[Federal Register Volume 86, Number 109 (Wednesday, June 9, 2021)]
[Notices]
[Pages 30663-30671]
[FR Doc No: 2021-12026]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92105; File No. SR-FINRA-2020-031]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Granting Approval of a Proposed Rule Change, as
Modified by Amendment No. 2, To Adopt Proposed Rule 6439 (Requirements
for Member Inter-Dealer Quotation Systems) and Rescind the Rules
Related to the OTC Bulletin Board Service

June 3, 2021.

I. Introduction

    On September 24, 2020, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to rescind the rules related to
the OTC Bulletin Board Service and cease its operation and to adopt new
requirements for member inter-dealer quotation systems that disseminate
quotations in equity securities traded over-the-counter (``OTC''). The
proposed rule change was published for comment in the Federal Register
on October 7, 2020.\3\ On November 4, 2020, pursuant

to Section 19(b)(2) of the Act,\4\ the Commission designated a longer
period within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\5\ On December 21, 2020, FINRA
filed Amendment No. 1 to the proposed rule change.\6\ On December 30,
2020, the Commission published notice of Amendment No. 1 and instituted
proceedings pursuant to Section 19(b)(2)(B) of the Act \7\ to determine
whether to approve or disapprove the proposed rule change.\8\ On April
5, 2021, the Commission extended the period for consideration of the
proposed rule change to June 4, 2021.\9\ On June 1, 2021, FINRA filed
Amendment No. 2 to the proposed rule change, which replaces and
supersedes Amendment No. 1 in its entirety.\10\ The Commission received
four comment letters regarding the proposed rule change,\11\ and two
responses to comments from FINRA.\12\ This order approves the proposed
rule change, as modified by Amendment No. 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act Release No. 90067 (October 1, 2020), 85 FR
63314 (``Notice''). Comments on the proposed rule change can be
found at: https://www.sec.gov/comments/sr-finra-2020-031/srfinra2020031.htm.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Exchange Act Release No. 90335 (November 4, 2020). The
Commission designated January 5, 2021, as the date by which the
Commission shall approve or disapprove, or institute proceedings to
determine whether to approve or disapprove, the proposed rule
change.
    \6\ Amendment No. 1 may be found at: https://www.sec.gov/comments/sr-finra-2020-031/srfinra2020031-8841399-238269.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Exchange Act Release No. 90824, 86 FR 653 (January 6,
2021).
    \9\ See Securities Exchange Act Release No. 91474, 86 FR 18583
(April 9, 2021).
    \10\ Amendment No. 2 is a partial amendment in which FINRA added
a representation that the effective date for deleting the rules
related to the OTCBB (as defined herein) will not occur until: (1)
Proposed Rule 6439 (except for Rule 6439(d)(1)(B)) is effective; and
(2) the Commission grants FINRA's request set forth in the QEQS
Designation Request Letter (as defined herein) (or FINRA files a
rule filing otherwise setting the implementation date for deleting
the rules related to the OTCBB and the Commission approves such rule
filing, if required). Because Amendment No. 2 to the proposed rule
clarifies the timing of effectiveness of the proposed rule change
and does not materially alter the substance of the proposed rule
change, Amendment No. 2 is not subject to notice and comment.
Amendment No. 2 may be found at: https://www.sec.gov/comments/sr-finra-2020-031/srfinra2020031.htm.
    \11\ See Letters from Christopher Bok, Chief Compliance Officer,
OTC Link, LLC, dated October 28, 2020 (``OTC Link Letter 1'');
Kimberly Unger, CEO and Executive Director, The Security Traders
Association of New York, Inc., dated October 28, 2020 (``STANY
Letter''); Sherry J. Sandler, Global OTC, dated November 9, 2020
(``Global OTC Letter''), and Cass Sanford, Associate General
Counsel, OTC Markets Group, Inc., dated January 27, 2021 (``OTC Link
Letter 2'').
    \12\ See Letters from Racquel Russell, Associate General
Counsel, FINRA, dated November 20, 2020 (``FINRA Letter 1'') and
February 12, 2021 (``FINRA Letter 2'').
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II. Summary of the Proposal, as Modified by Amendment No. 2

    As further described below, FINRA proposes to (i) rescind FINRA's
rules governing the OTC Bulletin Board Service (``OTCBB'') and cease
its operation; and (ii) adopt new Rule 6439 (Requirements for Member
Inter-Dealer Quotation Systems) to expand the obligations of member
interdealer quotation systems (``IDQSs'') \13\ that disseminate
quotation updates on a real-time basis in OTC Equity Securities.\14\
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    \13\ FINRA Rule 6420(c) defines ``inter-dealer quotation
system'' as ``any system of general circulation to brokers or
dealers which regularly disseminates quotations of identified
brokers or dealers.'' This definition tracks the Commission's
definition of the same term in Exchange Act Rule 15c2-11, 17 CFR
240.15c2-11.
    \14\ The term ``OTC Equity Security'' is defined in FINRA Rule
6420(f) as any equity security that is not an ``NMS stock'' as that
term is defined in Rule 600(b)(47) of Regulation NMS; provided,
however, that the term ``OTC Equity Security'' shall not include any
Restricted Equity Security. The term ``Restricted Equity Security''
is further defined in FINRA Rule 6420(k) to mean any equity security
that meets the definition of ``restricted security'' as contained in
Rule 144(a)(3) under the Securities Act of 1933.
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A. Rescission of Rules Governing the OTCBB

    The OTCBB is a FINRA-operated IDQS available for use by broker-
dealers to publish quotations in eligible OTC Equity Securities.\15\
FINRA has operated the OTCBB since 1990.\16\ FINRA states that, due to
technological advancements since 1990 and the increase in alternative
electronic venues with more extensive functionality than the OTCBB, the
level of quotation activity occurring on the OTCBB has continued to
decline over the past several years and is now nonexistent.\17\ FINRA
represents that, as of the date that it filed the proposed rule change,
the OTCBB does not display or widely disseminate quotation information
on any OTC Equity Security.\18\
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    \15\ See Notice, supra note 3, at 63315.
    \16\ See id.
    \17\ See id.
    \18\ See id.
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    FINRA states that it does not believe that continued operation of
the OTCBB serves any benefit to investors or the marketplace and that
ceasing operation of the OTCBB would eliminate potential investor
confusion regarding the availability of quotation information for OTC
Equity Securities.\19\ In addition, FINRA states that it does not
believe that the OTCBB, in its current state, furthers the goals and
objectives of Section 17B of the Act and, therefore, does not meet the
characteristics of a system described in Section 17B of the Act
regarding the widespread dissemination of reliable and accurate
quotation information with respect to ``penny stocks.'' \20\
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    \19\ See id. at 63318. For example, FINRA states that where
investors look to feeds that solely disseminate OTCBB data for
quotation information on a particular OTC Equity Security, investors
mistakenly may conclude that there are no current quotations in the
security (when, in fact, there may be numerous quotations available
elsewhere--i.e., on member-operated IDQSs). See id.
    \20\ Section 17B(b)(1) of the Act, which was added by the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990
(``Penny Stock Act''), directs the Commission to ``facilitate the
widespread dissemination of reliable and accurate last sale and
quotation information with respect to penny stocks . . . with a view
toward establishing, at the earliest feasible time, one or more
automated quotation systems that will collect and disseminate
information regarding all penny stocks.'' 15 U.S.C. 78q-2(b)(1).
Under Exchange Act Rule 3a51-1, ``penny stock'' is a non-NMS stock
that among other things, does not include securities that have a
price of five dollars or more as determined either on a per
transaction basis or, in the absence of a transaction, on the basis
of the inside bid quotation for the security displayed on an
automated interdealer quotation system that has the characteristics
set forth in Section 17B(b)(2) of the Act or such other automated
interdealer system that is designated by the Commission for purposes
of the rule (such a system, a ``Qualifying Electronic Quotation
System'' or ``QEQS''). See 17 CFR 240.3a51-1; Exchange Act Release
No. 30608 (April 20, 1992), 57 FR 18004 (April 28, 1992) (``Penny
Stock Rules Adopting Release''); 17 CFR 240.3a51-1, 15g-1 through
15g-9 and 15g-100 (``Penny Stock Rules''). The Commission, in
adopting the Penny Stock Rules, set forth standards it would
consider when designating a QEQS. See Penny Stock Rules Adopting
Release, 57 FR at 18012 n.64. The QEQS designation criteria set
forth in the Penny Stock Rules are based on the Exchange Act Section
17B characteristics of an automated quotation system that would
facilitate the widespread dissemination of reliable and accurate
last sale and quotation information with respect to penny stocks.
See 15 U.S.C. 78q-2(b)(1) and (2). In 1992, the Commission
designated the OTCBB, then operated by FINRA's predecessor the
National Association of Securities Dealers, Inc. (``NASD''), as an
automated interdealer quotation system and a QEQS for purposes of
the Penny Stock Rules. See Letter from Margaret H. McFarland, Deputy
Secretary, Commission, to Richard Ketchum, Executive Vice President,
NASD, Inc., dated December 30, 1992 (``OTCBB Designation Letter'').
The Commission thereafter granted the NASD's request for an
extension of QEQS status. See Securities Exchange Act Release No.
38101 (Dec. 31, 1996), 62 FR 1010 (Jan. 7, 1997).
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    As a result, FINRA proposes to rescind the FINRA Rule 6500 Series,
which governs the operation of the OTCBB. Among other things, the FINRA
Rule Series 6500 contains provisions regarding the securities eligible
to be quoted on the OTCBB (FINRA Rule 6530), market maker obligations
on the OTCBB (FINRA Rule 6540), and transaction reporting (FINRA Rule
6550). FINRA also proposes to rescind FINRA Rule 7720, which sets forth
the fees applicable to a broker-dealer that displays quotations or
trading interest in the OTCBB, and to amend FINRA Rule

