[Federal Register Volume 79, Number 41 (Monday, March 3, 2014)]
[Notices]
[Pages 11840-11845]
[FR Doc No: 2014-04554]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71614; File No. SR-ISEGemini-2014-10]

Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change to Amend the
Schedule of Fees

February 25, 2014.
    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 10, 2014, ISE Gemini, LLC (the ``Exchange'' or ``ISE
Gemini'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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 Substance
of the Proposed Rule Change

    ISE Gemini is proposing to amend its Schedule of Fees to adopt
subscription fees for its market data offerings. The text of the
proposed rule change is available on the Exchange's Internet Web site
at http://www.ise.com, at the principal office of the Exchange, 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, the Exchange 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. The Exchange 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
    The purpose of the proposed rule filing is to amend the Schedule of
Fees to adopt subscription fees for three ISE Gemini market data
offerings: the ISE Gemini order feed (``Order Feed''), the ISE Gemini
top quote feed (``Top Quote Feed''), and the ISE Gemini real-time depth
of market data feed (``Depth Feed''), which were established by an
immediately effective rule change filed on December 5, 2013.\3\ Each of
these market data offerings is presently available without charge, and
going forward will be made available to both members and non-members,
and to both professional and non-professional subscribers, on a
subscription basis as described in more detail below.\4\
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    \3\ See Securities Exchange Act Release No. 71087 (December 5,
2013) 78 FR 77545 (December 23, 2013) (SR-Topaz-2013-17).
    \4\ See id.
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Order Feed
    The Order Feed provides real-time updates to subscribers every time
a new limit order that is not immediately executable at the BBO is
placed on the ISE Gemini order book. The Order Feed also announces the
commencement of auctions including Flash, Facilitation, Solicitation,
Block Order and Price Improvement Mechanisms, as well as Directed
Orders, but does not include Immediate or Cancel (``IOC'') or Fill or
Kill (``FOK'') orders, quotes, or any non-displayed interest. The
information included on the Order Feed includes auction type, order
side (i.e., buy/sell), order price, order size, and a market
participant (e.g., priority customer) indicator, as well as details for
each instrument series, including the symbols (series and underlying
security), put or call indicator, the expiration date, and the strike
price of the series. While the Options Price Reporting Authority
(``OPRA'') feed, as well as the Top Quote and Depth Feeds each provide
aggregated order and quote information, the Order Feed provides each
individual limit order, not including quote traffic, resulting in lower
bandwidth usage and less data for subscribers to process.
    The Exchange proposes to charge distributors $500 per month for
subscriptions to the Order Feed and will not charge distributors a
monthly fee per controlled device as long the feed is for internal use
only.\5\ For subscribers that redistribute the Order Feed externally,
or redistribute the Order Feed internally and externally, the Exchange
proposes to charge each distributor an additional fee of $5 per month
per controlled device with a combined maximum fee capped at $625 per
month. For example, a firm that subscribes to the Order Feed and then
redistributes it via controlled device to 10 clients will pay $550 per
month ($500 for the feed and $50 for the controlled devices ($5 x 10)).
If that same firm redistributes the data via controlled device to 50
clients, the fee for that firm will be capped at $625 per month,
resulting in a savings of $125.\6\
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    \5\ A distributor is any firm that receives one of the market
data feeds directly from ISE Gemini or indirectly through a
redistributor and then distributes it either internally or
externally. A redistributor includes market data vendors and
connectivity providers such as extranets and private network
providers.
    \6\ Fee caps described below for the Top Quote and Depth Feeds
operate in the same manner as described here with respect to the
Order Feed.
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Top Quote & Depth Feeds
    The Top Quote and Depth Feeds are each real-time market data feeds
that aggregate non-marketable, displayed quotes and orders on the
Exchange on both the bid and offer side of the market. The Top Quote
Feed provides aggregate quotes and orders at the top price level on the
Exchange, and provides subscribers with a consolidated view of tradable
prices at the BBO or ``top of book.'' The Depth Feed, on the other
hand, provides aggregate quotes and orders at the top five price levels
on the Exchange, and provides subscribers with a consolidated view of
tradable prices beyond the BBO, showing additional liquidity and
enhancing transparency for ISE Gemini traded options. The data provided
for each instrument includes the symbols (series and underlying
security), put or call indicator, expiration date, the strike price of
the series, and trading status. In addition, subscribers are provided
with total quantity, customer quantity (if present), price, and side
(i.e., bid/ask). This information is provided for the top price level
on the Top Quote Feed, and for each of the five indicated price levels
on the Depth Feed.
    The Exchange proposes to charge distributors $1,000 per month for
subscriptions to the Top Quote Feed, which will allow both internal use
and external distribution to professional or non-professional
subscribers.\7\ In addition, the Exchange proposes to charge each
distributor a fee of $5 per month per controlled device for
professional subscribers,\8\ with a combined maximum fee capped at
$1,250 per month for internal use or $1,500 per month for external
redistribution or for internal and external redistribution. There will
be no monthly controlled device fees applicable to non-professional
subscribers. Customers who also subscribe to the Depth Feed will not
pay a separate fee for the Top Quote Feed, as the Top Quote Feed is
embedded in the Depth Feed.
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    \7\ Firms that redistribute the Top Quote Feed via controlled
device to both professional and non-professional subscriber clients
will only pay a single $1,000 per month fee plus the applicable
controlled device fees for professional subscribers as described
below.
    \8\ A controlled device is any device that a distributor permits
to access the information in an ISE Gemini market data feed.

