[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Notices]
[Pages 58273-58275]
[FR Doc No: 2011-24093]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2011-0742; FRL-9466-8]

Agency Information Collection Activities; Proposed Collection;
Comment Request; Outer Continental Shelf Air Regulations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: In compliance with the Paperwork Reduction Act (PRA) (44
U.S.C. 3501 et seq.), this document announces that the EPA is planning
to submit a request to renew an existing approved Information
Collection Request (ICR) to the Office of Management and Budget (OMB).
This ICR is scheduled to expire on January 31, 2012. Before submitting
the ICR to OMB for review and approval, the EPA is soliciting comments
on specific aspects of the proposed information collection as described
below.

DATES: Comments must be submitted on or before November 21, 2011.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2011-0742, by one of the following methods:
     http://www.regulations.gov: Follow the on-line
instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: Agency Information Collection Activities; Proposed
Collection; Comment Request; Outer Continental Shelf Air Regulations;
EPA ICR No. 1601.08; OMB Control No. 2060-0249 Docket, Environmental
Protection Agency, Air and Radiation Docket and Information Center,
Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.
Please include a total of two copies.
     Hand Delivery: EPA Docket Center, Public Reading Room, EPA
West, Room 3334, 1301 Constitution Ave., NW., Washington, DC 20460.
Such deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2011-0742. The EPA's policy is that all comments received will be
included in the public docket without change and may be made available
online at http://www.regulations.gov, including any personal
information provided, unless the comment includes information claimed
to be Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. Do not submit information
that you consider to be CBI or otherwise protected through http://www.regulations.gov or email. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means the EPA will not know
your identity or contact information unless you provide it in the body
of your comment. If you send an email comment directly to the EPA
without going through http://www.regulations.gov, your email address
will be automatically captured and included as part of the comment that
is placed in the public docket and made available on the Internet. If
you submit an electronic comment, the EPA recommends that you include
your name and other contact information in the body of your comment and
with any disk or CD-ROM you submit. If the EPA cannot read your comment
due to technical difficulties and cannot contact you for clarification,
the EPA may not be able to consider your comment. Electronic files
should avoid the use of special characters, any form of encryption, and
be free of any defects or viruses. For additional information about the
EPA's public docket, visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.

FOR FURTHER INFORMATION CONTACT: Mr. David Painter, Air Quality Policy
Division, Office of Air Quality Planning and Standards, (C504-03),
Environmental Protection Agency, Research Triangle Park, North Carolina
27711; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-
mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

How can I access the docket and/or submit comments?

    The EPA has established a public docket for this ICR under Docket
ID No. EPA-HQ-OAR-2011-00742,which is available for online viewing at
http://

www.regulations.gov, or in-person viewing at the Air and Radiation
Docket in the EPA Docket Center (EPA/DC), EPA West, Room 3334, 1301
Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room
is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The telephone number for the Public Reading Room is
(202) 566-1744.
    Use http://www.regulations.gov to obtain a copy of the draft
collection of information, submit or view public comments, access the
index listing of the contents of the docket, and to access those
documents in the public docket that are available electronically. Once
in the system, select ``search,'' then key in the docket ID number
identified in this document.

What information is EPA particularly interested in?

    Pursuant to section 3506(c)(2)(A) of the PRA, the EPA specifically
solicits comments and information to enable it to:
    (i) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
    (ii) Evaluate the accuracy of the agency's estimate of the burden
of the proposed collection of information, including the validity of
the methodology and assumptions used;
    (iii) Enhance the quality, utility, and clarity of the information
to be collected; and
    (iv) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses. In particular, the EPA is requesting comments
from very small businesses (those that employ less than 25) on examples
of specific additional efforts that the EPA could make to reduce the
paperwork burden for very small businesses affected by this collection.

What should I consider when I prepare my comments for EPA?

    You may find the following suggestions helpful for preparing your
comments:
    1. Explain your views as clearly as possible and provide specific
examples.
    2. Describe any assumptions that you used.
    3. Provide copies of any technical information and/or data you used
that support your views.
    4. If you estimate potential burden or costs, explain how you
arrived at the estimate that you provide.
    5. Offer alternative ways to improve the collection activity.
    6. Make sure to submit your comments by the deadline identified
under DATES.
    7. To ensure proper receipt by the EPA, be sure to identify the
docket ID number assigned to this action in the subject line on the
first page of your response. You may also provide the name, date, and
Federal Register citation.

What information collection activity does this apply to?

    Affected entities: Entities potentially affected by this action are
all outer continental shelf (OCS) sources except those located in the
Gulf of Mexico west of 87.5 degrees longitude (near the border of
Florida and Alabama). For sources located within 25 miles of states'
seaward boundaries, the requirements are the same as those that would
be applicable if the source were located in the corresponding onshore
area (COA). In states affected by this rule, state boundaries extend
three miles from the coastline, except off the coast of the Florida
Panhandle, where the state's boundary extends three leagues (about nine
miles) from the coastline.
    Title: Outer Continental Shelf Air Regulations.
    ICR numbers: EPA ICR Number 1601.08 and OMB Control Number 2060-
0249.
    ICR status: This ICR is currently scheduled to expire on January
31, 2012.
    Abstract: Sources located beyond 25 miles of states' boundaries are
subject to federal requirements (implemented and enforced solely by the
EPA) for Prevention of Significant Deterioration (PSD), New Source
Performance Standards (NSPS), National Emissions Standards for
Hazardous Air Pollutants Standards (NESHAP), the federal title V
operating permit program, and the enhanced compliance and monitoring
regulations. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information request unless it
displays a currently valid OMB control number. The OMB control numbers
for the EPA's regulations in 40 CFR are listed in 40 CFR part 9 and 48
CFR chapter 15. Section 176(c) of the Clean Air Act (42 U.S.C. 7401 et
seq.) requires that all federal actions conform with the State
Implementation Plans (SIPs) to attain and maintain the NAAQS. Depending
on the type of action, the federal entities must collect information
themselves, hire consultants to collect the information or require
applicants/sponsors of the federal action to provide the information.
    The type and quantity of information required will depend on the
circumstances surrounding the action. First, the entity must make an
applicability determination. If the source is located within 25 miles
of the state's seaward boundaries as established in the regulations,
the requirements are the same as those that would be applicable if the
source were located in the COA. State and local air pollution control
agencies are usually requested to provide information concerning
regulation of offshore sources and are provided opportunities to
comment on the proposed determinations. The public is also provided an
opportunity to comment on the proposed determinations.
    Burden Statement: Burden means the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements which have subsequently changed; train
personnel to be able to respond to a collection of information; search
data sources; complete and review the collection of information; and
transmit or otherwise disclose the information.
    On April, 29, 2008, the EPA last announced a renewal of the ICR for
OCS air regulations. At that time we provided our estimate that the
reporting and recordkeeping burden for this collection of information
would average 549 hours per response. We then summarized the burden as
follows:
    Estimated Total Number of Potential Respondents: 49.
    Estimated Number of Responses: 62.
    Frequency of Response: Annual.
    Estimated Total Annual Burden Hours: 34,024.
    Estimated Total Annual Costs: $1,857,950, which includes $0
annualized capital startup costs, $17,886 O&M costs, and $1,840,064 in
annual labor costs.
    Included in the docket for this proposed ICR renewal is a copy of
the supporting statement provided to OMB in 2008 which summarized the
final results of the analyses that followed our prior request for
public comment. The

approach to the prior supporting statement will be applied to summarize
any provided information for the purpose of updating the estimate of
burden for the next three years.

