordingly, pursuant to the authority delegated to me, the Federal
Aviation Administration proposes to amend 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of FAA Order JO
7400.11F, Airspace Designations and Reporting Points, dated August 10,
2021, and effective September 15, 2021, is amended as follows:

Paragraph 6005 Class E Airspace Areas Extending Upward From 700
Feet or More Above the Surface of the Earth.

* * * * *

ASW TX E5 Oakwood, TX [Amended]

Carter Ranch Airport, TX
    (Lat. 31[deg]34'01'' N, long. 95[deg]46'00'' W)

    That airspace extending upward from 700 feet above the surface
within a 6.5-mile radius of Carter Ranch Airport.

    Issued in Fort Worth, Texas, on April 5, 2022.
Martin A. Skinner,
Acting Manager, Operations Support Group, ATO Central Service Center.
[FR Doc. 2022-07586 Filed 4-8-22; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 85, Number 138 (Friday, July 17, 2020)]
[Notices]
[Page 43577]
[FR Doc No: 2020-15480]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL19-58-002]

PJM Interconnection, LLC; Notice of Filing

    Take notice that on July 6, 2020, PJM Interconnection, LLC
submitted a filing in compliance with the Federal Energy Regulatory
Commission's (Commission) Order on Proposed Tariff Revisions and
Operating Agreement Revisions, in the above captioned proceeding, on
May 21, 2020.\1\
---------------------------------------------------------------------------

    \1\ PJM Interconnection, L.L.C., 171 FERC ] 61,153 (2020) (``May
21 Order'').
---------------------------------------------------------------------------

    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, 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 on or before the comment date. On or
before the comment date, it is not necessary to 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 5 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street NE, Washington, DC
20426.
    In addition to publishing the full text of this document in the
Federal Register, The Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to Commission's Public Reference
Room, due to the proclamation declaring a National Emergency concerning
the Novel Coronavirus Disease (COVID-19), issued by the President on
March 13, 2020. For assistance, contact FERC at
<EMAIL_ADDRESS>or call toll-free,<PHONE_NUMBER> or TYY,
(202) 502-8659.
    Comment Date: 5:00 p.m. Eastern Time on July 27, 2020.

    Dated: July 13, 2020.
Kimberly D. Bose,
Secretary.
[FR Doc. 2020-15480 Filed 7-16-20; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 87 (Wednesday, May 6, 2015)]
[Notices]
[Pages 26021-26022]
[FR Doc No: 2015-10574]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2323-206]

TransCanada Hydro Northeast, Inc.; Notice of Application Accepted
for Filing, Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Type of Application: Request to Amend License Articles 409, 410,
411, and 413.
    b. Project No.: 2323-206.
    c. Date Filed: March 31, 2015.
    d. Applicant: TransCanada Hydro Northeast, Inc. (licensee).
    e. Name of Project: Deerfield River Hydroelectric Project.
    f. Location: Windham and Bennington counties, Vermont and Franklin
and Berkshire counties, Massachusetts.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791(a)-825(r).
    h. Applicant Contact: John Ragonese, FERC License Manager, (603)
498-2851, or<EMAIL_ADDRESS>    i. FERC Contact: Alicia Burtner,<PHONE_NUMBER>, or
<EMAIL_ADDRESS>    j. Deadline for filing comments, motions to intervene, protests,
and recommendations is 30 days from the issuance date of this notice by
the Commission.
    All documents may be filed electronically via the Internet. See, 18
CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web
site at http://www.ferc.gov/docs-filing/efiling.asp. If unable to be
filed electronically, documents may be paper-filed. To paper-file, an
original and seven copies should be mailed to: Secretary, Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426. Commenters can submit brief comments up to 6,000 characters,
without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and
contact information at the end of your comments.
    Please include the project number (P-2323-206) on any comments,
motions, or recommendations filed.
    k. Description of Request: The licensee requests the deletion or
suspension of the requirements of license Articles 409, 410, 411, and
413 and the associated Atlantic Salmon Radio-Tagging Plan, as approved
by the Commission on March 31, 1998. The requirements pertain to
monitoring and restoring Atlantic salmon (Salmo salar) in the
Connecticut River and its tributaries. Article 409 requires the
licensee to construct, operate, and maintain a permanent upstream fish
passage facility. Article 410 requires a plan to capture upstream
migrating Atlantic salmon below the dam and transport them to river
reaches above the dam or to hatchery facilities until permanent passage
facilities, are completed. Article 411 requires monitoring of Atlantic
salmon smolts through project fish passage facilities, and Article 413
requires an Atlantic Salmon Radio-Tagging Plan. The licensee indicates
that the U.S. Fish and Wildlife Service, which had been actively
stocking Atlantic salmon in the Connecticut River and its tributaries,
has officially withdrawn support for the restoration program due to
unsatisfactory results. The licensee indicates that its efforts under
Articles 409, 410, 411, and 413 have no feasible chance of success
without the U.S. Fish and Wildlife's stocking component.
    l. Locations of the Application: A copy of the application is
available for inspection and reproduction at the Commission's Public
Reference Room, located at 888 First Street NE., Room 2A, Washington,
DC 20426, or by calling<PHONE_NUMBER>. This filing may also be viewed
on the Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number excluding the last three digits
in the docket number field to access the document. You may also
register online at http://www.ferc.gov/docs-filing/esubscription.asp to
be notified via email of new filings and issuances related to this or
other pending projects. For assistance, call 1-866-208- 3676 or email
<EMAIL_ADDRESS>for TTY, call<PHONE_NUMBER>. A copy is
also available for inspection and reproduction at the address in item
(h) above.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
.214. In determining the appropriate action to take, the Commission
will consider all protests or other comments filed, but only those who
file a motion to intervene in accordance with the Commission's Rules
may become a party to the proceeding. Any comments, protests, or
motions to intervene must be received on or before the specified
comment date for the particular application.
    o. Filing and Service of Responsive Documents: Any filing must (1)
bear in all capital letters the title ``COMMENTS'', ``PROTEST'', or
``MOTION TO INTERVENE'' as applicable; (2) set forth in the heading the
name of the applicant and the project number of the application to
which the filing responds; (3) furnish the name, address, and telephone
number of the person protesting or intervening; and (4) otherwise
comply with the requirements of 18 CFR 385.2001 through 385.2005. All
comments, motions to intervene, or protests must set forth their
evidentiary basis and otherwise comply with the requirements of 18 CFR
4.34(b). All comments, motions to intervene, or protests should relate
to project works which are the subject of the variance. Agencies may
obtain copies of the application directly from the applicant. A copy of
any protest or motion to intervene must be served upon each
representative of the applicant specified in the particular
application. If an intervener files comments or documents with the
Commission relating to the merits of an issue that may affect the
responsibilities of a particular resource agency, they must also serve
a copy of the document on that resource agency. A copy of all other
filings in reference

to this application must be accompanied by proof of service on all
persons listed in the service list prepared by the Commission in this
proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.

    Dated: April 30, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015-10574 Filed 5-5-15; 8:45 am]
 BILLING CODE 6717-01-P