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    The Exchange proposes to charge distributors $1,500 per month for
subscriptions to the Depth Feed, which will allow both internal use and
external distribution to professional or non-professional
subscribers.\9\ Each distributor will also be charged $10 per month per
controlled device for professional subscribers, with a combined maximum
fee capped at $2,000 per month for internal use or $2,500 per month for
external redistribution, and $1 per month per controlled device for
non-professional subscribers, with a combined maximum fee capped at
$2,500 per month.
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    \9\ Firms that redistribute the Depth Feed via controlled device
to both professional and non-professional subscriber clients will
only pay a single $1,500 per month fee plus the applicable
controlled device fees for each as described below.
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Multi-Product Subscription Discount
    In order to encourage subscriptions to multiple market data feeds,
the Exchange proposes to adopt a multi-product subscription discount.
Subscription fees will be discounted by 10% for customers who subscribe
to two of these data feeds. As customers who subscribe to the Depth
Feed and Top Quote Feed will only pay fees for the Depth Feed, such
subscription counts as one feed for the purpose of the discount.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(4) of the Act,\11\ in particular, in that it provides for an
equitable allocation of reasonable fees and other charges among
Exchange Members and other persons using its facilities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is also
consistent with Section 6(b)(8) of the Act,\12\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed fees are the same
for all similarly-situated market participants, and therefore do not
unreasonably discriminate among market participants.
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    \12\ 15 U.S.C. 78f(b)(8).
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    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data.
    The Commission concluded that Regulation NMS--by deregulating the
market in proprietary data--would itself further the Act's goals of
facilitating efficiency and competition:

[E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their own internal
analysis of the need for such data.\13\
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    \13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers at all, it follows that the price at which such data is
sold should be set by the market as well.
    On July 21, 2010, President Barak Obama signed into law H.R. 4173,
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(``Dodd-Frank Act''), which amended Section 19 of the Act. Among other
things, Section 916 of the Dodd-Frank Act amended paragraph (A) of
Section 19(b)(3) of the Act by inserting the phrase ``on any person,
whether or not the person is a member of the self-regulatory
organization'' after ``due, fee or other charge imposed by the self-
regulatory organization.'' As a result, all SRO rule proposals
establishing or changing dues, fees, or other charges are immediately
effective upon filing regardless of whether such dues, fees, or other
charges are imposed on members of the SRO, non-members, or both.
Section 916 further amended paragraph (C) of Section 19(b)(3) of the
Act to read, in pertinent part, ``At any time within the 60-day period
beginning on the date of filing of such a proposed rule change in
accordance with the provisions of paragraph (1) [of Section 19(b)], the
Commission summarily may temporarily suspend the change in the rules of
the self-regulatory organization made thereby, if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of this title. If the Commission takes such action, the
Commission shall institute proceedings under paragraph (2)(B) [of
Section 19(b)] to determine whether the proposed rule should be
approved or disapproved.''
    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010), although reviewing a Commission decision made prior to the
effective date of the Dodd-Frank Act, upheld the Commission's reliance
upon competitive markets to set reasonable and equitably allocated fees
for market data. ``In fact, the legislative history indicates that the
Congress intended that the market system `evolve through the interplay
of competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.''' \14\
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    \14\ NetCoalition, at 535 (quoting H.R. Rep. No. 94-229, at 92
(1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).
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    The court's conclusions about Congressional intent are therefore
reinforced by the Dodd-Frank Act amendments, which create a presumption
that exchange fees, including market data fees, may take effect
immediately, without prior Commission approval, and that the Commission
should take action to suspend a fee change and institute a proceeding
to determine whether the fee change should be approved or disapproved
only where the Commission has concerns that the change may not be
consistent with the Act.
    The Exchange believes that the proposed fees for the ISE Gemini
market data offerings are consistent with the requirements of the Act
because competition provides an effective constraint on the market data
fees that the Exchange has the ability and the incentive to charge. ISE
Gemini has a compelling need to attract order flow from market
participants in order to maintain its share of trading volume. This
compelling need to attract order flow imposes significant pressure on
the Exchange to act reasonably in setting the fees for its market data
offerings, particularly given that the market participants that will
pay such fees often will be the same market participants from whom the
Exchange must attract order flow. These market participants include
broker-dealers that control the handling of a large volume of customer
and proprietary order flow. Given the portability of order flow from
one exchange to another, any exchange that sought to charge
unreasonably high market data fees would risk alienating many of the
same customers on whose