Are there changes in the estimates from the last approval?

    At this time we are obtaining updated data from which to re-
calculate burden estimates for the ICR renewal. The preliminary data is
sufficiently incomplete to preclude the EPA from projecting the change
in burden. There is an indication of an increase of activity for the
Atlantic region and the coast of Alaska.

What is the next step in the process for this ICR?

    The EPA will consider the comments received and amend the ICR as
appropriate. Additionally, the EPA is consulting with the Department of
Interior's Bureau of Ocean Energy Management, Regulation and
Enforcement to obtain detailed estimates of offshore activity that
would fall under air regulations and incur burden. The incoming
information will be incorporated into an updated supporting statement
for inclusion in an OMB ICR package. The final ICR package will then be
submitted to OMB for review and approval pursuant to 5 CFR 1320.12. At
that time, the EPA will issue another Federal Register notice pursuant
to 5 CFR 1320.5(a)(1)(iv) to announce the submission of the ICR to OMB
and the opportunity to submit additional comments to OMB. If you have
any questions about this ICR or the approval process, please contact
the technical person listed under FOR FURTHER INFORMATION CONTACT.

    Dated: September 14, 2011.
Mary Henigin,
Acting Director, Office of Air Quality Planning and Standards.
[FR Doc. 2011-24093 Filed 9-19-11; 8:45 am]
BILLING CODE 6560-50-P


P-20-0132 Sanitized Support Documents Index:
 P-20-0132 Sanitized Premanufacture Notice (linked)
 P-20-0132 Sanitized Determination Document (linked)
 P-20-0132 Sanitized CHEM Report (attached)
 P-20-0132 Sanitized ECO Report (attached)
 P-20-0132 Sanitized ENG Report (attached)
 P-20-0132 Sanitized EXP Report (attached)
 P-20-0132 Sanitized Fate Report (attached)
 P-20-0132 Sanitized HLTH Report_POST-FOCUS FINAL (attached)


[Federal Register Volume 86, Number 6 (Monday, January 11, 2021)]
[Notices]
[Page 1965]
[FR Doc No: 2021-00245]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OECA-2013-0332; FRL-10018-82-OMS]

Information Collection Request Submitted to OMB for Review and
Approval; Comment Request; NSPS for Small Industrial-Commercial-
Institutional Steam Generating Units (Renewal)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: The Environmental Protection Agency has submitted an
information collection request (ICR), NSPS for Small Industrial-
Commercial-Institutional Steam Generating Units (EPA ICR Number
1564.11, OMB Control Number 2060-0202), to the Office of Management and
Budget (OMB) for review and approval in accordance with the Paperwork
Reduction Act. This is a proposed extension of the ICR, which is
currently approved through February 28, 2021. Public comments were
previously requested via the Federal Register on May 12, 2020 during a
60-day comment period. This notice allows for an additional 30 days for
public comments. A fuller description of the ICR, including its
estimated burden and cost to the public, is given below. An agency may
neither conduct nor sponsor, and a person is not required to respond
to, a collection of information unless it displays a currently valid
OMB control number.

DATES: Additional comments may be submitted on or before February 10,
2021.

ADDRESSES: Submit your comments, referencing Docket ID Number EPA-HQ-
OECA-2013-0332, to EPA online using www.regulations.gov (our preferred
method), or by mail to: EPA Docket Center, Environmental Protection
Agency, Mail Code 28221T, 1200 Pennsylvania Ave. NW, Washington, DC
20460. EPA's policy is that all comments received will be included in
the public docket without change including any personal information
provided, unless the comment includes profanity, threats, information
claimed to be Confidential Business Information (CBI), or other
information whose disclosure is restricted by statute.
    Submit written comments and recommendations to OMB for the proposed
information collection within 30 days of publication of this notice to
www.reginfo.gov/public/do/PRAMain. Find this particular information
collection by selecting ``Currently under 30-day Review--Open for
Public Comments'' or by using the search function.

FOR FURTHER INFORMATION CONTACT: Patrick Yellin, Monitoring,
Assistance, and Media Programs Division, Office of Compliance, Mail
Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax number:
(202) 564-0050; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Supporting documents, which explain in
detail the information that the EPA will be collecting, are available
in the public docket for this ICR. The docket can be viewed online at
www.regulations.gov, or in person, at the EPA Docket Center, WJC West,
Room 3334, 1301 Constitution Ave. NW, Washington, DC. The telephone
number for the Docket Center is<PHONE_NUMBER>. For additional
information about EPA's public docket, visit: http://www.epa.gov/dockets.
    Abstract: Owners and operators of affected facilities are required
to comply with reporting and record keeping requirements for the
General Provisions (40 CFR part 60, subpart A), as well as for the
specific requirements at 40 CFR part 60, subpart Dc. This includes
submitting initial notifications, performance tests and periodic
reports and results, and maintaining records of the occurrence and
duration of any startup, shutdown, or malfunction in the operation of
an affected facility, or any period during which the monitoring system
is inoperative. These reports are used by EPA to determine compliance
with these standards.
    Form Numbers: None.
    Respondents/affected entities: Owners or operators of small
industrial-commercial-institutional steam generators with maximum
design heat input capacity of 29 megawatts (MW) or less, but greater
than or equal to 2.9 MW.
    Respondent's obligation to respond: Mandatory (40 CFR part 60,
subpart Dc).
    Estimated number of respondents: 323 (total).
    Frequency of response: Initially and semiannually.
    Total estimated burden: 219,000 hours (per year). Burden is defined
at 5 CFR 1320.3(b).
    Total estimated cost: $38,300,000 (per year), which includes
$12,600,000 in annualized capital/setup and/or operation & maintenance
costs.
    Changes in the Estimates: There is an adjustment increase in the
respondent burden and O&M cost from the most-recently approved ICR due
to an increase in the number of respondents. This ICR assumes an
industry growth rate of 11 respondents per year, or an increase of 33
respondents, since the last ICR renewal period, which results in an
increase in burden and the number of responses submitted. The industry
growth also results in an increase in O&M costs. This ICR also
maintains a continuous growth rate of 11 respondents per year over the
next three years. Because the number of new sources anticipated over
the next three years has not changed, there is no increase in the
anticipated capital costs reflected in this ICR.