9217 (Violations Appropriate for Disposition Under Plan Pursuant to SEA
Rule 19d-1(c)(2)) to remove reference to FINRA Rule 6550 (Transaction
Reporting). While these proposed changes to the FINRA rulebook would
cause the operation of the OTCBB to terminate, FINRA states that it
would not cease operation of the OTCBB until: (1) Proposed Rule 6439
(except for proposed Rule 6439(d)(1)(B)) is effective, and (2) the
Commission grants FINRA's request set forth in the QEQS Designation
Request Letter (or FINRA files a rule filing otherwise setting the
implementation date for deleting the rules related to the OTCBB and the
Commission approves such rule filing, if required).\21\
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    \21\ See Amendment No. 2, supra note 10. See also infra notes
46-47 and accompanying text.
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B. Proposed Rule 6439 (Requirements for Member Inter-Dealer Quotation
Systems)

    FINRA states that all quotation activity in OTC Equity Securities
now occurs on member-operated IDQSs, rather than the OTCBB.\22\ FINRA
proposes, in conjunction with the cessation of the OTCBB, to adopt new
requirements for member IDQSs that provide quotations in OTC Equity
Securities in order to ensure that they have minimum standards in
place.\23\ FINRA states that it believes that the proposed requirements
would complement the existing framework governing the form and content
of quotations \24\ and are consistent with the goals and objectives of
Section 17B of the Act regarding the facilitation of widespread
dissemination of reliable and accurate quotation information in penny
stocks.\25\
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    \22\ See Notice, supra note 3, at 63320.
    \23\ Id. at 63316.
    \24\ FINRA currently has in place rules that govern the activity
of member firms when they engage in quoting OTC Equity Securities.
Specifically, the FINRA Rule 6400 Series (Quoting and Trading in OTC
Equity Securities), among other things, provides a regulatory
framework that governs the form and content of OTC Equity
Securities' quotations, and the FINRA Rule 5200 Series sets forth
rules of general applicability that govern quoting and trading
practices in this market sector (hereinafter, the FINRA Rule Series
6400 and 5200 are collectively referred to as the ``FINRA Quotation
Governance Rules''). See Notice, supra note 3, at 63314-15. Rather
than governing the activity of member firms, like the FINRA
Quotation Governance Rules, proposed Rule 6439 would provide
quotation governance standards for member IDQSs on or through which
quotations are displayed.
    \25\ See supra note 20.
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    Proposed Rule 6439 would apply to member IDQSs (whether or not such
member is also an alternative trading system (``ATS'')) that permit
quotation updates on a real-time basis in OTC Equity Securities. Under
proposed Rule 6439(a), member IDQSs must establish, maintain and
enforce written policies and procedures relating to the collection and
dissemination of quotation information in OTC Equity Securities on or
through their systems. Such written policies and procedures must be
reasonably designed to ensure that quotations received and disseminated
are informative, reliable, accurate, firm, and treated in a not
unfairly discriminatory manner, including by establishing non-
discretionary standards under which quotations are prioritized and
displayed.\26\ Member IDQSs must also prominently disclose these
written policies and procedures, along with any material updates,
modifications and revisions thereto, to subscribers within five
business days following the date of establishment of a policy or
procedure or implementation of a material change, as well as provide
them to prospective subscribers upon request.\27\
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    \26\ For example, FINRA states that a member IDQS would be
required to address in its procedures its methodology for ranking
quotations, including at a minimum, addressing factors such as price
(including any applicable quote access fee), size, time, capacity
and type of quotation (such as unpriced quotes and bid/offer wanted
quotations). The member IDQS also would be required to include any
other factors relevant to the ranking and display of quotations
(e.g., reserve sizes, quotation updates, treatment of closed
quotations, and quotation information imported from other systems).
See Notice, supra note 3, at 63316.
    \27\ FINRA states that a member that is an IDQS at the time of
the effective date of this proposed rule change would be required to
prominently disclose the required information to its subscribers
upon the effective date of the proposed rule change and, thereafter,
within five business days of the implementation of any material
update, modification or revision thereto. See id., at n.16.
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    Under proposed Rule 6439(b), member IDQSs must establish non-
discriminatory written standards for granting access to quoting and
trading in OTC Equity Securities on their systems that do not
unreasonably prohibit or limit any person with respect to access to
services offered by such member IDQS.\28\ As with the requirements
under proposed Rule 6439(a), member IDQSs would be required to
prominently disclose these written standards relating to fair access,
and any material updates, modifications and revisions thereto, to their
subscribers within five business days following the date of
establishment of written standards or implementation of a material
change, as well as provide them to prospective subscribers upon
request.\29\ In addition, member IDQSs would be required to make and
keep records of all grants of access and all denials or limitations of
access. Such records must include, for all subscribers, the reasons for
granting access, and, for all denials or limitations of access, the
reasons for denying or limiting such access.\30\
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    \28\ FINRA states that this proposed requirement is consistent
with the ``fair access'' requirements of Regulation ATS but would
apply to quoting and trading in all OTC Equity Securities on the
member IDQS, regardless of the percentage of average daily volume
that such member IDQS had in the security. See 17 CFR 242.301(b)(5).
FINRA states that while certain member IDQSs may already be subject
to the similar volume-based fair access requirements under
Regulation ATS, proposed Rule 6439 would ensure the application of
fair access requirements to all member IDQSs. See Notice, supra note
3, at 63316.
    \29\ See id. at 63316-17. See also supra note 27.
    \30\ See proposed Rule 6439(b).
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    Proposed Rules 6439(c) and (d) would apply only to member IDQSs
that do not automatically execute all orders presented for execution
against displayed quotations for which a member subscriber has an
obligation under FINRA Rule 5220 (Offers at Stated Prices) \31\ (such a
system is hereafter referred to as a ``non-auto-executing member
IDQS''). Under proposed Rule 6439(c), non-auto-executing member IDQSs
must establish, maintain and enforce written policies and procedures
that are reasonably designed to address instances of unresponsiveness
to orders in an OTC Equity Security. At a minimum, these policies and
procedures must specify an efficient process for: (i) Monitoring
subscriber unresponsiveness; (ii) subscribers to submit complaints to
the non-auto-executing member IDQS regarding potential instances of
order unresponsiveness; (iii) documenting the subscriber's rationale
for unresponsiveness; and (iv) determining specified steps when an
instance of, or repeated, order unresponsiveness may have occurred.\32\
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    \31\ FINRA Rule 5220 and its associated Supplementary Material
set forth members' firm quote obligations. Specifically, FINRA Rule
5220 provides that no member shall make an offer to buy from or sell
to any person any security at a stated price unless such member is
prepared to purchase or sell, as the case may be, at such price and
under such conditions as are stated at the time of such offer to buy
or sell.
    \32\ See Notice, supra note 3, at 63317.
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    Under proposed Rule 6439(d), non-auto-executing member IDQSs must
report to FINRA, in a form and manner prescribed by FINRA,\33\ certain
aggregate and order-level information in OTC Equity Securities.
Specifically, proposed Rule 6439(d)(1)(A) would require a non-auto-
executing member IDQS to report to FINRA on a monthly basis the
following aggregated information, categorized by FINRA