orders it depends for competitive survival. ISE Gemini currently
competes with 11 other options exchanges for order flow.
    The Exchange is constrained in pricing its market data offerings by
the availability to market participants of alternatives to purchasing
these products. The Exchange must consider the extent to which market
participants would choose one or more alternatives instead of
purchasing the Exchange's data.
    For the reasons cited above, the Exchange believes that the
proposed fees for the ISE Gemini data feeds are equitable, fair,
reasonable and not unreasonably discriminatory. The Exchange further
believes that the continued availability of each of the ISE Gemini data
feeds enhances transparency, fosters competition among orders and
markets, and enables buyers and sellers to obtain better prices. In
addition, the Exchange believes that no substantial countervailing
basis exists to support a finding that the proposed terms and fees for
these products fail to meet the requirements of the Act. Moreover, the
Exchange notes that the proposed fees are lower than fees currently
charged by ISE Gemini's sister exchange, the International Securities
Exchange, LLC (``ISE''), which offers its own market data feeds that
provide comparable information to that provided by the ISE Gemini order
feeds.\15\
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    \15\ See ISE Schedule of Fees, Section X, Market Data.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\16\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Notwithstanding
its determination that the Commission may rely upon competition to
establish fair and equitably allocated fees for market data, the
NetCoalition court found that the Commission had not, in that case,
compiled a record that adequately supported its conclusion that the
market for the data at issue in the case was competitive. The Exchange
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
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    \16\ 15 U.S.C. 78f(b)(8).
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    For the reasons discussed above, the Exchange believes that the
Dodd-Frank Act amendments to Section 19 materially alter the scope of
the Commission's review of future market data filings, by creating a
presumption that all fees may take effect immediately, without prior
analysis by the Commission of the competitive environment. Even in the
absence of this important statutory change, however, the Exchange
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
    There is intense competition between trading platforms that provide
transaction execution and routing services and proprietary data
products. Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price and distribution of its data
products. Without the prospect of a taking order seeing and reacting to
a posted order on a particular platform, the posting of the order would
accomplish little. Without trade executions, exchange data products
cannot exist. Data products are valuable to many end users only insofar
as they provide information that end users expect will assist them or
their customers in making trading decisions.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs. Moreover, an exchange's
customers view the costs of transaction executions and of data as a
unified cost of doing business with the exchange. A broker-dealer will
direct orders to a particular exchange only if the expected revenues
from executing trades on the exchange exceed net transaction execution
costs and the cost of data that the broker-dealer chooses to buy to
support its trading decisions (or those of its customers). The choice
of data products is, in turn, a product of the value of the products in
making profitable trading decisions. If the cost of the product exceeds
its expected value, the broker-dealer will choose not to buy it.
    Moreover, as a broker-dealer chooses to direct fewer orders to a
particular exchange, the value of the product to that broker-dealer
decrease, for two reasons. First, the product will contain less
information, because executions of the broker-dealer's orders will not
be reflected in it. Second, and perhaps more important, the product
will be less valuable to that broker-dealer because it does not provide
information about the venue to which it is directing its orders. Data
from the competing venue to which the broker-dealer is directing orders
will become correspondingly more valuable. Thus, a super-competitive
increase in the fees charged for either transactions or data has the
potential to impair revenues from both products. ``No one disputes that
competition for order flow is `fierce'.'' \17\ However, the existence
of fierce competition for order flow implies a high degree of price
sensitivity on the part of broker-dealers with order flow, since they
may readily reduce costs by directing orders toward the lowest-cost
trading venues. A broker-dealer that shifted its order flow from one
platform to another in response to order execution price differentials
would both reduce the value of that platform's market data and reduce
its own need to consume data from the disfavored platform. Similarly,
if a platform increases its market data fees, the change will affect
the overall cost of doing business with the platform, and affected
broker-dealers will assess whether they can lower their trading costs
by directing orders elsewhere and thereby lessening the need for the
more expensive data.
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    \17\ NetCoalition, at 24.
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    Analyzing the cost of market data distribution in isolation from
the cost of all of the inputs supporting the creation of market data
will inevitably underestimate the cost of the data. Thus, because it is
impossible to create data without a fast, technologically robust, and
well-regulated execution system, system costs and regulatory costs
affect the price of market data. It would be equally misleading,
however, to attribute all of the exchange's costs to the market data
portion of an exchange's joint product. Rather, all of the exchange's
costs are incurred for the unified purposes of attracting order flow,
executing and/or routing orders, and generating and selling data about
market activity. The total return that an exchange earns reflects the
revenues it receives from the joint products and the total costs of the
joint products.
    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but

different platforms may choose from a range of possible, and equally
reasonable, pricing strategies as the means of recovering total costs.
For example, some platform may choose to pay rebates to attract orders,
charge relatively low prices for market information (or provide
information free of charge) and charge relatively high prices for
accessing posted liquidity. Other platforms may choose a strategy of
paying lower rebates (or no rebates) to attract orders, setting
relatively high prices for market information, and setting relatively
low prices for accessing posted liquidity. In this environment, there
is no economic basis for regulating maximum prices for one of the joint
products in an industry in which suppliers face competitive constraints
with regard to the joint offering.
    The market for market data products is competitive and inherently
contestable because there is fierce competition for the inputs
necessary to the creation of proprietary data and strict pricing
discipline for the proprietary products themselves. Numerous exchanges
compete with each other for listings, trades, and market data itself,
providing virtually limitless opportunities for entrepreneurs who wish
to produce and distribute their own market data. This proprietary data
is produced by each individual exchange, as well as other entities, in
a vigorously competitive market.
    Broker-dealers currently have numerous alternative venues for their
order flow, including numerous self-regulatory organization (``SRO'')
markets, as well as internalizing broker-dealers (``BDs'') and various
forms of alternative trading systems (``ATSs''), including dark pools
and electronic communication networks (``ECNs''). Each SRO market
competes to produce transaction reports via trade executions, and two
FINRA-regulated Trade Reporting Facilities (``TRFs'') compete to
attract internalized transaction reports. Competitive markets for order
flow, executions, and transaction reports provide pricing discipline
for the inputs of proprietary data products. The large number of SROs,
TRFs, BDs, and ATSs that currently produce proprietary data or are
currently capable of producing it provides further pricing discipline
for proprietary data products. Each SRO, TRF, ATS, and BD is currently
permitted to produce proprietary data products, and many currently do.
    Any ATS or BD can combine with any other ATS, BD, or multiple ATSs
or BDs to produce joint proprietary data products. Additionally, order
routers and market data vendors can facilitate single or multiple
broker-dealers' production of proprietary data products. The potential
sources of proprietary products are virtually limitless.
    The fact that proprietary data from ATSs, BDs, and vendors can by-
pass SROs is significant in two respects. First, non-SROs can compete
directly with SROs for the production and sale of proprietary data
products, as BATS and Arca did before registering as exchanges by
publishing proprietary book data on the Internet. Second, because a
single order or transaction report can appear in an SRO proprietary
product, a non-SRO proprietary product, or both, the data available in
proprietary products is exponentially greater than the actual number of
orders and transaction reports that exist in the marketplace. Market
data vendors provide another form of price discipline for proprietary
data products because they control the primary means of access to end
users. Vendors impose price restraints based upon their business
models. For example, vendors such as Bloomberg and Reuters that assess
a surcharge on data they sell may refuse to offer proprietary products
that end users will not purchase in sufficient numbers. Internet
portals, such as Google, impose a discipline by providing only data
that will enable them to attract ``eyeballs'' that contribute to their
advertising revenue. Retail broker-dealers, such as Schwab and
Fidelity, offer their customers proprietary data only if it promotes
trading and generates sufficient commission revenue. Although the
business models may differ, these vendors' pricing discipline is the
same: They can simply refuse to purchase any proprietary data product
that fails to provide sufficient value. The Exchange and other
producers of proprietary data products must understand and respond to
these varying business models and pricing disciplines in order to
market proprietary data products successfully.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\18\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\19\ because it establishes a due, fee, or other charge
imposed by ISE Gemini.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
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-ISEGemini-2014-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISEGemini-2014-10. 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
the filing also will be available for inspection and copying at the
principal office of the Exchange. 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-ISEGemini-2014-10 and should be submitted on or before
March 24, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-04554 Filed 2-28-14; 8:45 am]
BILLING CODE 8011-01-P