Courtney Kerwin,
Director, Regulatory Support Division.
[FR Doc. 2021-00245 Filed 1-8-21; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 81, Number 44 (Monday, March 7, 2016)]
[Notices]
[Pages 11851-11856]
[FR Doc No: 2016-04912]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77269; File No. SR-FINRA-2016-010]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt
FINRA Rule 4554 (Alternative Trading Systems--Recording and Reporting
Requirements of Order and Execution Information for NMS Stocks)

March 1, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 29, 2016, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    FINRA is proposing to adopt FINRA Rule 4554 to require alternative
trading systems (``ATSs'') to submit additional order information to
FINRA.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    FINRA is proposing to adopt FINRA Rule 4554 to require ATSs to
report additional order information to FINRA. While ATSs already submit
order information to FINRA that is required by the Order Audit Trail
System (``OATS'') rules, there is additional order information not
currently required to be reported to OATS, such as order re-pricing
events (e.g., changes to an order that is pegged to the National Best
Bid or Offer (``NBBO'')) and order display and reserve size
information, that, if available to FINRA, would greatly enhance FINRA's
ability to perform certain order-based surveillance, including
layering, quote spoofing and mid-point pricing manipulation
surveillance, by enabling FINRA to more fully reconstruct an ATS's
order book. FINRA therefore is proposing to require ATSs to report
additional ATS-specific data elements in existing OATS reports for
orders in NMS stocks. ATSs would be required to report this information
to FINRA consistent with current OATS reporting requirements (no later
than 8:00 a.m. Eastern Time on the calendar day following receipt of
the order in an electronic form as prescribed by FINRA).
    As described in more detail in Item C, FINRA initially solicited
comment on this proposal in Regulatory Notice 14-51.\3\ Based on
concerns raised by commenters about potential burdens associated with
the original proposal, FINRA has revised the original proposal to
narrow some aspects of the order information required to be reported
while still enhancing FINRA's ability to reconstruct an ATS's order
book for surveillance purposes. The proposal sets forth four categories
of reporting requirements: (1) Data to be reported by all ATSs at the
time of order receipt; (2) data to be reported by all ATSs at the time
of order execution; (3) data to be reported by ATSs that display
subscriber orders; and (4) data specific to ATSs that are registered as
ADF Trading Centers. The proposed requirements would apply to order and
execution information for NMS stocks.\4\
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    \3\ See Regulatory Notice 14-51 (November 2014).
    \4\ See 17 CFR 242.600(b)(47).
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Proposed Order Receipt Reporting Requirements Applicable to All ATSs
That Trade NMS Stocks
    The first category of proposed changes applies to all ATSs when
reporting the receipt of an order to OATS. Specifically, the proposed
rule would require each ATS to indicate on all orders received whether
it displays subscriber orders outside of the ATS (other than to
alternative trading system employees).\5\ This requirement will enable
FINRA to distinguish between ATSs that display orders outside the ATS,
either to subscribers or through consolidated quote data (``display
ATS'') and ATSs that do not display orders outside the ATS (``non-
display ATS'').\6\ A display ATS would also indicate whether the order
book is displayed to subscribers only, or distributed for publication
in the consolidated quotation data. Each ATS would also be required to
identify whether it is an ADF Trading Center as defined in FINRA Rule
6220. An ATS would make these determinations on a general basis, but
would provide this information through flags submitted on every order
event. Each ATS also would be required to identify whether a specific
order can be routed away from the ATS for execution, and whether there
are any counter-party restrictions on the order. ATSs would also be
required to provide FINRA with a unique identifier representing the
specific order type other than market and limit orders that have no
other special handling instructions. In order for FINRA to map the
identifier to a specific order type, an ATS will also be required to
provide FINRA with a list of all of its order types twenty days before
such order types become effective, and if the ATS makes any subsequent
changes to its order types, twenty days before such changes become
effective.\7\
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    \5\ The proposed requirements apply to any alternative trading
system, as defined in Rule 300(a)(1) of SEC Regulation ATS, that has
filed a Form ATS with the SEC and is subject to FINRA's OATS and
equity trade reporting rules. See 17 CFR 242.300(a)(1).
     For purposes of this rule, the term ``order'' includes a
broker-dealer's proprietary quotes that are transmitted to an ATS.
    \6\ If an ATS meets the applicable volume thresholds, it is
required to make its best bid and best offer available for
publication in the consolidated quotation data. See 17 CFR
242.301(b)(3).
    \7\ In a Regulatory Notice announcing the implementation of this
proposal, FINRA will provide a deadline prior to the implementation
date by which current ATSs must initially submit lists of their
existing order types to FINRA.
     FINRA notes that, under current Rule 301(b)(2)(ii) of
Regulation ATS, ATSs are required to file an amendment on Form ATS
at least 20 calendar days prior to implementing a material change to
the operation of the ATS. See 17 CFR 242.301(b)(2)(ii). In the
adopting release for Regulation NMS, the Commission noted that a
material change to the operation of the ATS would include any change
to: the operating platform of the ATSs, the types of securities
traded, or the types of subscribers. The Commission also noted that
ATSs implicitly make materiality decisions in determining when to
notify their subscribers of changes. See Securities Exchange Act
Release No. 40760 (December 8, 1998) 63 FR 70844, 70864 (December
22, 1998). Under a proposed rule that would alter the reporting
requirements for ATSs that trade NMS stocks, an ATS would be
required to amend its effective form at least 30 calendar days prior
to the date of implementation of a material change to the operations
of the ATS or to the activities of the broker-dealer operator or its
affiliates that are subject to disclosure on the form. The
Commission stated that a scenario that is likely to implicate a
material change to the operations of an ATS would likely include the
introduction or removal of a new order type on the ATS. See
Regulation of NMS Stock Alternative Trading Systems, Securities
Exchange Act Release No. 76474 (November 18, 2015), 80 FR 80998,
81027-28 (December 28, 2015).