member subscriber market participant identifier (MPID) across all
symbols quoted by the MPID during the previous calendar month: (i)
Total number of marketable orders presented for execution against the
MPID's quotation; \34\ (ii) average execution (full or partial) time
for marketable orders presented against the MPID's quotation based on
the time an order is presented; (iii) total number of full or partial
executions based on the time a marketable order is presented that are
within the following execution timeframes: <5 seconds; >=5 and <10
seconds; >=10 and <20 seconds; and >=20 seconds; (iv) total number of
marketable orders presented against the MPID's quotation that did not
receive a full or partial execution; and (v) average response time of
the highest 10% and highest 50% of the MPID's response times for
marketable orders (for full or partial executions).\35\
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    \33\ FINRA states that following Commission approval, FINRA
would announce in a Regulatory Notice details about the required
manner and timing of the submission of this information to FINRA.
See Notice, supra note 3, at 63317, n.27.
    \34\ FINRA states that in this context, a ``marketable order''
refers to a message presented against a market maker's quote that is
priced to be immediately executable. See id., n.29.
    \35\ See proposed Rule 6439(d)(1)(A).
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    Proposed Rule 6439(d)(1)(B) would require non-auto-executing member
IDQSs to provide to FINRA the following order-level information for
each order presented against an MPID's quotation during the previous
calendar month: (i) Buy/sell; (ii) security symbol; (iii) price; (iv)
size; (v) All or None indicator (yes or no); (vi) order entry firm
MPID; (vii) order receipt time; (viii) time in force; (ix) response
time; (x) order response (e.g., execute, reject cancel, etc.); (xi)
executed quantity; (xii) system-generated order number (if any); and
(xiii) position in queue for quote (e.g., IL1, IL2).\36\ However, to
the extent that the above order-level information is or becomes
reportable under the Consolidated Audit Trail (``CAT'') pursuant to
FINRA Rule 6830 (Industry Member Data Reporting), non-auto-executing
member IDQSs would not be required to report this order-level
information under proposed Rule 6439(d)(1)(B).\37\
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    \36\ See proposed Rule 6439(d)(1)(B).
    \37\ See proposed Rule 6439(d)(2). If such information is
reportable to the CAT pursuant to FINRA Rule 6830, this information
will be available to FINRA. Thus, separate reporting pursuant to
proposed FINRA Rule 6439(d) would be duplicative.
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    Proposed Rule 6439(e) would require each member IDQS to make
available to customers on its website (or its affiliate distributor's
website) a written description of each OTC Equity Security order- or
quotation-related data product offered by such member IDQS and related
pricing information, including fees, rebates, discounts and cross-
product pricing incentives. Member IDQSs would be required to keep the
relevant website page(s) accurate and up-to-date with respect to the
required data product descriptions and pricing information and to make
such information available at least two business days in advance of
offering a data product.\38\ Proposed Rule 6439(e) would specify that a
member IDQS is not precluded from negotiating lower fees with
customers, provided that the member IDQS discloses on such website
page(s) the circumstances under which it may do so.
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    \38\ See proposed Rule 6439(e).
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    Finally, under proposed Rule 6439(f), a member IDQS must provide
FINRA with prompt notification when it reasonably becomes aware of any
systems disruption that is not de minimis that degrades, limits, or
otherwise impacts the member IDQS's functionality with respect to
trading or the dissemination of market data.\39\ Such notification must
include, on a reasonable best efforts basis, a brief description of the
event, its impact, and the member IDQS's resolution efforts.\40\ FINRA
states that, to comply with this requirement, a member IDQS that is an
SCI ATS, as defined in Rule 1000 of Regulation SCI, could provide FINRA
with the same information (or a duplicate copy of any notification)
submitted to the Commission as required under Regulation SCI Rule
1002(b) \41\ promptly after filing the notification with the
Commission.\42\ FINRA states that, if a member IDQS is not an SCI ATS,
it could comply with this requirement by providing FINRA prompt
notification when it reasonably becomes aware of any such systems
disruption, and by providing periodic updates on the event and its
resolution.\43\ Such notifications would include, on a reasonable best
efforts basis, a brief description of the event, its impact, and
resolution efforts.\44\
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    \39\ FINRA would announce in a Regulatory Notice the methods and
process by which members may provide systems disruption
notifications to FINRA. See Notice, supra note 3, at 63318.
    \40\ See proposed Rule 6439(f).
    \41\ 17 CFR 242.1002(b).
    \42\ See Notice, supra note 3, at 63318.
    \43\ See id.
    \44\ See id.
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    FINRA states that, if the proposed rule change is approved by the
Commission, FINRA will announce in a Regulatory Notice the effective
date(s) of the proposed rule change, which may be phased in but will be
no later than 365 days following Commission approval.\45\
Notwithstanding the foregoing, the effective date for rescinding the
rules related to the OTCBB will not occur until: (1) Proposed Rule 6439
(except for Rule 6439(d)(1)(B)) is effective,\46\ and (2) the
Commission grants FINRA's request set forth in the QEQS Designation
Request Letter \47\ (or FINRA files a rule filing otherwise setting the
implementation date for deleting the rules related to the OTCBB and the
SEC approves such rule filing, if required).\48\ FINRA also states that
it will examine for compliance by member IDQSs with proposed Rule 6439,
including by reviewing the adequacy of member IDQSs' written policies
and procedures and written fair access standards required under the
proposal, conducting a targeted exam of impacted member IDQSs after the
initial effectiveness of the rule, and will incorporate a Rule 6439
review as part of the regular exam program for impacted member
firms.\49\
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    \45\ See Notice, supra note 3, at 63319.
    \46\ FINRA states that proposed Rule 6439, with one exception
related to the reporting to FINRA of order-level information, will
become effective at the same time or prior to the rescission of the
OTCBB rules. FINRA states that paragraph (d)(1)(B) of proposed Rule
6439 (requiring reporting of specified order-level information) may
be phased at a later date within the 365-day timeframe to allow
FINRA to better coordinate with the timeline for reporting
information in OTC Equity Securities to the CAT under FINRA Rule
6830 (Industry Member Data Reporting). See Amendment No. 2, supra
note 10.
    \47\ See infra note 66.
    \48\ See id.
    \49\ See Notice, supra note 3, at 63316, n.17.
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III. Discussion and Commission Findings

    After carefully reviewing the proposed rule change, as modified by
Amendment No.2, the comment letters, and the FINRA letters, the
Commission finds that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities association.\50\ In particular, the
Commission finds that the proposed rule change is consistent with
Section 15A(b)(6) of the Act,\51\ in that it is designed, among other
things, to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. In addition, the Commission
finds that the proposed rule change is consistent with Section
15A(b)(11) of the Act, in that it includes provisions governing the
form and content of quotations relating to securities sold otherwise
than on a national securities exchange which may

be distributed or published by any member or person associated with a
member, and the persons to whom such quotations may be supplied, and
that such rules are designed to produce fair and informative
quotations, to prevent fictitious or misleading quotations, and to
promote orderly procedures for collecting, distributing, and publishing
quotations.\52\ The Commission also finds that the proposal is
consistent with Section 17B(b)(1) of the Act in that it is designed to
facilitate the widespread dissemination of reliable and accurate last
sale and quotation information with respect to penny stocks.\53\
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    \50\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \51\ 15 U.S.C. 78o-3(b)(6).
    \52\ 15 U.S.C. 78o-3(b)(11).
    \53\ 15 U.S.C 78q-2(b)(1).
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A. Rescission of Rules Governing the OTCBB

    As noted by FINRA, the OTCBB currently does not display or widely
disseminate quotation information on any OTC Equity Securities, and all
quotation activity in OTC Equity Securities occurs on member IDQSs.\54\
As a result, FINRA represents that discontinuance of the OTCBB as an
IDQS will not impact the current level of quotation information
available for OTC Equity Securities.\55\ The Commission received two
comment letters supporting FINRA's proposal to cease operation of the
OTCBB.\56\ These commenters agreed that the OTCBB no longer benefits
investors or the marketplace due to how the market for OTC Equity
Securities has evolved.\57\
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    \54\ See supra notes 18 and 22 and accompanying text.
    \55\ See Notice, supra note 3, at 63318.
    \56\ See OTC Link Letter 1 and STANY Letter, supra note 11.
    \57\ See STANY Letter, supra note 11, at 1; OTC Link Letter 1,
supra note 11, at 1.
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    The Commission believes that the continued operation of the OTCBB,
which FINRA represents is essentially defunct, provides no current
benefit to the market and could cause investor confusion with respect
to the availability of quotations in OTC Equity Securities. The
Commission recently estimated \58\ that, on average, there were 9,998
quoted OTC securities \59\ that had published quotations per day during
the calendar year 2019.\60\ OTC Markets Group, which operates OTC Link
ATS (a member IDQS that would be subject to proposed Rule 6439),
currently identifies 81 broker-dealers that are active on the OTC Link
ATS in OTC securities.\61\ In addition, from aggregated OTC Markets
Group data for the calendar year 2019, the Commission identified 19,141
unique OTC securities for 16,059 unique companies.\62\ Of these
securities, 11,542 unique OTC securities had at least one published
quotation on OTC Link ATS and 9,895 unique companies had a security
that was quoted at least once on OTC Link ATS during the calendar year
2019.\63\ By contrast, the Commission understands that there currently
is no quoting activity occurring on the OTCBB.\64\ Given the non-
existent quoting activity on the OTCBB and the emergence of member
IDQSs, such as OTC Link ATS, as the dominant sources for quotation
activity in OTC Equity Securities, the Commission agrees with FINRA
that the continued operation of the OTCBB could result in confusion
with respect to the availability of quotations in OTC Equity
Securities. For example, an investor looking solely to the OTCBB for
quotation data for a particular OTC Equity Security could mistakenly
conclude that there are no current quotations in the security when, in
fact, there may be quotations available elsewhere--i.e., on member
IDQSs. Further, FINRA has represented that it will not cease operation
of the OTCBB until proposed Rule 6439 (except for Rule 6439(d)(1)(B))
is effective and the Commission either grants FINRA's request set forth
in the QEQS Designation Request Letter or approves (if necessary) a
subsequent rule filing from FINRA that otherwise sets the
implementation date for deleting the rules related to the OTCBB.\65\
Accordingly, the Commission finds that the proposed rule change to
rescind FINRA's rules governing the OTCBB and cease its operation,
while simultaneously implementing enhanced regulatory requirements for
member IDQSs pursuant to Rule 6439, will protect investors and the
public interest, consistent with Section 15A(b)(6) of the Act, by
eliminating investor confusion that could arise because members no
longer submit quotations to the OTCBB and, as a result, the OTCBB no
longer displays any quotations in OTC Equity Securities.\66\
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    \58\ See Securities Exchange Act Release Nos. 89891 (September
16, 2020), 85 FR 68124, 68185-86 (October 27, 2020) (``Exchange Act
Rule 15c2-11 Release''). The Commission uses three sources of data
on OTC securities. OTC Markets Group's ``End-of-Day Pricing
Service'' and ``OTC Security Data File'' provide closing trade and
quote data for the U.S. OTC equity market and include identifying
information for securities and issuers. The Commission also uses
information from the weekly OTC Markets Group's ``OTC Company Data
File.'' Company Data Files include information about issuer
reporting, shell, and bankruptcy status, as well as the SEC Central
Index Key (CIK) identifier and whether an issuer's financial
statements are audited. See id., at 68185, n.640.
    \59\ While this data may include OTC securities that are
restricted securities and thus outside of the scope of FINRA's
definition of OTC Equity Securities, the Commission believes that
the data is reasonably representative of quoting and trading
activity in OTC Equity Securities.
    \60\ See id. at 68185. The number of securities quoted includes
those securities with published priced and unpriced quotations. The
Commission estimated that approximately seven percent of quoted OTC
securities did not have priced quotations. See id. at 68185, n.641.
    \61\ See Broker-Dealer Directory, OTC Markets Group. Inc.,
https://www.otcmarkets.com/otc-link/broker-dealer-directory (last
visited Apr. 19, 2021, 2:16 p.m.). The Commission expects that not
all of the broker-dealers included in the directory are actively
engaged in quoting OTC securities. See also Exchange Act Rule 15c2-
11 Release, supra note 58, at 68184.
    \62\ See Exchange Act Rule 15c2-11 Release, supra note 58, at
68185.
    \63\ See id. at 68185, n.640. The Commission believes that OTC
Markets Group data are reasonably representative of all OTC quoting
and trading activity in the U.S. OTC equities market. See id.
    \64\ See supra note 18 and accompanying text.
    \65\ See Amendment No. 2, supra note 10.
    \66\ As noted above, the Commission previously designated the
OTCBB as an automated interdealer quotation system and QEQS for
purposes of the Penny Stock Rules. Historically, the universe of
securities quoted on the OTCBB included penny stocks as well as
higher priced OTC Equity Securities. See OTCBB Designation Letter,
supra note 20. FINRA has stated that it intends to request that the
Commission designate the FINRA OTC Reporting Facility (see infra
note 109 and accompanying text), together with any FINRA-member
IDQS, as a QEQS for purposes of the Penny Stock Rules (``QEQS
Designation Request Letter''). See Notice, supra note 3, at 63116,
n.15; Amendment No. 2, supra note 10.
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B. Proposed Rule 6439 (Requirements for Member Inter-Dealer Quotation
Systems)