<EPA REGISTRATION DIVISION COMPANY NOTICE OF FILING FOR PESTICIDE
PETITIONS PUBLISHED IN THE FEDERAL REGISTER  (7/1/2007)>

<EPA Registration Division contact: Laura Nollen,<PHONE_NUMBER>>

<TEMPLATE:>

<Interregional Research Project #4 (IR-4)>

<Petition Number PP# 8E7445>

 -methyl-α- L
-manno-pyranosyl)oxy]-13-[[5-(dimethylamino)-tetrahydro-6-methyl-2H-pyra
n-2-yl]oxy]-9-ethyl-2,3,3a,5a,5b,6,9,10,11,12,13,14,16a,16b-tetradecahyd
ro-14-methyl-1H-as-Indaceno[3,2-d]oxacyclododecin-7,15-dione; and
Spinosyn D (Factor D; CAS # 131929–63–0) or 2-[(6-deoxy-2,3,4-tri- O
-methyl-α- L
-manno-pyranosyl)oxy]-13-[[5-(dimethyl-amino)-tetrahydro-6-methyl-2H-pyr
an-2-yl]oxy]-9-ethyl-2,3,3a,5a,5b,6,9,10,11,12,13,14,16a,16b-tetradecahy
dro-4,14-methyl-1H-as-Indaceno[3,2-d]oxacyclododecin-7,15-dione] in or
on the raw agricultural commodities Pomegranate at 0.3 parts per million
(ppm) and Date at 0.1 ppm and to increase the levels of existing
tolerances for Nut, tree, group 14 and Pistachio from 0.02 to 0.08 ppm
and Almond, hulls from 2.0 ppm  to 9.0ppm.  A reduction to a 1-day PHI
is supported with new MOR data for the increased tolerances in tree
nuts. >

<	EPA has determined that the petition contains data or information
regarding the elements set forth in section 408 (d)(2) of  FDDCA;
however, EPA has not fully evaluated the sufficiency of the submitted
data at this time or whether the data supports granting of the petition.
Additional data may be needed before EPA rules on the petition.

[The Agency has concluded that spinosad are considered toxicologically
identical to another pesticide, spinetoram. This conclusion is based on
the following: (1) Spinetoram and spinosad are large molecules with
nearly identical structures; and (2) the toxicological profiles for each
are similar (generalized systemic toxicity) with similar doses and
endpoints chosen for human-health risk assessment. Spinosad and
spinetoram should be considered toxicologically identical in the same
manner that metabolites are generally considered toxicologically
identical to the parent.	>

<A. Residue Chemistry>

<	1. Plant metabolism. Per the Federal Register: April 15, 1998 (Vol 63,
No 72) OPP-300644; FRL-5785-7, the nature of the residue of spinosad in
plants has been studied in several plants (apple, cabbage, cotton,
tomato and turnip) and is adequately understood.  EPA determined the
rotational crop study showed no carryover of measurable spinosad related
residues in representative test crops (lettuce, radish, and wheat).
Tolerances for enforcement are established for spinosad based on the
residue definition of Spinosyn A (Factor A) plus Spinosyn D (Factor D).>

<	2. Analytical method. EPA has determined adequate analytical methods
are available for enforcement purposes for spinosad in plant and animal
matrices.  Methods include an immunoassay particle-based method 97.05
and an HPLC/UV method GRM 03.15 and a suite of specific crop methods:
GRM 94.02 (cottonseed and related commodities), GRM 95.17 (leafy
vegetables), GRM 96.09 (citrus), GRM 96.14 (tree nuts), GRM 95.04
(fruiting vegetables), GRM 94.02.S1 (cotton gin byproducts).  GRM 94.02
has a successful independent lab validation and was submitted for
inclusion in PAM II as Method I.  EPA recently concluded that for water,
residues should be estimated using total spinosad residue method (EPA,
DP # 316077, August 2, 2006).>

<	3. Magnitude of residues. The current tolerance for spinosad in tree
nutmeats was established for a 14-day PHI.  The revised tree nut
proposal is supported by a new IR-4 spinosad MOR study in almonds with a
1-day PHI and the recently submitted Dow AgroSciences spinetoram MOR
decline trial in almonds and pecans with a 1-day PHI time point (MRID
47468301).

The IR-4 spinosad MOR trial in almonds   DOCVARIABLE  Cr1lc  \*
MERGEFORMAT  supports a 1-day PHI.  Residues of spinosad were determined
following three foliar applications at five field locations in
California during the 2003 and 2004 growing seasons.  Spinosad was
applied at a target rate of 0.156 lb ai/A, for a total of approximately
0.468 lb ai/A.  Applications were made 6 to 7 days apart and timed so
that mature hulls and nutmeat were collected at both 1 and 3 days after
the final application (except at one trial at 4 days due to rainfall.)
Spinosad residues were determined by the IR-4 Western Region Satellite
Laboratory using a procedure derived from Dow AgroSciences method GRM
96.14.  The lowest level of method validation (LLMV) was 0.02 ppm.  All
spinosyn D residues were below the LLMV for the nutmeats.  Spinosyn D
residues in the hulls ranged from 0.0367 to 0.689 ppm for the 1-day PHI.
 Spinosyn A residues in nutmeat ranged from <0.02 to 0.0467 ppm.
Spinosyn A residues in the hulls ranged from 0.255 to 4.42 ppm for the
1-day PHI.