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    An ATS also would be required to report, for all orders, the NBBO
(or relevant reference price) in effect at the time of order receipt
and the timestamp of when the ATS captured the effective NBBO (or
relevant reference price); as part of this report, the ATS must
identify the market data feed it used to obtain the NBBO (or relevant
reference price).\8\ FINRA believes that there may be some time
difference, however small, between the time that an ATS receives an
order and places it on the order book, and the time that the ATS
records the NBBO. Reporting both fields will enable FINRA to ascertain
if the NBBO changed between the time of order receipt and the time the
ATS captured the effective NBBO.
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    \8\ An ATS may use a relevant reference price other than the
NBBO if, for example, it pegs to the primary market for a security
or pegs to the Protected Best Bid or Offer.
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    If, for any reason, the ATS uses an alternative feed to the one
that was reported on its ATS data submission, the ATS must notify FINRA
via email of the fact that an alternative source was used, identify the
alternative source, and specify the date(s), time(s) and securities for
which the alternative source was used. Finally, each ATS would be
required to provide the sequence number assigned to the order event by
the ATS's matching engine.
Proposed Order Execution Reporting Requirements Applicable to All ATSs
That Trade NMS Stocks
    The second category of proposed changes applies to all ATSs when
reporting the execution of an order to OATS. Specifically, each ATS
must record and report the NBBO (or relevant reference price) in effect
at the time of order execution, and the timestamp of when the ATS
captured the effective NBBO (or relevant reference price). An ATS must
identify the market data feed used by the ATS to obtain the NBBO (or
other reference price). If for any reason, the ATS uses an alternative
feed than the one that was reported on its ATS data submission, the ATS
must notify FINRA via email of the fact that an alternative source was
used, identify the alternative source, and specify the date(s), time(s)
and securities for which the alternative source was used.
Proposed Reporting Requirements Applicable to Display ATSs That Trade
NMS Stocks
    The third category of changes applies only to display ATSs and
requires that those ATSs report the following additional order receipt
information: (1) Whether the order is hidden or displayable; (2)
display quantity; (3) reserve quantity, if applicable; (4) displayed
price; and (5) the price entered. If the matching engine re-prices a
displayed order or changes the display quantity of a displayed order,
the ATS must report the time of such modification and the applicable
new display price or size.
    The initial proposal applied these requirements to both display and
non-display ATSs and would have required reporting of all changes to
the price and size of orders, whether or not displayed. Commenters
raised concerns with these proposed requirements, especially those
related to non-displayed orders, because they would have required ATSs
to record and report information that they indicated that they do not
currently capture.\9\ While FINRA understands the additional burdens
associated with reporting this information, FINRA believes it is
important that FINRA receive this information for display ATSs because
the pricing and size changes are being displayed to others and FINRA
needs to have an accurate, time sequenced audit trail to reconstruct
the displayed market. Therefore, rather than requiring that all ATSs
report changes to the price and size of orders as set forth in the
initial proposal, FINRA is proposing that only those ATSs that display
subscriber orders report changes to the price or size of a displayed
order. FINRA believes that this information is particularly relevant to
display ATSs, and that this requirement will enhance FINRA's
surveillance of displayed ATSs while not imposing undue reporting
burdens on non-display ATSs.
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    \9\ FINRA notes that ATSs are currently required to capture and
maintain several categories of order-specific information for both
displayed and non-displayed orders. For example, ATSs are required
to capture the time an order was received, the number of shares to
which the order applies, any limit or stop price prescribed by the
order, any instructions to modify or cancel the order, the time the
order was executed, the price at which the order was executed, and
the size at which the order was executed. See 17 CFR 242.302(c).
     Similarly, ATSs are currently required to report a variety of
order-specific information to FINRA via OATS. For example, upon
receipt of an order, a member must report the number of shares to
which the order applies, any limit or stop price prescribed in the
order, special handling requests, and the time at which the order is
received. See Rule 7440(b). Upon the modification or execution of an
order, the member must report the time of modification or execution,
whether the order was fully or partially executed, the number of
unexecuted shares remaining if the order was only partially
executed, and the execution price. See Rule 7440(d).
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Proposed Reporting Requirements Applicable to ATSs that are ADF Trading
Centers That Trade NMS Stocks
    Finally, FINRA is proposing to require that ATSs that are ADF
Trading Centers report information in addition to the requirements for
all ATSs and display ATSs described above. Specifically, under the
proposed rule, if a change to the displayed size or price of an order
resulted in a new quote being transmitted to the ADF, the ADF Trading
Center would be required to report the quote identifier provided to the
ADF. In addition, an ADF Trading Center would be required to provide a
new quote identifier if an order held by the ADF Trading Center becomes
associated with a quote identifier based on an action by the matching
engine related to different order(s), (e.g., another order is cancelled
making the order being held the best priced order in the matching
engine). The following example illustrates the operation of this last
provision:

    10:00:01 a.m.: ATS receives order #7896 to buy 500 shares of XYZ
at $10.
    10:00:02 a.m.: ATS receives order #8521 to buy 500 shares of XYZ
at $10.
    10:00:03 a.m.: ATS submits a quote to the ADF to buy 1,000
shares of XYZ at $10, and assigns the quote ID of #1234.
    The ATS would be required to report the quote ID of #1234 with
orders #7896 and #8521 so that FINRA would be able to identify the
specific orders that were represented in quote ID #1234.
    10:00:20 a.m.: Order #7896 to buy 500 shares at $10 is
cancelled.
    10:00:21 a.m.: The ATS must update its bid to reflect the
cancellation of order #7896. Since quote ID #1234 reflected the now-
cancelled order, the ATS must assign a new quote identifier when it
updates its bid to reflect the cancellation of order #7896.
    10:00:22 a.m.: The ATS updates its quote on the ADF to buy 500
shares of XYZ at $10, and assigns the quote ID of #5678.
    The ATS will be required to submit a report to OATS for order
#8521 to reflect the new quote ID of #5678 now associated with the
order. This report is necessary so that

FINRA is able to identify the specific order that is represented in
quote ID #5678.

    The proposed requirements for ADF Trading Centers largely replicate
the requirements applicable to ADF Trading Centers that were proposed
in Regulatory Notice 14-51. In response to comments, however, FINRA
modified the types of identifiers that ADF Trading Centers are required
to report to FINRA. As proposed in Regulatory Notice 14-51 proposal,
ADF Trading Centers were required to report, for each order that is
part of the displayed bid or offer, the unique identifier that the ADF
Trading Center assigned to the order. ADF Trading Centers were also
required to report the quote identifier that it provided to the ADF. In
this proposal, FINRA is requiring that an ADF Trading Center report the
quote identifier that it provided to the ADF if a new order is
transmitted to the ADF, or a new quote identifier even when there is no
change in the order itself (e.g., another order is cancelled making the
order being held the best-priced order in the matching engine). These
requirements will enable FINRA to identify all orders that make up a
specific quote displayed on the ADF, thereby enhancing surveillance of
the ADF, while not unduly burdening ATSs that are ADF Trading Centers
by requiring them to submit their own internal identifiers.
    If the Commission approves the proposed rule change, FINRA will
announce the effective date of the proposed rule change no later than
90 days following Commission approval. The effective date will be no
later than 180 days following Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that FINRA rules must be 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, and Section 15A(b)(9) of the Act,\11\ which requires
that FINRA rules not impose any burden on competition that is not
necessary or appropriate.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3(b)(6).
    \11\ 15 U.S.C. 78o-3(b)(9).
---------------------------------------------------------------------------