    The Commission finds that the proposed requirements set forth in
Rule 6439 relating to member IDQSs that permit quotation updates on a
real-time basis in OTC Equity Securities are consistent with the
Exchange Act.
    First, the Commission finds that proposed Rule 6439(a), which would
require member IDQSs to establish, maintain and enforce written
policies and procedures relating to the collection and dissemination of
quotation information in OTC Equity Securities on or through their
systems, is consistent with Section 15A(b)(11) of the Act, which
requires FINRA rules relating to quotations for securities sold other
than on a national securities exchange to be designed to produce fair
and informative quotations, to prevent fictitious or misleading
quotations, and to promote orderly procedures for collecting,
distributing, and publishing quotations. The Commission believes that
proposed Rule 6439(a) is designed to promote orderly procedures for
collecting, distributing, and publishing quotations in OTC Equity
Securities because the proposed requirements would apply to all member
IDQSs that permit quotation updates on a real-time

basis in OTC Equity Securities. In addition, proposed Rule 6439(a)
would require that a member IDQS's policies and procedures relating to
collection and dissemination of quotation information must be
reasonably designed to ensure that quotations received and disseminated
are informative, reliable, accurate, firm and treated in a not unfairly
discriminatory manner, including by establishing non-discretionary
standards under which quotations are prioritized and displayed.
Moreover, member IDQSs would be accountable to FINRA should their
policies and procedures not meet the minimum standards set forth in
proposed Rule 6439(a) and FINRA has represented that it will examine
member IDQSs for compliance with the requirements of proposed Rule
6439, including by reviewing the adequacy of member IDQSs' written
policies and procedures.\67\ In addition, by requiring that all member-
IDQSs that provide quotations in OTC Equity Securities maintain
policies and procedures for collecting and disseminating quotation
information, and that such policies and procedures be reasonably
designed to ensure that quotations received and disseminated are
informative, reliable, accurate, firm and treated in a not unfairly
discriminatory manner, the Commission finds that proposed Rule 6439(a)
is designed to promote just and equitable principles of trade and
protect investors and the public interest, consistent with Section
15A(b)(6) of the Act.
---------------------------------------------------------------------------

    \67\ See supra note 49 and accompanying text.
---------------------------------------------------------------------------

    Second, the Commission finds that proposed Rule 6439(b), which
would require a member IDQS to establish non-discriminatory written
standards for granting access to quoting and trading in OTC Equity
Securities on its system that do not unreasonably prohibit or limit any
person in respect to access to services offered by such member IDQS, is
consistent with Section 15A(b)(6) of the Act, which requires that
FINRA's rules be designed to promote just and equitable principles of
trade and protect investors and the public interest. The Commission
believes that the proposed requirements relating to fair access are
designed to afford fair and non-discriminatory access for all market
participants to the quotation systems of all member IDQSs that provide
real-time quotations in OTC Equity Securities. Given the significant
role that member IDQSs serve in the marketplace for quotations in OTC
Equity Securities, the Commission believes that these requirements
should improve access to quotations for these securities, which should
help to ensure that investors have the pricing information necessary to
make informed investment decisions with respect to OTC Equity
Securities. As a result, the Commission finds that the requirements of
proposed Rule 6439(b) are designed to promote just and equitable
principles of trade and protect investors and the public interest,
consistent with Section 15A(b)(6) of the Act.
    One commenter suggested that member IDQSs that are subject to the
fair access requirements under Regulation ATS should be exempt from the
fair access requirements of proposed Rule 6439(b) because such
requirements are duplicative.\68\ In response, FINRA stated that, to
the extent that a member IDQS already is subject to Regulation ATS's
fair access standards with respect to all OTC Equity Securities traded
on its platform, then the proposal would only additionally require that
the member IDQS prominently disclose such fair access policies and
procedures to subscribers.\69\ However, to the extent that a member
IDQS is not already subject to the fair access standards of Regulation
ATS for all OTC Equity Securities traded on its platform, FINRA stated
that the proposal would fill that gap by requiring the member IDQS to
expand the fair access standards to activity in all OTC Equity
Securities and to prominently disclose such fair access policies and
procedures.\70\
---------------------------------------------------------------------------

    \68\ See OTC Link Letter 1, supra note 11, at 4. The Commission
notes that while the commenter, in making this suggestion, referred
to paragraph (c) of the proposed rule, it is paragraph (b) under
proposed Rule 6439-- not paragraph (c) that sets forth the proposed
fair access requirements in Rule 6439. See supra notes 28-30 and
accompanying text.
    \69\ See FINRA Letter 1, supra note 12, at 5.
    \70\ See id., at 5-6.
---------------------------------------------------------------------------

    As discussed, the Commission believes that the requirements
relating to fair access for member IDQSs, as set forth in proposed Rule
6439(b), are consistent with the Exchange Act. The fair access
requirements set forth in Rule 301(b)(5) of Regulation ATS,\71\ which
are consistent with the requirements set forth in proposed Rule
6439(b), only apply if an ATS meets certain volume thresholds set forth
Rule 301(b)(5).\72\ On the other hand, the requirements set forth in
proposed Rule 6439(b) would apply to quoting and trading in all OTC
Equity Securities on a member IDQS, regardless of the percentage of
average daily volume that such member IDQS has in the security. Thus,
FINRA's proposal would ensure the application of fair access
requirements to all member IDQSs that permit quotation updates on a
real-time basis in OTC Equity Securities and to all OTC Equity
Securities quoted and traded on such member IDQSs. Furthermore, as
noted by FINRA in its response to comments,\73\ proposed Rule 6439(b)
sets forth an additional requirement that is not included in Rule
301(b)(5) of Regulation ATS: That a member IDQS's written standards
relating to access and any material updates, modifications and
revisions thereto ``be prominently disclosed to subscribers within five
business days following the date of establishment of the written
standards or implementation of the material change and provided to
prospective subscribers upon request.'' Accordingly, contrary to the
commenter's assertion, the Commission notes that the proposed fair
access requirements under Rule 6439(b) are not duplicative of the fair
access requirements set forth in Rule 301(b)(5) of Regulation ATS.
Further, the Commission believes that exempting member IDQSs subject to
the fair access requirements under Regulation ATS from proposed Rule
6439(b), as the commenter requested, would result in such member IDQSs
not being subject to a key requirement of the proposed rule and would
result in disparate treatment among member IDQSs.
---------------------------------------------------------------------------

    \71\ 17 CFR 242.301(b)(5).
    \72\ See supra note 28.
    \73\ See FINRA Letter 1, supra note 12, at 5-6.
---------------------------------------------------------------------------

    Third, proposed Rules 6439(c) and (d) would require non-auto-
executing member IDQSs to establish, maintain and enforce written
policies and procedures that are reasonably designed to address
instances of unresponsiveness when orders are presented to trade with
firm quotations displayed in OTC Equity Securities, and to report on a
monthly basis certain aggregate and order-level information to FINRA.
FINRA states that such requirements are designed to enhance compliance
with the firm quote requirements for non-auto-executing member IDQSs as
set forth in FINRA Rule 5220.\74\ FINRA also states that the proposed
information to be reported to FINRA would support its oversight of the
OTC securities market by providing FINRA with additional information
regarding the quotation activities occurring on non-auto-executing
member IDQSs and would assist FINRA in surveilling for member
compliance

with firm quote obligations and unresponsiveness.\75\
---------------------------------------------------------------------------

    \74\ See Notice, supra note 3, at 63317. FINRA states that order
unresponsiveness is an area where it regularly receives complaints.
FINRA notes that in 2018, it received 119 complaints from members
regarding instances of unresponsiveness to requests to execute
against a displayed quotation. See id., at 63318, n.26.
    \75\ See id.
---------------------------------------------------------------------------