The IR-4 MOR data supports a reduction of the PHI for spinosad to 1-day
in almonds and pistachios with a tolerance of 0.08 ppm in the nutmeats
and 9.0 ppm for almond hulls.  Full rationale for the full tree nut
group at 1-day PHI is provided by comparing data from four studies
conducted on almonds and/or pecans treated with spinosad or spinetoram.
The data shows that the magnitude of residues on pecans is not
dissimilar from residues on almonds and supports bridging to pecans.

IR-4 supports bridging from the established spinosad tolerance for
avocado to pomegranate.  This translation is consistent with the
on-going discussions for crop groupings between IR-4, USDA and EPA.
Pomegranate is scheduled to be placed into the inedible peel smooth skin
except papaya and banana tropical fruit crop subgroup E and the
representative crop for this subgroup will be avocado.

IR-4 requests that California (EPA Region 10) plum data for spinosad be
bridged over to dates.  The use pattern for dates will be the same as
for plums.  Five trials were conducted in California by Dow AgroSciences
and submitted to EPA (PP No. 8F5002, MRID No. 44597716). Three trials
were on plum and two trials were on prune type plums.  The plum residues
ranged from ND to 0.014 ppm with an average residue of 0.003 ppm. The
fresh prune-type plum residues ranged from 0.04 to 0.08 ppm with an
average of 0.063 ppm. The dried prune-type plum residues ranged from
0.03 to 0.08 ppm with an average of 0.058 ppm.  Concentration of
spinosad into dried prune type plums was not detected.>

<B. Toxicological Profile Per the Federal Register: April 15, 1998 (Vol
63, No 72) OPP-300644; FRL-5785-7, EPA determined the toxicological
profile and endpoints for spinosad are adequate for risk assessment
evaluations and determination of FQPA.  For recent spinosad decisions,
per Federal Register: December 5, 2007 (Volume 72, Number 233);
FRL-8339-8, EPA employed slightly revised endpoints based on their
decision that spinetoram is toxicologically identical to spinosad.  EPA
picked the lowest of the spinosad and spinetoram endpoints for each
exposure scenario.  A summary of the toxicological endpoints for
spinosad and spinetoram used for human risk assessment can be found at
HYPERLINK "http://www.regulations.gov"  http://www.regulations.gov  in
docket EPA-HQ-OPP-2007-0310.  Relevant information is summarized below.>

<	1. Acute toxicity.  No appropriate endpoint attributable to a single
dose was identified; the EPA has not established an acute RfD for
spinosad or spinetoram.>

<	2. Genotoxicty. Assays for genotoxicity consisting of a bacterial
reverse mutation assay (Ames test), and in vitro assay for cytogenetic
damage using the Chinese hamster ovary cells, an in vitro mammalian gene
mutation assay using lymphoma cells, an in vitro assay for DNA damage
and repair in rat hepatocytes, and an in vivo cytogenetic assay in the
mouse bone marrow (micronucleus test) have been conducted with spinosad.
 These studies show a lack of genotoxicity.>

<	3. Reproductive and developmental toxicity. >Spinosad caused decreased
body weights in maternal rats given 200 mg/kg/day by gavage in a
developmental study (highest dose tested).  This was not accompanied by
either embryotoxicity, fetal toxicity, or teratogenicity.  The
no-observed-effect levels (NOELs) for maternal and fetal toxicity in
rats were 50 and 200 mg/kg/day, respectively.  A developmental study in
rabbits showed that spinosad caused decreased body weight gain and two
abortions attributed to inanition in maternal rabbits at 50 mg/kg/day
(highest dose tested).  Maternal toxicity was not accompanied by either
embryo toxicity, fetal toxicity, or teratogenicity.  The NOELs for
maternal and developmental effects in rabbits were 10 and 50 mg/kg/day,
respectively.  In a two-generation reproduction study in rats, parental
toxicity was observed in both males and females given 100 mg/kg/day
(highest dose tested).  Effects in the offspring (decreased litter size
and pup weight) at 100 mg/kg/day were attributed to maternal toxicity.
The systemic and reproductive NOELs were both 10 mg/kg/day.  EPA has
determined that reliable data show that it would be safe for infants and
children to reduce the 10X FQPA safety factor to 1X.

<	4. Subchronic toxicity. Both Short-term endpoints (inhalation and
incidental oral) were established based on the Oral NOAEL of 4.9
mg/kg/day from the subchronic feeding study in dogs with spinosad and a
LOC for MOEs of 100.>

<	5. Chronic toxicity. EPA used the lowest NOAEL of 0.249 mg/kg/day from
the chronic toxicity study in dogs for spinetoram and a 100X UF to
establish a cRfD of 0.0249 mg/kg/day for both spinosad and spinetoram.
Spinosad is considered ``Not likely to be Carcinogenic to Humans''.>

<	6. Animal metabolism. The nature of spinosad residue in animals is
understood based on livestock studies in ruminants (oral and dermal) and
poultry (oral) (DP # 316077, August 2, 2006).  ADME studies in rats
indicate spinosad is rapidly absorbed and extensively metabolized.  Also
the rat metabolism studies showed no major differences between the
bioavailability, routes or rates of excretion, or metabolism of Factor A
or Factor D.  Urine and fecal excretions were almost completed in
48-hours post-dosing.  In addition, the routes and rates of excretion
were not affected by repeated administration.  EPA recently indicated
that for fish/shellfish within the risk assessment estimates of the
total residue within edible tissues is applicable (EPA, DP # 316077,
August 2, 2006).  Total edible residues in fish have been extensively
characterized within BCF studies (MRID 43557601, 44557734, 47355801.>

<	7. Metabolite toxicology. Results of the plant and animal metabolism
studies and toxicity testing have been assessed.  Per Federal Register:
April 15, 1998 (Vol 63, No 72)  FRL-5785-7,  EPA concluded that the
spinosad metabolites/fermentation impurities (Factor B, Factor B of D,
Factor K, and other related Factors) were no more toxicological concern
than the two parent compounds.  Metabolite toxicity has been addressed
by establishment of the residue for tolerance purposes as the parent
materials.  In addition, for risk assessment purposes, the total residue
in water and edible fish is now conservatively considered.