    FINRA believes that this proposed rule change is consistent with
the Act because it will greatly enhance FINRA's ability to surveil
activity occurring within an ATS, and by extension FINRA's ability to
surveil for potentially abusive algorithmic trading activity more
generally across markets. For example, to effectively conduct
quotation-based surveillance such as layering and quote spoofing, FINRA
needs access to comprehensive order information and to the identity of
firms that are generating ATS quotations. The proposed rule change
would address such information gaps and would provide FINRA with
additional information that can be integrated into FINRA's surveillance
patterns to support alert generation and analysis. In addition, the
proposed rule change would also increase FINRA's ability to detect the
use of a display or non-display ATS by a market participant to further
a wide range of other potential market-specific and cross-market
manipulative activities that market participants may engage in by
placing orders or executing trades on the ATS itself or across multiple
ATSs or exchanges.
    FINRA believes that applying this proposal to NMS stocks is
consistent with the Act because the potentially abusive trading
activity that the proposal is designed to detect, including, but not
limited to, layering, quote spoofing, and mid-point pricing
manipulation within ATSs and across markets is of particular concern
with respect to NMS stocks.\12\ While some of the data required to be
reported under the proposed rule change may be captured as part of the
Consolidated Audit Trail (``CAT''), FINRA strongly believes that gaps
in ATS order book data must be addressed in the near-term, weighing the
burdens to firms and the necessity of the change, to ensure effective
surveillance of ATSs and by extension abusive algorithmic trading
activity more generally across markets. FINRA therefore believes that
this ATS reporting requirement should not be delayed due to the future
implementation of CAT.\13\ To the extent this proposed rule change
requires the reporting of information that will also be captured by the
CAT, FINRA would sunset the rule upon the implementation of the CAT
requirement.
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    \12\ FINRA notes that OATS reporting requirements apply to OTC
equity securities, as defined in Rule 6420, in addition to NMS
stocks.
    \13\ By its terms, Rule 613 of SEC Regulation NMS, which sets
forth the requirements for the CAT, will not require all broker-
dealers to report to CAT until three years after the CAT plan is
approved. See 17 CFR 242.613 (a)(3)(vi).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed changes will apply
equally to all similarly situated ATSs. FINRA also notes that the
proposed rule change is designed to assist FINRA in meeting its
regulatory obligations by enhancing its ability to efficiently surveil
activity occurring within ATSs and across markets.
Economic Impact Assessment
    The purpose of the proposed rule change is to enhance FINRA's
surveillance of potential abusive trading activity, including, but not
limited to, layering, quote spoofing, and mid-point pricing
manipulation within ATSs and across markets. Specifically, the proposal
requires ATSs to report additional order information to FINRA, such as
specific order types, and whether an order can be routed away from the
ATS for execution, so that FINRA has the relevant information to
reconstruct an ATS's order book for surveillance purposes.
    For purposes of this rule proposal, FINRA defines the economic
baseline as the current regulatory reporting requirements of an ATS to
FINRA. Currently, each ATS has the same reporting requirements to FINRA
related to OATS that apply to all FINRA members.\14\ For instance,
these obligations accrue when an ATS acts as a party to a securities
transaction, such as matching buy and sell orders from its subscribers.
Currently, ATSs do not have to notify FINRA of any amendments or
additions to existing order types. FINRA requires each member,
including an ATS, to associate its order types with one of the existing
special handling codes defined in the OATS technical documentation.
This association is not perfect, as the conditions on a specific order
type offered by a firm or ATS may differ from the approximately 70
special handing codes identified in OATS.\15\
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    \14\ In addition to the OATS reporting requirements, ATSs were
required to calculate their volume information pursuant to Rule 4552
through January 31, 2016, and were required to report this data to
FINRA by February 9, 2016. FINRA began calculating ATS volume data
based on trade reports on February 1, 2016.
    \15\ See ``OATS Reporting Technical Specifications'' at http://www.finra.org/sites/default/files/OATSTechSpec_01112016.pdf for a
full list of special handling codes.
---------------------------------------------------------------------------

    FINRA does not believe that this proposed rule change will impose a
significant burden on its member firms that are ATSs. Given the level
of order activity generated on ATSs, ATSs currently report a
significant amount of order information to OATS. The proposed rule
change would require an

ATS to supplement its current submissions with the additional
information described herein using the existing OATS gateway. In so
doing, the proposal minimizes duplication with OATS reporting and the
potential impact on ATSs, while providing FINRA with the necessary
order information to perform more comprehensive order-based
surveillance of ATSs and the market as a whole. FINRA does not believe
that this proposed rule change would require ATSs to generate
significant new information relating to orders; rather it would require
ATSs to report information already compiled as part of operating their
order books, and for which the ATSs are already obligated to capture
under Regulation ATS.\16\ In addition, as described above, FINRA has
revised the proposal as published in Regulatory Notice 14-51 so that
FINRA will obtain order information that will enhance its surveillance
of ATS activity, while not imposing undue reporting requirements on
ATSs.
---------------------------------------------------------------------------

    \16\ See 17 CFR 242.302.
---------------------------------------------------------------------------

    FINRA expects that there will be approximately 42 ATSs that will be
impacted by the rule change, where they will be required to report
additional information at the time of the order receipt and order
execution. Of those, five are identified as display ATSs, and therefore
will be subject to additional reporting requirements at the time of the
order receipt such as whether the order is hidden or displayable,
display quantity, reserve quantity, displayed price and price
entered.\17\ However, based on a series of communications with a sample
of ATSs, FINRA understands that ATSs already collect and store such
information, including the NBBO at the time of the order receipt and
execution.
---------------------------------------------------------------------------

    \17\ Of the five ATSs that are display ATSs, one ATS is an ECN
that displays quotes on an exchange.
---------------------------------------------------------------------------

    FINRA also acknowledges that ATSs may incur some costs associated
with updating their reporting systems to reflect the new requirements
introduced by this rule proposal. However, some of the reporting
requirements under this Rule, such as an indicator whether the order
can be routed away from the ATS and display size, have already been
implemented due to the National Market System Plan to Implement a Tick
Size Pilot Program,\18\ and reporting additional data fields are
expected to create marginal reporting costs for member firms that are
ATSs. Therefore, the proposed rule change is not expected to create an
unnecessary burden on member firms that are ATSs.
---------------------------------------------------------------------------

    \18\ See Securities Exchange Act Release No. 74892 (May 6,
2015), 80 FR 27514 (May 13, 2015) (File No. 4-657).
---------------------------------------------------------------------------

    As of February 2016, there are no ATSs that are also ADF Trading
Centers and the requirements on reporting quote identifiers would not
be applicable to the approximately 42 ATSs that are active at the time
of the writing of this filing.
    Pursuant to Section 19(b)(1) of the Act \19\ and Rule 19b-4
thereunder,\20\ exchanges have to file with the SEC when they intend to
eliminate, amend and add to the existing order types, modifiers and
related references. The proposed rule change introduces similar pre-use
reporting requirements for ATSs which currently have no such reporting
requirements to FINRA, and hence would impose comparable obligations
between execution venues as it relates to the introduction of new order
types.\21\
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    \19\ 15 U.S.C. 78s(b)(1).
    \20\ 17 CFR 240.19b-4.
    \21\ FINRA notes that, under current Rule 301(b)(2)(ii) of SEC
Regulation ATS, ATSs are required to file an amendment on Form ATS
at least 20 calendar days prior to implementing a material change to
the operation of the ATS. See 17 CFR 242.301(b)(2)(ii).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    This proposal, in addition to another proposal involving OATS order
reporting, was published for comment in Regulatory Notice 14-51
(November 2014).\22\ Five comments were received in response to the
Regulatory Notice.\23\ A copy of Regulatory Notice 14-51 is attached as
Exhibit 2a. A list of comment letters received in response to
Regulatory Notice 14-51 is attached as Exhibit 2b, and copies of the
five comment letters that addressed the proposed rule change are
attached as Exhibit 2c.\24\
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    \22\ The OATS non-member reporting proposal also described in
Regulatory Notice 14-51 is not reflected in the current proposed
rule change; consequently, comments on that proposal are not
addressed.
    \23\ See Letter from Manisha Kimmel, Managing Director,
Financial Information Forum, to Marcia E. Asquith, Secretary, FINRA,
dated February 20, 2015 (``FIF''); Letter from John A. McCarthy,
General Counsel, KCG Holdings, Inc., to Marcia E. Asquith,
Secretary, FINRA, dated February 20, 2015 (``KCG''); Letter from
Howard Meyerson, General Counsel, Liquidnet Inc., to Marcia E.
Asquith, Secretary, FINRA, dated February 20, 2015 (``Liquidnet'');
Letter from Theodore R. Lazo, Managing Director and Associate
General Counsel, Securities Industry and Financial Markets
Association, to Marcia E. Asquith, Secretary, FINRA, dated February
24, 2015 (``SIFMA''); and Letter from Mark Holder, Managing
Director, UBS Securities LLC, to Marcia E. Asquith, Secretary,
FINRA, dated February 26, 2015 (``UBS'').
    \24\ The Commission notes that the exhibits referred to in the
Notice, 2a, 2b, and 2c, are exhibits to the proposed rule change,
not to this Notice.
---------------------------------------------------------------------------