    The Commission agrees that unresponsiveness by those who display
quotations in the OTC Equity Securities market can be harmful to the
market and investors in OTC Equity Securities. The principle that a
displayed quotation should be ``firm'' is well established in the
securities markets.\76\ In its proposal, FINRA would require member
IDQSs that provide quotations in OTC Equity Securities but do not auto-
execute orders presented for execution against such quotations to adopt
standards to address instances of unresponsiveness by their
subscribers. Because a system that permits manual responses to orders
received against displayed quotations can result in order
unresponsiveness, the Commission believes that requiring such systems
to establish, maintain and enforce written policies and procedures that
are reasonably designed to address instances of unresponsiveness should
help to ensure that market participants can reasonably rely on the
displayed quotations on member IDQSs that do not auto-execute orders.
In addition, the requirement for non-auto-executing member IDQSs to
report aggregate and order-level information to FINRA should help FINRA
surveil for unresponsiveness and ``backing away'' by members and to
take remedial actions against such members, if necessary. As such, the
Commission finds that paragraphs (c) and (d) of proposed Rule 6439 are
consistent with Section 15A(b)(6) of the Act in that they are designed,
among other things, to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \76\ See, e.g., Securities Exchange Act Release No. 60835
(October 16, 2009), 74 FR 54616 (October 22, 2009) (FINRA-2009-055)
(approving proposal to adopt FINRA Rule 5220 (Offers at Stated
Prices) into FINRA's consolidated rulebook) (``The Commission
believes that the proposed rule change is designed to protect
investors and promote the maintenance of fair, orderly and efficient
markets by prohibiting a member from publishing a report of any
transaction unless the member believes that it was a bona fide
purchase or sale of the security and from ``backing away'' from its
quotations.''); Securities Exchange Act Release No. 12670 (July 29,
1976), 41 FR 32856 (August 5, 1976) (proposing Exchange Act Rule
11Ac1-1 (predecessor to Rule 602 of Regulation NMS) (``The
reliability and availability of quotation information are basic
components of a national market system and are needed so that
broker-dealers are able to make best execution decisions for their
customers' orders, and customers are able to make order entry
decisions.'').
---------------------------------------------------------------------------

    Two commenters suggested that FINRA revise proposed Rule 6439(d) to
exempt member-IDQSs that would have reporting obligations under
proposed paragraph (d) \77\ from applicable CAT reporting
obligations.\78\ These commenters stated that proposed Rule 6439 would
provide a reporting mechanism that is more consistent with the way in
which IDQSs operate and therefore would make collection and reporting
more efficient and effective than under the order-based reporting
prescribed by the CAT.\79\ In response, FINRA stated that the proposal
was never intended to impact the outcome of whether the commenters'
order-level information should become CAT reportable and that FINRA
continues to believe that it is appropriate to exempt a non-auto-
executing member IDQS from reporting under proposed Rule 6439(d)(1)(B)
if the IDQS's order-level information is CAT reportable.\80\
---------------------------------------------------------------------------

    \77\ See supra notes 33-37 and accompanying text for a
discussion of the requirements proposed under Rule 6439(d).
    \78\ See STANY Letter, supra note, 11 at 2; OTC Link Letter 1,
supra note 11, at 3-4. As proposed, non-auto-executing member IDQSs
would be exempt from the reporting requirements under proposed Rule
6439(d)(1)(B) to the extent that such items are subject to reporting
to the CAT under FINRA Rule 6830. See supra note 37 and accompanying
text.
    \79\ See STANY Letter, supra note 11, at 2; OTC Link Letter 1,
supra note 11, at 3-4. In connection with this suggested
modification, one commenter stated its view that trade messages on
its ATS--OTC Link ATS--are negotiations and do not constitute
``orders'' for purposes of Rule 6439 or with respect to any CAT
reporting obligations. See OTC Link Letter 1, supra note 11, at 4.
FINRA stated in its proposal, and again in its response to comments,
that such negotiation activities are indeed ``orders'' for purposes
of FINRA's firm quote rule obligations and proposed Rule 6439. See
Notice, supra note 3, at 63317, n.28 (stating that such negotiation
activities are considered ``orders'' for purposes of firm quote rule
obligations and proposed Rule 6439). See FINRA Letter 1, supra note
12, at 4, n.12. See also Exchange Act Rule 3b-16(c) and Rule 300(e)
of Regulation ATS (defining an ``order'' as ``any firm indication of
a willingness to buy or sell a security, as either principal or
agent, including any bid or offer quotation, market order, limit
order, or other priced order'').
    \80\ See FINRA Letter 1, supra note 12, at 4.
---------------------------------------------------------------------------

    The Commission finds that FINRA's proposal to exempt non-auto-
executing member IDQSs from reporting order-level information pursuant
to proposed Rule 6439(d)(1)(B) to the extent such information becomes
reportable to CAT is reasonable and is designed to effectively reduce
reporting redundancies. If the information required to be reported
pursuant to Rule 6439(d)(1)(B) is already reportable, or becomes
reportable, to the CAT pursuant to FINRA Rule 6830, it will be
available to FINRA through the CAT, so separate reporting pursuant to
proposed FINRA Rule 6439(d)(1)(B) would be duplicative. As a result,
the Commission finds the proposed exemption is consistent with Section
15A(b)(6) of the Act in that it is designed to promote just and
equitable principles of trade.
    These two commenters also requested that FINRA provide additional
guidance with respect to proposed Rule 6439(c)(3) and (4), which would
require non-auto-executing member IDQSs to maintain policies and
procedures that specify an efficient process for documenting a
subscriber's rationale for unresponsiveness and for determining
specified steps when an instance of repeated order unresponsiveness may
have occurred.\81\ In response to these comments, FINRA provided some
additional guidance specifically requested by commenters relating to
the requirements of proposed Rule 6439(c)(3) and (4).\82\
---------------------------------------------------------------------------

    \81\ See STANY Letter, supra note 11, at 3; OTC Link Letter 1,
supra note 11, at 2-3. One commenter noted that, as the only non-
auto-executing member IDQS, it would be the only IDQS that would be
subject to the requirements set forth in paragraph (c) of the Rule,
and requested that FINRA issue guidance confirming that its existing
``saturation'' feature and provision of data regarding subscriber
unresponsiveness to certain order messages under its trading
functionalities meet the standards set forth in paragraphs (c)(3)
and (c)(4) of proposed Rule 6439. See OTC Link Letter 1, supra note
11. at 2-3.
    \82\ See FINRA Letter 1, supra note 12, at 3-4. FINRA stated
that it agrees that OTC Link ATS's ``saturation'' feature, as FINRA
understands it, is consistent with the objectives of some of the
proposed requirements in Rule 6439(c), such as proposed Rule
6439(c)(1) and (c)(4), which would require that a member IDQS's
policies and procedures specify an efficient process for monitoring
subscriber unresponsiveness and determining specified steps when an
instance of repeated order unresponsiveness may have occurred.
However, FINRA indicated that it does not believe that OTC Link
ATS's current saturation feature would meet the objectives of
proposed paragraphs (c)(2) or (3) of Rule 6439, which, when
combined, would require that the member IDQS provide a mechanism or
process whereby one subscriber may submit or report to the non-auto-
executing member IDQS a potential instance of order unresponsiveness
by another subscriber and document the subscriber's rationale in
response to that event. FINRA further stated that it does not expect
the member IDQS to investigate or confirm a subscriber's rationale
for the unresponsiveness, but expects that the member IDQS provide a
mechanism or process that would permit a subscriber to submit or
report a potential instance of order unresponsiveness and the member
IDQS would be required to request that the other subscriber provide
its rationale in connection with the instance. For example, the
member IDQS could provide a messaging protocol or other mechanism
that would permit a subscriber to submit or report to the member
IDQS a potential instance of order unresponsiveness and that also
would contact the other party to obtain their rationale. FINRA
stated that it believes that the member IDQS is in the best position
to obtain this information from the subscriber at the time of, or
close in time to, the event, and to document this information and
make it available to FINRA upon request. See id., at 3-4.
---------------------------------------------------------------------------

    In response, one commenter raised concerns regarding the
requirements of proposed Rule 6439(c)(2) and (c)(3), which would
require non-auto-

executing member IDQSs to maintain policies and procedures that specify
an efficient process for subscribers submitting to the member IDQS
complaints regarding potential instances of order unresponsiveness and
documenting the subscriber's rationale for unresponsiveness.\83\ This
commenter stated that, in attempting to perform this function, its
member IDQS would not have access to the necessary underlying
information regarding the issue and would lack the regulatory authority
to resolve the dispute.\84\ This commenter further stated that these
proposed requirements effectively require member IDQSs to act as a
clearinghouse for subscriber complaints of non-responsiveness and blurs
the distinction between SROs and commercial market operators.\85\ The
commenter accordingly requested that FINRA amend the proposal to only
require that a member IDQS escalate instances of unresponsiveness to
FINRA for review when the IDQS is informed of such cases via
appropriate channels (i.e., phone, email, message).\86\
---------------------------------------------------------------------------

    \83\ See OTC Link Letter 2, supra note 9.
    \84\ See id., at 2.
    \85\ See id., at 3.
    \86\ See id.
---------------------------------------------------------------------------

    In response, FINRA stated that it is cognizant that IDQSs,
including the commenter, lack access to certain information and lack
regulatory authority and that it would not expect a member IDQS to
gather extraneous information or resolve disputes (beyond steps that
may be taken pursuant to proposed Rule 6439(c)(4)).\87\ FINRA stated
that the proposal would require that reasonable policies and procedures
be developed, which could include specifying reasonable and appropriate
form and methods through which a member would accept complaints from
subscribers pursuant to proposed paragraph (c)(2).\88\ In addition, the
proposed rule would not require that member IDQSs, including the
commenter, investigate or confirm a subscriber's rationale for
unresponsiveness or determine whether a violation of FINRA Rule 5220
(Offers at Stated Prices) has occurred.\89\ FINRA stated that the role
of a member IDQS under proposed paragraph (c)(3) would be limited to
information collection, and the lack of access to certain information
regarding instances of potential unresponsive would therefore not
impair a member IDQS's ability to establish policies and procedures
required under the proposal.\90\ FINRA provided that it continues to
believe that the requirements of proposed Rule 6439(c) are reasonable
and appropriate for non-auto-executing member IDQSs given that order
unresponsiveness only occurs on systems that permit manual response to
orders received against displayed quotations and that it believed the
member IDQS is in the best position to obtain this information from the
subscriber at the time of, or close in time to, the event, and to
document this information and make it available to FINRA upon
request.\91\
---------------------------------------------------------------------------