>

<	8. Endocrine disruption. There is no evidence to suggest that spinosad
has an effect on any endocrine system.>

<C. Aggregate Exposure The agency conducted an assessment of the
aggregate exposure for spinosad and spinetoram in conjunction with the
establishment of the initial spinetoram tolerances reported in the
Federal Register of October 10, 2007 (  HYPERLINK
"http://www.epa.gov/EPA-PEST/2007/October/Day-10/p19947.htm"  72 FR
57492 ) (FRL-8149-9).  The EPA assumed toxicological equivalency of
spinosad and spinetoram in their aggregate exposure assessment.
Anticipated exposure to spinosad was deemed acceptable.  The proposed
changes for nutmeat tolerances and the addition of dates and pomegranate
have little impact on the dietary exposure.  An evaluation of the animal
dietary burden indicates no impact on the animal meat or milk
tolerances.  No new aggregate assessments are warranted.>

<	1. Dietary exposure. i. Acute exposure. No quantitative acute dietary
exposure assessment has been required for spinosad.

ii. Chronic exposure.  Spinosad and spinetoram are deemed
toxicologically equivalent by EPA.  Based on the similarity of the
insecticides and the anticipated markets for each, it is unlikely that
spinosad and spinetoram will be applied to the same crop.  Hence, EPA
aggregated exposure by either assuming that all commodities contain
spinosad (because side-by-side spinosad and spinetoram residue data
indicated that spinetoram residues were less than or equal to spinosad
residues) or summing the percentage of a crop that would be treated with
spinosad and the percentage that would be treated with spinetoram.

Almond hulls are potential cattle feed items. However, a comparison of
their potential tolerance contribution to the higher values of other
roughage commodities already assumed in the theoretical animal dietary
burden calculations indicates no need to substitute almond hulls into
the spinosad cattle diets.  The potential exposure is already adequately
represented by other feed commodities in the calculation with higher
potential contributions.  Thus, there is no need for a revision of the
meat and milk animal commodity tolerances for spinetoram.>

<	i. Food. The chronic dietary exposure assessment (EPA, DP#33531,
September 12, 2007) was recreated in Dietary Exposure Evaluation Model -
Food Consumption Intake Database (DEEM-FCID) (version 2.16) which
incorporates the United States Department of Agriculture (USDA)
1994-1996 and 1998 Continuing Surveys of Food Intakes by Individuals
(CSFII).  The residues of livestock were refined through the
incorporation of a refined dietary burden (average field crop residues
and projected PCT) with average milk residues for spinosad from the
ruminant dermal MOR study.  The analysis assumed DEEM (ver 7.81) default
processing factors for many food commodities, EPA specified processing
factors for corn, grape, and wheat, 100% crop treated for food
commodities and used average field trial residues for several
commodities: apple, leafy vegetables, Brassica vegetables, citrus,
fruiting vegetables, herbs, banana and strawberry and tolerances values
for all others, except fish/shellfish which were conservatively
represented as 12.5 ppm (3X fold of the 4 ppm tolerance for spinosad.)>

<	ii. Drinking water. Drinking water estimates were determined based on
EPA screening models and concentrations were directly entered into the
dietary exposure model. For spinetoram, estimated environmental
concentrations (EECs) for chronic exposures are calculated to be 6.17
ppb for surface water using the First Index Reservoir Screening Tool
(FIRST) and 0.072 ppb for ground water using the Screening Concentration
in Ground Water (SCI-GROW) model.  For spinosad, average values of 10.5
ppb for surface water and 1.1 ppb for ground water were conservatively
estimated based on additional uses.  Thus, for the joint chronic dietary
risk assessment, EPA has used the water concentration value of 10.5 ppb
to assess the contribution to drinking water.>

<

	2. Non-dietary exposure. EPA has determined there is potential for
residential handler and post-application exposures to
spinosad/spinetoram.  Because spinosad and spinetoram control the
similar pests, EPA concluded these products will not be used in
combination with each other and combining the residential exposures is
unnecessary.  Per Federal Register of October 10, 2007 (  HYPERLINK
"http://www.epa.gov/EPA-PEST/2007/October/Day-10/p19947.htm"  72 FR
57492 ) (FRL-8149-9), short-term residential inhalation risks were
estimated for adult residential handlers, as well as short-term
post-application incidental oral risks for toddlers, based on
applications to home lawns, home gardens and ornamentals.>

<D. Cumulative Effects>

<	EPA has not made a common mechanism of toxicity finding as to spinosad
and any other substances and spinosad does not appear to produce a toxic
metabolite produced by other substances.  HED’s Hazard Assessment and
Policy Committee noted that toxicologically equivalent does not imply a
cumulative assessment which involves the concepts of mechanism of
toxicity and potency.  For the purposes of tolerance action, it is not
assumed that spinosad has a common mechanism of toxicity with other
substances.>

<E. Safety Determination The proposed actions of this petition have been
added via DEEM to EPA’s initial assessment for spinetoram/spinosad
(EPA, DP#33531, September 12, 2007).  The additional exposure is
estimated to be <0.1% of the cRfD.  Dow AgroSciences concludes with
reasonable certainty that no harm will result to the general population
or infants and children from the aggregate exposure to spinetoram
residues from these uses.>

<	1. U.S. population. The resulting dietary exposure estimates are not
of concern to HED; exposure for the general population is estimated as
<35% of the cPAD.  When the food and water exposure is summed with the
estimated residential inhalation exposure for youth (over 12 years old)
and adults, the resulting short term aggregate MOE values range from 650
to 710 (Federal Register: Dec 5, 2007 (Vol 72, No 233); FRL-8339-8).>