    As proposed in Regulatory Notice 14-51, ATSs would be required to
report additional order information that is not currently captured in
OATS, which would enable FINRA to better recreate the full ATS order
book. This would include all events and order attributes that would
change the ATS's system quantity (the number of shares of an order,
whether displayed or undisplayed, that can currently execute within the
ATS), the displayed quantity, highest (buy orders) or lowest (sell
orders) price at which the order may be executed, and the displayed
price for an order. As initially proposed, an ATS also would have been
required to provide, for every order, the associated OATS identifier,
which would link information about that order to the related
information and full lifecycle reported to OATS. That proposal would
have applied to any ATS that accounted for more than 0.25% of
consolidated market share in any security over a one-month period. Once
an ATS had exceeded the threshold for one security, it would have been
required to report order information for all securities for which the
ATS receives an order. As proposed, an ATS that triggered the reporting
requirement would have had to fall under the 0.25% threshold and remain
there for six months before being relieved of its reporting obligation.
    While some of the commenters supported the overall goal of
increased surveillance of ATSs and increased transparency of ATS
operations,\25\ all the commenters opposed some aspect of the proposal,
with commenters primarily criticizing the proposed requirement that
ATSs report re-pricing events for pegged orders. Multiple commenters
argued that this part of the proposal would require ATSs to record and
generate information that they do not currently capture.\26\ Commenters
noted that an ATS may not necessarily re-price an order due to a change
in the NBBO, especially if it does not display or route orders to other
market centers.\27\ Commenters noted that the proposal, and
particularly the requirement to report re-pricing events for pegged
orders, would generate a substantial number of new OATS records, which
would place an additional burden on ATSs and might

create latency.\28\ Liquidnet noted that midpoint pegged orders
constitute all of its order flow, and that reporting re-pricings of
pegged orders would impose a heavy reporting burden on it.\29\
Commenters stated that the new requirements might also necessitate the
creation of real-time OATS generation, rather than end-of-day
batching.\30\
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    \25\ See KCG Letter at 4; SIFMA Letter at 2; UBS Letter at 1.
    \26\ See FIF Letter at 2, KCG Letter at 4-5; SIFMA Letter at 3;
UBS Letter at 2.
    \27\ See FIF Letter at 2; KCG Letter at 4; UBS Letter at 2. One
commenter suggested that some of the stated goals of the proposal,
e.g., detection of spoofing and layering, may not be applicable to
ATSs that do not display or route orders. See FIF Letter at 3.
    \28\ See FIF Letter at 2; KCG Letter at 4; SIFMA Letter at 3-4.
    \29\ See Liquidnet Letter at 2.
    \30\ See FIF Letter at 2; KCG Letter at 5; UBS Letter at 3.
---------------------------------------------------------------------------

    Several commenters also stated that the proposal should be modified
to reflect the differences between exchanges and ATSs. Commenters noted
that ATSs may use variants of price/time priority, and may also allow
subscribers to opt out of executing against certain order flow.\31\ As
a result, it may appear that an ATS is not executing against available
interest. Commenters also noted that the proposal should be modified to
reflect the fact that not all ATSs operate similarly, e.g., order
handling and execution methodologies may differ among ATSs.\32\
---------------------------------------------------------------------------

    \31\ See FIF Letter at 3; SIFMA Letter at 3.
    \32\ See supra note 29.
---------------------------------------------------------------------------

    FIF recommended that the proposed 0.25% volume threshold should be
modified so that it is consistent with the current fair access
threshold of Regulation ATS (ADV of five percent or more of the
aggregate average daily share volume) or the Regulation SCI ATS
threshold.\33\ Liquidnet noted that FINRA already has access to NBBO
data and suggested an alternative whereby the ATS could report, in
connection with the execution of a midpoint pegged order, the BBO that
the ATS referenced to derive its execution price.\34\ UBS suggested
enhancing existing OATS order attributes, rather than the current
proposal, e.g., the addition of special handling codes.\35\
---------------------------------------------------------------------------

    \33\ See FIF Letter at 2. FIF also suggested that any changes to
order reporting should not be undertaken through OATS but through
changes to the functionality of CAT. See FIF Letter at 3.
    \34\ See Liquidnet Letter at 2.
    \35\ See UBS Letter at 3.
---------------------------------------------------------------------------

    After the close of the comment period, FINRA engaged in discussions
with representatives of several ATSs to better understand their
concerns with the proposal and to solicit input on possible
alternatives to the proposal. In response to commenters and in
furtherance of those discussions, FINRA has amended the proposal in
several respects as noted above in Item II.A.1. The most significant
change is the removal of the requirement for non-displayed ATSs to
report changes in price or size, including changes to pegged orders
each time the pegging price changes. Based on the comment letters and
FINRA's subsequent discussions with several ATSs, such events generally
would not be created by an ATS matching engine unless a new order on
the opposite side of the market that is eligible to execute against
that resting order is received and can match against the resting order.
Consequently, the initial requirement to report re-pricing events would
have required ATSs to create such events for the specific purpose of
reporting to FINRA. FINRA believes that removing the requirement to
report changes to price or size for non-displayed ATSs responds to
commenters' concerns that the proposal is complex, will significantly
impact members' OATS reporting practices, and will require members to
create information that they do not currently capture. At the same
time, FINRA believes that the revised proposal still enhances FINRA's
surveillance capabilities by requiring ATSs that display subscriber
orders to report this information. FINRA believes that this information
is particularly relevant to display ATSs, and that FINRA does not
currently possess this information.
    FINRA has also amended the proposal to remove the volume-based
threshold that would trigger the reporting requirements. FINRA believes
that removing the reporting threshold will increase the number of ATSs
that report the proposed order information, and by extension increase
FINRA's ability to enhance its surveillance of trading and order
activity occurring on or through ATSs. At the same time, FINRA notes
that removing the proposed reporting threshold should not significantly
impact the reporting status of most ATSs, since the majority of ATSs
would have satisfied the proposed reporting requirement. To the extent
that FINRA is distinguishing among ATSs in setting forth reporting
requirements, FINRA believes that a more useful distinction is between
non-display and display ATSs, as it is currently proposing.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2016-010 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2016-010. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of FINRA. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-FINRA-2016-010, and should
be submitted on or before March 28, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-04912 Filed 3-4-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 183 (Tuesday, September 22, 2015)]
[Notices]
[Pages 57263-57265]
[FR Doc No: 2015-24019]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75935; File No. PCAOB-2015-01]

Public Company Accounting Oversight Board; Order Granting
Approval of Proposed Rules To Implement the Reorganization of PCAOB
Auditing Standards and Related Changes to PCAOB Rules and Attestation,
Quality Control, and Ethics and Independence Standards

September 17, 2015.