    \87\ See FINRA Letter 2, supra note 12, at 3.
    \88\ See id. As an example, FINRA stated that OTC Markets may
determine to accept complaints only through a specified email
address or through a complaint protocol that it may establish and,
in doing so, its obligations under proposed paragraph (c)(3) would
be limited to complaints received through reasonable, specified,
established channels. See id.
    \89\ See id.
    \90\ See id.
    \91\ See id., at 4.
---------------------------------------------------------------------------

    The Commission has considered commenters' request for guidance and
modifications to the proposed requirements and FINRA's responses and
believes FINRA's responses support the finding that the proposed Rule
6439(c) is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest, consistent with
Section 15A(b)(6) of the Act. As previously noted, a system that
permits manual responses to orders received against displayed
quotations can result in order unresponsiveness. The Commission agrees
with FINRA that requiring such systems to establish, maintain and
enforce written policies and procedures that are reasonably designed to
address instances of unresponsiveness, which includes requiring such
systems to maintain policies and procedures that specify an efficient
process for subscribers submitting to the member IDQS complaints
regarding potential instances of order unresponsiveness and documenting
the subscriber's rationale for unresponsiveness, should help ensure
that market participants can reasonably rely on the displayed
quotations on member IDQSs that do not auto-execute orders and help
FINRA surveil for unresponsiveness on such systems.
    Further, the Commission finds that proposed Rule 6439(e), which
will require member IDQSs to publish and keep updated information about
order- or quotation-related data products, is consistent with both
Exchange Act Section 15A(b)(6)'s requirement that FINRA's rules be
designed to protect investors and the public interest and Exchange Act
Section 15A(b)(11)'s requirement that FINRA's rules contain provisions
governing the form and content of quotations relating to securities
sold otherwise than on a national securities exchange which may be
distributed or published by any member or person associated with a
member, and the persons to whom such quotations may be supplied. The
publication of such information will provide FINRA with useful
information to ensure compliance with FINRA rules and to monitor the
widespread availability of OTC Equity Securities' quotation information
to investors and to market participants through non-SRO sources. In
addition, market participants will benefit from a better understanding
of such data products when assessing a particular member IDQS as a
potential trading venue.
    Finally, the Commission finds that proposed Rule 6439(f), which
would require a member IDQS to provide FINRA with prompt notification
when it reasonably becomes aware of any systems disruption that is not
de minimis that degrades, limits, or otherwise impacts the member
IDQS's functionality with respect to trading or the dissemination of
market data, is consistent with Exchange Act Section 15A(b)(6)'s
requirement that FINRA's rules be designed to protect investors and the
public interest and Section 15A(b)(11)'s requirement that FINRA's rules
relating to quotations be designed to promote orderly procedures for
collecting, distributing, and publishing quotations. The Commission
believes that the uninterrupted operation of member IDQSs is vital to
investor confidence in the OTC securities market structure and furthers
the goals of Section 17B of the Act.\92\ As such, the Commission
believes that proposed Rule 6439(f) should help FINRA monitor and
resolve any issues that could disrupt investors' ability to quote and
execute trades in OTC Equity Securities, thereby promoting orderly
procedures with respect to quotations in OTC Equity Securities and
protecting investors and the public interest.
---------------------------------------------------------------------------

    \92\ See infra notes 99-101 and accompanying text.
---------------------------------------------------------------------------

    FINRA has committed to examining member IDQSs for compliance with
proposed Rule 6439 and has represented that it will conduct a targeted
exam of impacted member IDQSs after the initial effectiveness of the
rule and will incorporate a proposed Rule 6439 review as part of the
regular exam program for impacted member firms.\93\ The Commission
believes that these exams should assist FINRA in reviewing

for compliance by member IDQSs with the requirements of proposed Rule
6439.
---------------------------------------------------------------------------

    \93\ See supra note 49 and accompanying text.
---------------------------------------------------------------------------

    The Commission notes that, despite certain suggested modifications
to the proposed rule, all three commenters supported FINRA's proposal
to enhance regulatory requirements for IDQSs.\94\ In addition to
commenters' suggested modifications discussed above,\95\ two commenters
also suggested that FINRA revise Rule 6437 (Prohibition from Locking
and Crossing), which currently prohibits locking and crossing
quotations displayed in the same IDQS, to also prohibit locking and
crossing displayed quotations between connected IDQSs.\96\ In its
response to comments, FINRA stated that it has been actively
considering whether any changes to the scope of Rule 6437 are
appropriate and that it will continue to separately assess this issue
outside of the context of this proposed rule change.\97\ The Commission
agrees with FINRA that the commenters' suggestion related to FINRA Rule
6437 is beyond the scope of the proposed rule change.
---------------------------------------------------------------------------

    \94\ See, generally, OTC Link Letter 1, STANY Letter and Global
OTC Letter, supra note 11.
    \95\ See supra notes 68, 78-79, and 81 and accompanying text.
    \96\ See STANY Letter, supra note 11, at 3; OTC Link Letter 1,
supra note 11, at 4-5.
    \97\ See FINRA Letter 1, supra note 12, at 6.
---------------------------------------------------------------------------

C. Section 17B of the Act

    Finally, the Commission believes that the proposed rule change to
rescind the rules related to the OTCBB and cease its operation and
adopt proposed Rule 6439 to expand the obligations of member IDQSs that
display quotations in OTC Equity Securities is consistent with Section
17B of the Act.\98\ FINRA has operated the OTCBB pursuant to the
Commission's obligations under Section 17B of the Act to facilitate the
widespread dissemination of quotation information for penny stocks
through an automated quotation system operated by a registered
securities association.\99\ When Congress enacted Section 17B, it found
that there was a lack of reliable and accurate quotation and last sale
information in the markets for penny stocks.\100\ As such, Section 17B
was designed to remedy inefficiencies and address regulatory concerns
caused by this lack of reliable market information about penny stocks
traded OTC, and Congress found that a fully implemented automated
quotation system for penny stocks would meet the information needs of
investors and market participants and add visibility and regulatory and
surveillance data to that market.\101\
---------------------------------------------------------------------------

    \98\ 15 U.S.C. 78q-2. See also supra note 20. Section 17B was
enacted by Congress as part of the Penny Stock Act, which was
designed to remedy inefficiencies and address regulatory concerns
caused by the lack of reliable market information on penny stocks
traded OTC.
    \99\ See 15 U.S.C. 78q-2(b). See also OTCBB Designation Letter,
supra note 20.
    \100\ See 15 U.S.C. 78q-2(a)(1).
    \101\ See 15 U.S.C. 78q-2(a)(3).
---------------------------------------------------------------------------

    Based on how the OTC market has evolved since the adoption of
Section 17B,\102\ the Commission believes that the OTCBB no longer
furthers the goals and objectives of Section 17B of the Exchange Act
because it no longer is utilized as a source of quotation information
for those OTC Equity Securities that meet the definition of ``penny
stock.'' \103\ Rather, member IDQSs currently collect and disseminate
all quotation information in OTC Equity Securities, including penny
stocks, and make such quotation information available to investors and
market participants.\104\ Therefore, the Commission finds that
discontinuing dissemination of potentially incomplete and misleading
quotation information from the marketplace by ceasing operation of the
OTCBB, while at the same time implementing enhanced requirements for
member IDQSs on or through which quotations in OTC Equity Securities,
including penny stocks, are currently displayed, as set forth in
proposed Rule 6439, best serves and promotes the goals of Section 17B
of the Act with respect to the widespread availability of quotation
information in penny stocks.\105\
---------------------------------------------------------------------------

    \102\ See Public Law 101-429, 104 Stat. 931 (1990).
    \103\ See supra notes 60-64 and accompanying text. As noted
above, the universe of securities historically quoted in the OTCBB
included penny stocks as well as higher priced OTC Equity
Securities. See supra note 66.
    \104\ See Notice, supra note 3, at 63318.
    \105\ See supra note 20 and 66. As discussed above, the
Commission previously designated the OTCBB as a QEQS for purposes of
the Penny Stock Rules. In connection with FINRA's cessation of the
OTCBB, FINRA has stated that it intends to request that the
Commission designate the FINRA OTC Reporting Facility (see infra
note 109 and accompanying text), together with any FINRA-member
IDQS, as a QEQS for purposes of the Penny Stock Rules. See supra
note 66.
---------------------------------------------------------------------------

    FINRA has represented that, in advance of the discontinuance of the
OTCBB, FINRA will take steps to ensure a smooth transition for issuers
and members.\106\ Specifically, although there are no members currently
using the OTCBB, FINRA will publicize announcements through its
website.\107\ In addition, FINRA has represented that, following the
cessation of the OTCBB, FINRA will continue to assess the widespread
availability of quotation transparency to investors and market
participants through non-SRO sources on a regular basis, and if the
availability of quotation information to investors declines, FINRA will
revisit and, if necessary, file a proposed rule change to establish an
SRO-operated IDQS (or other measure) to facilitate the type of
widespread quotation transparency described in Section 17B of the
Act.\108\ Finally, FINRA will continue to centralize last sale
transaction reporting in OTC Equity Securities, including for penny
stock transactions, through the FINRA OTC Reporting Facility (``ORF''),
a FINRA-operated system that provides last sale information on OTC
Equity Securities.\109\ Thus, following cessation of the OTCBB, member
IDQSs subject to proposed Rule 6439 will continue to collect and
disseminate quotation information for OTC Equity Securities, including
penny stocks, while the ORF will continue to collect and disseminate
real-time last sale price and volume information for OTC Equity
Securities, including penny stocks.
---------------------------------------------------------------------------

    \106\ See Notice, supra note 3, at 63319.
    \107\ See id. FINRA represents that there currently are no OTCBB
symbols. See id., at 63319, n.37.
    \108\ See id.
    \109\ See FINRA Rule 6600 and 7300 Series (OTC Reporting
Facility). FINRA members generally are required to report trades in
OTC Equity Securities to the ORF within 10 seconds of execution and
FINRA widely disseminates this transaction information in real-time.
See FINRA Rule 6622 (Transaction Reporting). See also Notice, supra
note 3, at 63318, n.36.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered that, pursuant to Section 19(b)(2) of the
Act,\110\ the proposed rule change (SR-FINRA-2020-031), as modified by
Amendment No. 2, be, and hereby is, approved.
---------------------------------------------------------------------------

    \110\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\111\
---------------------------------------------------------------------------

    \111\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12026 Filed 6-8-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 15 (Tuesday, January 23, 2018)]
[Notices]
[Page 3239]
[FR Doc No: 2018-01294]

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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meetings

FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: To be Published.