<	2. Infants and children. EPA has determined that reliable data allow a
reduction of the FQPA safety factor to 1X for infants and children.  The
resulting dietary exposure for the most exposed subpopulation (children
1 to 2 years) is estimated as <81% of the cPAD.  Short term
post-application risks were estimated for toddlers, based on application
to home lawn, home gardens and ornamentals and risks were not of concern
given resulting MOEs were >1200.  The resulting short term aggregate MOE
values were >180 and are, therefore, not of concern to HED.>

<F. International Tolerances>

<	A variety of international and CODEX MRLs are in place for spinosad.
The third party database Homologa was queried for MRLs germane to this
petition.  IR-4 makes no claim regarding the verification of these
values relative to the national authorities.

h

h







CODEX	ALMONDS	0.01	PPM

CODEX	ALMONDS: HULLS	2	PPM

EU Harmonized	NUTS: all OTHER except almonds	0.05	PPM

EU Harmonized	POMEGRANATE	0.02	PPM

EU Harmonized	ALMONDS	1	PPM

EU Harmonized	DATES	0.02	PPM

]>

 PAGE

 PAGE   7


[Federal Register Volume 83, Number 42 (Friday, March 2, 2018)]
[Notices]
[Pages 9006-9008]
[FR Doc No: 2018-04274]

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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2016-D-1255]

E18 Genomic Sampling and Management of Genomic Data;
International Council for Harmonisation; Guidance for Industry;
Availability

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of availability.

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

SUMMARY: The Food and Drug Administration (FDA or Agency) is announcing
the availability of a guidance for industry entitled ``E18 Genomic
Sampling and Management of Genomic Data.'' The guidance was prepared
under the auspices of the International Council for Harmonisation
(ICH), formerly the International Conference on Harmonisation. This
guidance focuses on the general principles of collecting, processing,
transporting, storing, and disposing of genomic samples or data in
clinical studies. The guidance is intended to provide harmonized
principles of genomic sampling and of management of genomic data in
clinical studies to foster interactions amongst stakeholders, including
drug developers, investigators, and regulators; and to encourage
genomic research within clinical studies.

DATES: The announcement of the guidance is published in the Federal
Register on March 2, 2018.

ADDRESSES: You may submit either electronic or written comments on
Agency guidances at any time as follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2016-D-1255 for ``E18 Genomic Sampling and Management of Genomic
Data; International Council for Harmonisation; Guidance for Industry.''
Received comments will be placed in the docket and, except for those
submitted as ``Confidential Submissions,'' publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m.
and 4 p.m., Monday through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For

more information about FDA's posting of comments to public dockets, see
80 FR 56469, September 18, 2015, or access the information at: https://www.gpo.gov/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.
    You may submit comments on any guidance at any time (see 21 CFR
10.115(g)(5)).
    Submit written requests for single copies of this guidance to the
Division of Drug Information, Center for Drug Evaluation and Research,
Food and Drug Administration, 10001 New Hampshire Ave., Hillandale
Building, 4th Floor, Silver Spring, MD 20993-0002; the Office of
Communication and Education, Division of Industry and Consumer
Education, Center for Devices and Radiological Health, Food and Drug
Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4621, Silver
Spring, MD 20993-0002; or the Office of Communication, Outreach and
Development, Center for Biologics Evaluation and Research, Food and
Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 3128,
Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to
assist that office in processing your requests. The guidance may also
be obtained by mail by calling the Center for Biologics Evaluation and
Research at 1-800-835-4709 or<PHONE_NUMBER>. Send one self-addressed
adhesive label to assist that office in processing your requests. See
the SUPPLEMENTARY INFORMATION section for electronic access to the
guidance document.

FOR FURTHER INFORMATION CONTACT: Regarding the guidance: Christian
Grimstein, Center for Drug Evaluation and Research, Food and Drug
Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 3116, Silver
Spring, MD 20993-0002,<PHONE_NUMBER>; or Eunice Lee, Center for Devices
and Radiological Health, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 66, Rm. 5546, Silver Spring, MD 20993-0002, 301-
796-4808.
    Regarding the ICH: Amanda Roache, Center for Drug Evaluation and
Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
51, Rm. 1176, Silver Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    FDA is announcing the availability of a guidance for industry
entitled ``E18 Genomic Sampling and Management of Genomic Data;
International Council for Harmonisation.'' In recent years, regulatory
authorities and industry associations from around the world have
participated in many important initiatives to promote international
harmonization of regulatory requirements under the ICH. FDA has
participated in several ICH meetings designed to enhance harmonization
and FDA is committed to seeking scientifically based harmonized
technical procedures for pharmaceutical development. One of the goals
of harmonization is to identify and reduce differences in technical
requirements for drug development among regulatory agencies.
    ICH was established to provide an opportunity for harmonization
initiatives to be developed with input from both regulatory and
industry representatives. FDA also seeks input from consumer
representatives and others. ICH is concerned with harmonization of
technical requirements for the registration of pharmaceutical products
for human use among regulators around the world. The six founding
members of the ICH are the European Commission; the European Federation
of Pharmaceutical Industries Associations; FDA; the Japanese Ministry
of Health, Labour, and Welfare; the Japanese Pharmaceutical
Manufacturers Association; and the Pharmaceutical Research and
Manufacturers of America. The standing members of the ICH Association
include Health Canada and Swissmedic. Any party eligible as a member in
accordance with the ICH Articles of Association can apply for
membership in writing to the ICH Secretariat. The ICH Secretariat,
which coordinates the preparation of documentation, operates as an
international nonprofit organization and is funded by the members of
the ICH Association.
    The ICH Assembly is the overarching body of the Association and
includes representatives from each of the ICH members and observers.
The ICH Assembly is responsible for the endorsement of draft guidelines
and adoption of final guidelines. FDA publishes ICH guidelines as FDA
guidance.
    In the Federal Register of June 3, 2016 (81 FR 35781), FDA
published a notice announcing the availability of a draft guidance
entitled ``E18 Genomic Sampling and Management of Genomic Data.'' The
notice gave interested persons an opportunity to submit comments by
August 2, 2016.
    After consideration of the comments received and revisions to the
guideline, a final draft of the guideline was submitted to the ICH
Assembly and endorsed by the regulatory agencies in September 2017.
    The guidance provides guidance on genomic sampling and management
of genomic data from interventional and non-interventional clinical
studies. The guidance addresses use of genomic samples and data
irrespective of the timing of analyses and both prespecified and non-
prespecified use. The focus is on the general principles of collecting,
processing, transporting, storing, and disposing of genomic samples or
data, within the scope of an informed consent policy or practice. The
technical aspects of genomic sampling are also discussed when
appropriate, recognizing the rapidly evolving technological advances in
genomic sampling and data generation. The guidance also intends to
increase awareness and provide a reminder regarding subjects' privacy,
protection of the data generated, the need to obtain suitable informed
consent, and the need to consider transparency of findings in line with
local legislation and regulations.
    This guidance is being issued consistent with FDA's good guidance
practices regulation (21 CFR 10.115). The guidance represents the
current thinking of FDA on ``E18 Genomic Sampling and Management of
Genomic Data.'' It does not establish any rights for any person and is
not binding on FDA or the public. You can use an alternative approach
if it satisfies the requirements of the applicable statutes and
regulations. This guidance is not subject to Executive Order 12866.