I. Introduction

    On June 17, 2015, the Public Company Accounting Oversight Board
(the ``Board'' or the ``PCAOB'') filed with the Securities and Exchange
Commission (the ``Commission''), pursuant to section 107(b) \1\ of the
Sarbanes-Oxley Act of 2002 (the ``Sarbanes-Oxley Act'') and section
19(b) \2\ of the Securities Exchange Act of 1934 (the ``Exchange
Act''), proposed rules to adopt amendments to implement the
reorganization of PCAOB auditing standards and related changes to PCAOB
rules and attestation, quality control, and ethics and independence
standards (collectively, the ``Proposed Rules'' or ``Proposed
Reorganization'').\3\ The Proposed Rules were published for comment in
the Federal Register on June 25, 2015.\4\ At the time the notice was
issued, the Commission designated a longer period to act on the
Proposed Rules, until September 23, 2015.\5\ The Commission received
four comment letters in response to the notice.\6\ This order approves
the Proposed Rules.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 7217(b).
    \2\ 15 U.S.C. 78s(b).
    \3\ The Board originally proposed in March 2013 (``Original
Proposal'') what became the Proposed Rules. See PCAOB Release No.
2013-002 (March, 26, 2013). The Board also issued a supplemental
request for comment in May 2014 (``Supplemental Request''). See
PCAOB Release No. 2014-001 (May 7, 2014).
    \4\ See Release No. 34-75251 (June 19, 2015), 80 FR 36602 (June
25, 2015).
    \5\ Ibid.
    \6\ See Comment letters from Suzanne H. Shatto, June 27, 2015,
Deloitte & Touche LLP, July 8, 2015, Michael McMurtry, July 28,
2015, and Stephen G. Wills, August 17, 2015, available at http://www.sec.gov/comments/pcaob-2015-01/pcaob201501.shtml.

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II. Description of the Proposed Rules

    In April 2003, the Board adopted, on an interim, transitional
basis, generally accepted auditing standards (``GAAS'') that were in
existence on April 16, 2003. When the Board adopted those auditing
standards, it continued to use the topical organization and reference
numbers (``AU sections'') in the Auditing Standards Board (``ASB'') of
the American Institute of Certified Public Accountants' (``AICPA'')
then-existing codification of its standards. Auditing standards issued
by the Board (``AS standards'') have not been codified or otherwise
organized by topic, and are numbered in sequential order based upon
when they were issued. As a result, the Board's auditing standards are
organized using two separate numbering systems: (1) The numbering
system used by the ASB when the Board adopted the interim standards;
and (2) the numbering system used by the Board for the standards it has
issued.

1. Proposed Reorganization

    Under the Proposed Reorganization, the individual standards will be
grouped into the following topical categories:
     General Auditing Standards (AS 1000s)--standards on broad
auditing principles, concepts, activities, and communications;
     Audit Procedures (AS 2000s)--standards for planning and
performing audit procedures and for obtaining audit evidence;
     Auditor Reporting (AS 3000s)--standards for auditors'
reports;
     Matters Related to Filings Under Federal Securities Laws
(AS 4000s)--standards on certain auditor responsibilities relating to
U.S. Securities and Exchange Commission filings for securities
offerings and reviews of interim financial information; and
     Other Matters Associated with Audits (AS 6000s)--standards
for other work performed in conjunction with an audit of an issuer or
of a broker or dealer.
    Within each category are subcategories to further organize similar
topics, such as standards related to auditor communications in the
``General Auditing Standards'' category. The integrated reference
system uses an ``AS'' prefix to identify the auditing standard and each
standard is assigned a unique section number, based on a four-digit
numbering system.

2. Changes to PCAOB Standards and Rules

    The amendments to PCAOB standards and rules include changes
rescinding certain interim auditing standards that the Board believes
are no longer necessary, eliminating inoperative language in auditing
standards, references, and interpretations, and eliminating inoperative
references to AICPA standards or rules.
a. Changes to the PCAOB Standards
    The amendments primarily update section numbers, update cross-
references among standards using the numbering system in the adopted
reorganization, and change the titles of certain standards. Other
amendments rescind certain interim standards and remove or update
certain terms and phrases in the standards.
Interim Standards to be Rescinded
    The following interim standards are being rescinded because they
contain requirements that have been superseded or duplicated by other
PCAOB standards, and as such, are considered unnecessary:

 AU sec. 150, Generally Accepted Auditing Standards
 AU sec. 201, Nature of the General Standards
 AU sec. 410, Adherence to Generally Accepted Accounting
Principles
 AU sec. 532, Restricting the Use of an Auditor's Report
 AU sec. 901, Public Warehouses--Controls and Auditing
Procedures for Goods Held.
Interpretive Publications
    Almost all \7\ of the AICPA auditing interpretations are being
retained and presented separately from the auditing standards. The
Proposed Reorganization retains the existing requirement for the
auditor to be aware of and consider the applicable auditing
interpretations.
---------------------------------------------------------------------------

    \7\ The Proposed Reorganization will rescind two auditing
interpretations related to AU sec. 410 and AU sec. 534 and
interpretation 16 of AU sec. 508 because they are either duplicative
or unrelated to the preparation or issuance of any audit report for
an issuer, broker, or dealer, and thus unnecessary.
---------------------------------------------------------------------------