PREVIOUSLY ANNOUNCED TIME AND DATE OF THE MEETING: Wednesday, January
24, 2018 at 2:00pm.

CHANGES IN THE MEETING: The Closed Meeting scheduled for Wednesday,
January 24, 2018 at 2:00 p.m. has been changed to Wednesday, January
24, 2018 at 11:00 a.m.

CONTACT PERSON FOR MORE INFORMATION: For further information and to
ascertain what, if any, matters have been added, deleted or postponed,
please contact the Office of the Secretary at<PHONE_NUMBER>.

    Dated: January 19, 2018.
Brent J. Fields,
Secretary.
[FR Doc. 2018-01294 Filed 1-19-18; 4:15 pm]
 BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 83 (Friday, April 29, 2016)]
[Notices]
[Page 25660]
[FR Doc No: 2016-10022]

=======================================================================
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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #2

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER13-1488-007.
    Applicants: Quantum Pasco Power, LP.
    Description: Compliance filing: Quantum Pasco Power, LP Revised
Electric Tariff to be effective 4/23/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5146.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-463-001.
    Applicants: Midcontinent Independent System Operator, Inc., Ameren
Illinois Company.
    Description: Compliance filing: 2016-04-22_SA 2765 MidAmerican-
Ameren Illinois 1st Rev TIA Compliance to be effective 2/18/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5091.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-920-001.
    Applicants: Southwestern Public Service Company.
    Description: Compliance filing: 4-22-16_ER13-1455 Comp Filing to be
effective 4/20/2012.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5144.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-1484-000.
    Applicants: Goshen Phase II LLC.
    Description: Sec.  205(d) Rate Filing: Revised Market-Based Rate
Tariff to be effective 6/22/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5074.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-1485-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Sec.  205(d) Rate Filing: 2016-04-22_MI ONT PARS MISO-
PJM JOA Revisions to be effective 6/22/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5135.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-1486-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Revisions to MISO-PJM JOA
re: MI-Ont PARS Congestion Mgmt to be effective 6/22/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5141.
    Comments Due: 5 p.m. ET 5/13/16.

    Docket Numbers: ER16-1487-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: First Revised
Interconnection Service Agreement No. 3767, Queue No. AA1-078 to be
effective 3/23/2016.
    Filed Date: 4/22/16.
    Accession Number: 20160422-5145.
    Comments Due: 5 p.m. ET 5/13/16.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: April 22, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-10022 Filed 4-28-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Rules and Regulations]
[Pages 70099-70102]
[FR Doc No: 2014-27751]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 81

[EPA-R03-OAR-2013-0690; FRL-9919-65-Region 3]

Approval and Promulgation of Air Quality Implementation Plans;
West Virginia's Redesignation Request and Associated Maintenance Plan
of the West Virginia Portion of the Martinsburg-Hagerstown, WV-MD
Nonattainment Area for the 1997 Annual Fine Particulate Matter Standard

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is approving the
State of West Virginia's request to redesignate to attainment the West
Virginia portion of the Martinsburg-Hagerstown, WV-MD nonattainment
area (the Martinsburg Area or Area) for the 1997 annual fine
particulate matter (PM2.5) national ambient air quality
standard (NAAQS). EPA is also approving as a revision to the West
Virginia State Implementation Plan (SIP) the associated maintenance
plan to show maintenance of the 1997 annual PM2.5 NAAQS
through 2025 for the Area. As part of this action, EPA is making a
determination that the Martinsburg Area continues to attain the 1997
annual PM2.5 NAAQS. The maintenance plan includes the 2017
and 2025 PM2.5 and nitrogen oxides (NOX) mobile
vehicle emissions budgets (MVEBs) for Berkeley County, West Virginia
for the 1997 annual PM2.5 NAAQS which EPA is approving for
transportation conformity purposes. Furthermore, EPA is approving, as a
revision to the West Virginia SIP, the 2007 base year emissions
inventory for the Area for the 1997 annual PM2.5 NAAQS.
These actions are being taken under the Clean Air Act (CAA).

DATES: This final rule is effective on December 26, 2014.

ADDRESSES: EPA has established a docket for this action under Docket ID
Number EPA-R03-OAR-2013-0690. All documents in the docket are listed in
the www.regulations.gov Web site. Although listed in the electronic
docket, some information is not publicly available, i.e., confidential
business information (CBI) or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available either electronically through www.regulations.gov or in hard
copy for public inspection during normal business hours at the Air
Protection Division, U.S. Environmental Protection Agency, Region III,
1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State
submittal are available at the West Virginia Department of
Environmental Protection, Division of Air Quality, 601 57th Street SE.,
Charleston, West Virginia 25304.

FOR FURTHER INFORMATION CONTACT: Rose Quinto,<PHONE_NUMBER>, or by
email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    On August 5, 2013, the State of West Virginia through the West
Virginia Department of Environmental Protection (WVDEP) formally
submitted a request to redesignate the West Virginia portion of the
Martinsburg Area from nonattainment to attainment for the 1997 annual
PM2.5 NAAQS. Concurrently, WVDEP submitted a maintenance
plan for the Area as a SIP revision to ensure continued attainment
throughout the Area over the next 10 years. The maintenance plan also

includes a 2007 base year emissions inventory for PM2.5,
NOX, sulfur dioxide (SO2), volatile organic
compounds (VOC) and ammonia (NH3) for the1997 annual
PM2.5 NAAQS in order to meet the emissions inventory
requirements of section 172(c)(3) of the CAA. In addition, the
maintenance plan includes the 2017 and 2025 PM2.5 and
NOX MVEBs used for transportation conformity purposes for
Berkeley County, West Virginia for the 1997 annual PM2.5
NAAQS.
    On April 16, 2014, the notice of proposed rulemaking (NPR) was
signed by the Regional Administrator for this rulemaking action. This
NPR was published in the Federal Register on May 5, 2014 (79 FR 25540)
and included proposals for several rulemaking actions. First, EPA
proposed to find that the Martinsburg Area met the requirements for
redesignation of the Area for the 1997 annual PM2.5 NAAQS
under section 107(d)(3)(E) of the CAA. Second, EPA proposed approval of
the associated maintenance plan as a SIP revision for the 1997 annual
PM2.5 NAAQS, which included the 2017 and 2025 for
PM2.5 and NOX MVEBs for purposes of
transportation conformity. Third, EPA proposed approval of the 2007
comprehensive emissions inventory for the 1997 annual PM2.5
NAAQS to meet the requirements of section 172(c)(3) of the CAA.
Finally, EPA proposed to find that the Area continues to attain the1997
annual PM2.5 NAAQS.
    In the May 5, 2014 NPR, EPA addressed the effects of one order and
two decisions of the United States Court of Appeals for the District of
Columbia (D.C. Circuit Court) on the approval of the redesignation
request and approval: (1) The D.C. Circuit Court's December 30, 2011
order staying Cross-State Air Pollution Control Rule (CSAPR) (i.e.
Transport Rule) pending resolution of the petitions for review of that
rule in EME Homer City Generation, L.P. v. EPA (No. 11-1302 and
consolidated cases); (2) the D.C. Circuit Court's August 21, 2012
decision to vacate and remand to EPA the CSAPR; and, (3) the D.C.
Circuit Court's January 4, 2013 decision to remand to EPA two final
rules implementing the 1997 annual PM2.5 standard. Details
of West Virginia's submittal and the rationale for EPA's proposed
actions are explained in the NPR and will not be restated here. No
public comments were received on the NPR.
    Since the Regional Administrator's signature of the NPR on April
16, 2014, the Supreme Court issued a decision and order, and the D.C.
Circuit Court issued an order regarding the status of EPA's regional
trading programs for transported air pollution, Clean Air Interstate
Rule (CAIR) and CSAPR. On April 29, 2014, the Supreme Court vacated and
reversed the D.C. Circuit Court's decision regarding CSAPR and remanded
that decision to the D.C. Circuit Court to resolve remaining issues in
accordance with its ruling. EPA v. EME Homer City Generation, L.P., 134
S. Ct. 1584 (2014). However, this April 29, 2014 Supreme Court decision
did not lift the stay on the implementation of CSAPR issued by the D.C.
Circuit Court by order dated December 30, 2011. In light of the April
29, 2014 Supreme Court decision, on June 26, 2014, EPA moved to have
the D.C. Circuit Court's December 30, 2011 stay of CSAPR lifted. EME
Homer City Generation, L.P. v. EPA, Case No. 11-1302, Document No.
1499505 (D.C. Cir. filed June 26, 2014). In its motion, EPA asked the
D.C. Circuit Court to toll CSAPR's compliance deadlines by three years,
so that the Phase 1 emissions budgets apply in 2015 and 2016 (instead
of 2012 and 2013), and the Phase 2 emissions budgets apply in 2017 and
beyond (instead of 2014 and beyond). On October 23, 2014, the D.C.
Circuit Court granted EPA's motion and lifted the stay of CSAPR which
was imposed on December 30, 2011. EME Homer City Generation, L.P. v.
EPA, No. 11-1302 (D.C. Cir. Oct. 23, 2014), Order at 3. EPA intends to
act in accordance with the D.C. Circuit Court's October 23, 2014 order
and will commence implementation of CSAPR beginning January 2015
pursuant to the D.C. Circuit Court's directive lifting the stay.
    Also, in the May 5, 2014 NPR, EPA discussed the January 4, 2013
D.C. Circuit Court's decision regarding subpart 4 and a proposed rule,
``Identification of Nonattainment Classification and Deadlines for
Submission of SIP Provisions for the 1997 and 2006 PM2.5
NAAQS'' (the PM2.5 Subpart 4 Classification and Deadline
Rule) that EPA issued on November 21, 2013 (78 FR 69806), which
identifies the classification under subpart 4 for areas currently
designated nonattainment for the 1997 annual and/or 2006 24-hour
PM2.5 standards. On June 2, 2014 (79 FR 31566), EPA
finalized the rule.

II. Final Action

    EPA is taking final action on the redesignation request and SIP
revisions submitted by the State of West Virginia on August 5, 2013 for
the West Virginia portion of the Martinsburg Area for the 1997 annual
PM2.5 NAAQS. EPA is approving West Virginia's redesignation
request for the 1997 annual PM2.5 NAAQS, because EPA has
determined that the request meets the redesignation criteria set forth
in section 107(d)(3)(E) of the CAA.
    EPA is finding that the West Virginia portion of the Martinsburg
Area has attained and is continuing to attain the 1997 annual
PM2.5 NAAQS. As explained in the NPR, West Virginia has
adequately demonstrated that the improvement in air quality is due to
permanent and enforceable emissions reductions. The air quality
modeling analysis conducted for the Transport Rule demonstrates that
the Area would be able to attain the 1997 annual PM2.5 NAAQS
even in the absence of either CAIR or the Transport Rule. EPA's
modeling projections show that the ambient monitors in the Area are
expected to continue to maintain compliance in the 2012 and 2014 ``no
CAIR'' base cases. Therefore, none of the ambient monitoring sites in
the Area are ``receptors'' that EPA projects will have future
nonattainment problems or difficulty maintaining the NAAQS. Given the
D.C. Circuit Court's October 23, 2014 order lifting the stay on CSAPR,
EPA expects the State's reliance on CAIR to be replaced with reliance
on CSAPR beginning in January 2015. CSAPR requires substantial
reductions of SO2 and NOX emissions from EGUs in
the Eastern United States, including West Virginia, that significantly
contribute to downwind nonattainment of the 1997 PM2.5 and
ozone NAAQS and 2006 PM2.5 NAAQS. Because CSAPR should
result in greater emissions reductions of SO2 and
NOX than CAIR in West Virginia and neighboring states, EPA
expects the West Virginia portion of the Martinsburg Area to continue
to attain the 1997 annual PM2.5 NAAQS through the
implementation of CSAPR.
    EPA is also approving the associated maintenance plan for the
Martinsburg Area as a revision to the West Virginia SIP for the 1997
annual PM2.5 NAAQS because it meets the requirements of
section 175A of the CAA. In addition, EPA is approving the 2017 and
2025 PM2.5 and NOX MVEBs submitted by West
Virginia for Berkeley County for transportation conformity purposes.
Furthermore, EPA is approving the 2007 comprehensive emissions
inventory for the 1997 annual PM2.5 NAAQS as a revision to
the West Virginia SIP because it meets the requirements of section
172(c)(3) of the CAA. Approval of this redesignation request will
change the official designation of the West Virginia portion of the
Martinsburg Area from nonattainment to attainment for the 1997 annual
PM2.5 NAAQS.

III. Statutory and Executive Order Reviews

A. General Requirements

    Under the CAA, redesignation of an area to attainment and the
accompanying approval of the maintenance plan under CAA section
107(d)(3)(E) are actions that affect the status of geographical area
and do not impose any additional regulatory requirements on sources
beyond those required by state law. A redesignation to attainment does
not in and of itself impose any new requirements, but rather results in
the application of requirements contained in the CAA for areas that
have been redesignated to attainment. Moreover, the Administrator is
required to approve a SIP submission that complies with the provisions
of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40
CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to
approve state choices, provided that they meet the criteria of the CAA.
Accordingly, this action merely approves state law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Public Law 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the state, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.

B. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).

C. Petitions for Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by January 26, 2015. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action.
    This action, approving the redesignation request, the maintenance
plan, MVEBs, and the 2007 comprehensive emissions inventory for the
West Virginia portion of the Martinsburg Area for the 1997 annual
PM2.5 NAAQS, may not be challenged later in proceedings to
enforce its requirements. (See section 307(b)(2)).

List of Subjects

40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Nitrogen oxides, Particulate matter, Reporting and
recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

40 CFR Part 81

    Air pollution control, National parks, Wilderness areas.

    Dated: November 6, 2014.
William C. Early,
Acting Regional Administrator, Region III.

    40 CFR parts 52 and 81 are amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

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

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

Subpart XX--West Virginia

0
2. In Sec.  52.2520, the table in paragraph (e) is amended by adding a
new entry ``1997 Annual PM2.5 Maintenance Plan for the West
Virginia Portion of the Martinsburg, WV-Hagerstown, MD Area'' at the
end of the table to read as follows:

Sec.  52.2520  Identification of plan.

* * * * *
    (e) * * *

----------------------------------------------------------------------------------------------------------------
   Name of non-regulatory SIP     Applicable geographic        State                              Additional
            revision                       area           submittal date   EPA approval date      explanation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
1997 Annual PM2.5 Maintenance    Berkeley County........          8/5/13  11/25/14 [Insert    See Sec.
 Plan for the West Virginia                                                Federal Register    52.2526(k), Sec.
 Portion of the Martinsburg WV-                                            citation].           52.2531(h) and
 Hagerstown, MD Area.                                                                         Sec.   52.2532(f).
----------------------------------------------------------------------------------------------------------------

0
3. Section 52.2526 is amended by adding paragraph (k) to read as
follows:

Sec.  52.2526  Control strategy: Particulate matter.

* * * * *
    (k) EPA approves the 1997 annual PM2.5 maintenance plan
for the West Virginia portion of the Martinsburg WV-Hagerstown, MD
Nonattainment Area (Berkeley County). The maintenance plan includes the
2017 and 2025 PM2.5 and NOX mobile vehicle
emissions budgets (MVEBs) for Berkeley County for transportation
conformity purposes.

0
4. Section 52.2531 is amended by adding paragraph (h) to read as
follows:

Sec.  52.2531  Base year emissions inventory.

* * * * *
    (h) EPA approves as a revision to the West Virginia State
Implementation Plan the comprehensive emissions inventory for the West
Virginia portion for the Martinsburg WV-Hagerstown, MD PM2.5
nonattainment area submitted by the West Virginia Department of
Environmental Protection on August 5, 2013. The emissions inventory
includes emissions estimates that cover the general source categories
of point sources, nonroad mobile sources, area sources, onroad mobile
sources and biogenic sources. The pollutants that comprise the
inventory are nitrogen oxides (NOX), volatile organic
compounds (VOC), PM2.5, ammonia (NH3), and sulfur
dioxide (SO2).

0
5. Section 52.2532 is amended by adding paragraph (f) to read as
follows:

Sec.  52.2532  Motor vehicle emissions budgets.

* * * * *
    (f) EPA approves the following revised 2017 and 2025 motor vehicle
emissions budgets (MVEBs) for the West Virginia portion of the
Martinsburg WV-Hagerstown, MD for the 1997 Annual PM2.5
maintenance area submitted by the Secretary of the Department of
Environmental Protection on August 5, 2013:

----------------------------------------------------------------------------------------------------------------
                                                                                Tons per year   Tons per year
                   Applicable geographic area                          Year            PM2.5            NOX
----------------------------------------------------------------------------------------------------------------
Martinsburg Area (Berkeley County)..............................            2017              83           2,621
Martinsburg Area (Berkeley County)..............................            2025              50           1,660
----------------------------------------------------------------------------------------------------------------

PART 81--DESIGNATION OF AREAS FOR AIR QUALITY PLANNING PURPOSES

0
6. The authority citation for part 81 continues to read as follows:

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

0
7. Section 81.349 is amended by revising the entry for ``Martinsburg,
WV-Hagerstown, MD: Berkeley County'' and footnote 2 at the end of the
table titled ``West Virginia--1997 Annual PM2.5 NAAQS'' to
read as follows:

Sec.  81.349  West Virginia.

* * * * *

                                     West Virginia--1997 Annual PM2.5 NAAQS
                                             [Primary and secondary]
----------------------------------------------------------------------------------------------------------------
                                             Designation \a\                         Classification
         Designated Area         -------------------------------------------------------------------------------
                                      Date \1\             Type               Date \2\               Type
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Martinsburg, WV-Hagerstown, MD:
Berkeley County.................        11/25/14   Attainment.........  ...................  Moderate

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
\a\ Includes Indian Country located in each county or area, except as otherwise specified.
\1\ This date is 90 days after January 5, 2005, unless otherwise noted.
\2\ This date is July 2, 2014, unless otherwise noted.

* * * * *
[FR Doc. 2014-27751 Filed 11-24-14; 8:45 am]
BILLING CODE 6560-50-P