    The Proposed Reorganization retains the majority \8\ of the
appendices to the interim auditing standards and to continue presenting
those appendices together with their related auditing standards in the
same manner that appendices to PCAOB-issued standards are presented.
Additionally, the Proposed Reorganization removes references to AICPA
Audit and Accounting Guides and AICPA auditing Statements of Position
because the guides referenced in PCAOB standards are outdated.\9\
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    \8\ The Proposed Reorganization will delete duplicative and thus
unnecessary appendices that contain paragraphs .86 and .87 of AU
sec. 316.
    \9\ AICPA Audit and Accounting Guides and auditing Statements of
Position referenced in PCAOB standards are the editions of those
publications as in existence on April 16, 2003.
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Other Changes to PCAOB Standards
    The Proposed Reorganization includes amendments to replace
references to GAAS throughout the auditing standards with references to
the standards of the PCAOB or PCAOB auditing standards, and
accordingly, to supersede Auditing Standard No. 1 (``AS 1''),
References in Auditors' Reports to the Standards of the Public Company
Accounting Oversight Board.\10\ The Proposed Reorganization also
includes amendments to preserve the requirement from AS 1 for the
auditor's report to include the city and state, (or city and country),
of the auditor. Finally, as AS 1 applied to the PCAOB's attestation
standards, amendments to update references to PCAOB standards and to
include the city and state (or city and country) have been applied to
the attestation standards.
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    \10\ In 2004, the Commission published interpretive guidance to
explain that references in Commission rules and staff guidance to
GAAS or specific standards of GAAS, as they relate to issuers,
should be understood to mean the standards of the PCAOB plus any
applicable rules of the Commission. See Release No. 34-49708, FR-73
(May 14, 2004).
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    As a result of these changes, the amendments also include updates
to the illustrative auditor's reports included throughout the auditing
standards. In addition to illustrating the two changes described above,
the updates to the reports include changing the title to ``Report of
Independent Registered Public Accounting Firm.'' \11\
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    \11\ In the Board's final rule release, it notes that the
amendments would not preclude an unregistered firm that applies
PCAOB standards, when appropriate, from omitting ``Registered'' from
the title of the report. See PCAOB Release No. 2015-002 at fn. 26
(March 31, 2015).
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b. Changes to PCAOB Rules
    The Proposed Reorganization amends PCAOB Rule 3200T to remove (1)
the reference to AU sec. 150, which, as discussed above, is rescinded,
and (2) terms such as ``interim auditing standards'' and ``generally
accepted auditing standards.'' These terms are no longer relevant under
the Proposed Reorganization. Additionally, the Proposed Reorganization
makes the rule permanent, rather than temporary, and therefore removes
the word ``Interim'' from its title.

3. Applicability and Effective Date

    The PCAOB has proposed application of its Proposed Rules to audits
of all issuers, including audits of emerging growth companies
(``EGCs''),\12\ as discussed in section IV. below. The Proposed Rules
also would apply to audits of SEC-registered brokers and dealers.\13\
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    \12\ The term ``emerging growth company'' is defined in Section
3(a)(80) of the Exchange Act. 15 U.S.C. 78c(a)(80).
    \13\ On July 30, 2013, the Commission adopted amendments to Rule
17a-5 under the Exchange Act to require, among other things, that
audits of brokers' and dealers' financial statements be performed in
accordance with the standards of the PCAOB for fiscal years ending
on or after June 1, 2014. 17 CFR 240.17a-5. See Broker-Dealer
Reports, Release No. 34-70073, (July 30, 2013), 78 FR 51910 (August
21, 2013), available at http://www.sec.gov/rules/final/2013/34-70073.pdf.
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    The Proposed Rules would be effective as of December 31, 2016.
However, auditors and others are not precluded from using and
referencing the standards as reorganized pursuant to the Proposed Rules
before the effective date because the amendments do not substantively
change the standards' requirements.\14\
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    \14\ See PCAOB Release No. 2015-002 at 21.
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III. Comment Letters

    As noted above, the Commission received four comment letters
concerning the Proposed Rules. Three commenters expressed support for
the Proposed Rules,\15\ and the other commenter provided suggestions
discussed further below.\16\
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    \15\ See Shatto Letter, Deloitte Letter and McMurtry Letter.
    \16\ See Wills Letter.
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    One commenter stated that the new organizational structure will
improve the usability of the PCAOB's auditing standards, including
helping users navigate the standards more easily.\17\ Another commenter
suggested adopting a similar structure used by the ASB and IAASB and
reorganizing the PCAOB's attestation, quality control, and ethics and
independence standards. This same commenter expressed concern regarding
the rescission of AU sec. 532 and removal of references to non-
authoritative other guidance in the Proposed Reorganization.\18\
Finally, one commenter suggested enhancements to improve the usability
of the Proposed Reorganization, including a suggestion to embed PCAOB
standards in the FASB's Accounting Standards Codification.\19\ The
PCAOB addressed many of these comments in its Original Proposal,
Supplemental Request, and final rule release. The Commission does not
find the PCAOB's responses to be unreasonable. The comment on embedding
PCAOB standards in the FASB's Accounting Standards Codification is
outside the scope of the Proposed Rules.
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    \17\ See Deloitte Letter.
    \18\ See McMurtry Letter.
    \19\ See Wills Letter.
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IV. The PCAOB's EGC Request

    Section 103(a)(3)(C) of the Sarbanes-Oxley Act provides that any
additional rules adopted by the PCAOB subsequent to April 5, 2012 do
not apply to the audits of EGCs, unless the Commission determines that
the application of such additional requirements is necessary or
appropriate in the public interest, after considering the protection of
investors and whether the action will promote efficiency, competition,
and capital formation.\20\ Having considered those factors, and as
explained further herein, the Commission finds that applying the
Proposed Rules to audits of EGCs is necessary or appropriate in the
public interest.
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    \20\ Section 103(a)(3)(C) of the Sarbanes-Oxley Act, as amended
by section 104 of the JOBS Act.
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    In proposing application of the Proposed Rules to audits of all
issuers, including EGCs, the PCAOB requested that the Commission make
the determination required by section 103(a)(3)(C). To assist the
Commission in making its determination, the PCAOB prepared and
submitted to the Commission its own EGC analysis. The PCAOB's EGC
analysis includes discussions of characteristics of self-identified
EGCs and economic considerations pertaining to audits of EGCs,
including efficiency, competition, and capital formation. In its
analysis, the Board states the reorganization of PCAOB auditing
standards would involve amendments that do not impose additional
requirements on auditors or change substantively the requirements of
PCAOB standards. Thus, the reorganization, including the amendments, is
not expected to affect the manner in which audits are performed and
reported under PCAOB standards, including audits of EGCs. Additionally,
reorganizing the PCAOB standards into a single, integrated
organizational structure should make it easier for auditors and others
to navigate, use, and apply the standards.
    The PCAOB's EGC analysis was included in the Commission's public
notice soliciting comment on the Proposed Rules. Based on the analysis
submitted, we believe the information in the record is sufficient for
the Commission to make the requested EGC determination in relation to
the Proposed Rules.

V. Conclusion

    The Commission has carefully reviewed and considered the Proposed
Rules and the information submitted therewith by the PCAOB, including
the PCAOB's EGC analysis, and the comment letters received. In
connection with the PCAOB's filing and the Commission's review,
    A. The Commission finds that the Proposed Rules are consistent with
the requirements of the Sarbanes-Oxley Act and the securities laws and
are necessary or appropriate in the public interest or for the
protection of investors; and
    B. Separately, the Commission finds that the application of the
Proposed Rules to EGC audits is necessary or appropriate in the public
interest, after considering the protection of investors and whether the
action will promote efficiency, competition, and capital formation.
    It is therefore ordered, pursuant to section 107 of the Sarbanes-
Oxley Act and section 19(b)(2) of the Exchange Act, that the Proposed
Rules (File No. PCAOB-2015-01) be and hereby are approved.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015-24019 Filed 9-21-15; 8:45 am]
BILLING CODE 8011-01-P