II. Paperwork Reduction Act of 1995

    This guidance refers to previously approved collections of
information that are subject to review by the Office of Management and
Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). The collections of information in 21 CFR parts 312 and 314 have
been approved under OMB control numbers 0910-0014 and 0910-0001,
respectively. The collections of information in 21 CFR parts 50 and 56
have been approved under OMB control number 0910-0755. The collections
of information in the guidance ``E6(R2) Good Clinical Practice:
Integrated Addendum to ICH E6(R1)'' have been approved under 0910-0843.

III. Electronic Access

    Persons with access to the internet may obtain the document at
https://www.regulations.gov, https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/default.htm, https://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/default.htm, or https://www.fda.gov/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/default.htm.

    Dated: February 27, 2018.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018-04274 Filed 3-1-18; 8:45 am]
 BILLING CODE 4164-01-P


Rule 15c6-1, or any part thereof, for small entities would prevent the
establishment of a standard settlement cycle and create substantial
confusion over when transactions will settle. Allowing small entities
to settle at a time later than T+1 could create a two-tiered market in
which order flow for small entities would not coincide with that of
other firms operating on a T+1 settlement cycle. Additionally, the
Commission believes that establishing a single timetable (i.e.,
compliance date) for all broker-dealers, including small entities, to
comply with the amendment is necessary to ensure that the transition to
a T+1 standard settlement cycle takes place in an orderly manner that
minimizes undue disruptions in the securities markets. In particular,
because broker-dealers do not always know the identity of their
counterparty when they enter a transaction, providing broker-dealers
that are small entities with an exemption from the standard settlement
cycle would likely create substantial confusion over when a transaction
will settle. With respect to using performance rather than design
standards, the Commission used performance standards to the extent
appropriate under the statute. For example, broker-dealers have the
flexibility to settle transactions under a standard settlement cycle
shorter than T+1. For firm commitment offerings, small entities do
retain the option under paragraph (d) to agree with their counterparty
in advance of the transaction to use a settlement cycle other than T+1.
In addition, under the proposed rule amendment, broker-dealers retain
flexibility to tailor their contracts, systems and processes to choose
how to comply with the rule most effectively. In Part V.C.5.b)(3), the
Commission preliminarily estimates the costs likely to be incurred by
broker-dealers to implement a T+1 standard settlement cycle.
    The Commission also considered alternatives to proposed Rule 15c6-2
that would accomplish the stated objectives of the new rule without
disproportionately burdening broker-dealers that are small entities,
including: Differing compliance requirements or timetables; clarifying,
consolidating or simplifying the compliance requirements; using
performance rather than design standards; or providing an exemption for
certain or all broker-dealers that are small entities. The purpose of
proposed Rule 15c6-2 is to achieve trade date completion of
institutional trade allocations, confirmations, and affirmations to
facilitate a T+1 standard settlement cycle. Alternatives, such as
different compliance requirements or timetables, or exemptions, for
Rule 15c6-2, or any part thereof, for small entities would undermine
the purpose of establishing a standard settlement cycle. For example,
allowing small entities to complete the allocation, confirmation, and
affirmation processes at a time later than trade date could create a
two-tiered market that could work to the detriment of small entities
whose post-trade processing would not coincide with that of other firms
operating on a T+1 settlement cycle. Additionally, the Commission
believes

that establishing a single timetable (i.e., compliance date) for all
broker-dealers, including small entities, to comply with the new rule
is necessary to ensure that the transition to a T+1 standard settlement
cycle takes place in an orderly manner that minimizes undue disruptions
in the securities markets. With respect to using performance rather
than design standards, the Commission used performance standards to the
extent appropriate under the statute. Under the proposed rule, broker-
dealers have the flexibility to tailor their systems and processes, and
generally to choose how, to comply with the new rule.
    The Commission considered alternatives to the proposed amendment to
Rule 204-2 that would accomplish the stated objectives of the amendment
without disproportionately burdening investment advisers that are small
entities, including: Differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; clarifying, consolidating or simplifying the compliance and
reporting requirements; using performance rather than design standards;
or providing an exemption from coverage of all or part of the proposed
rule for investment advisers that are small entities. Regarding the
first and fourth alternatives, the Commission believes that
establishing different compliance or reporting requirements or
timetables for small advisers, or exempting small advisers from the
proposed rule, or any part thereof, would be inappropriate under these
circumstances. Because the protections of the Advisers Act are intended
to apply equally to clients of both large and small firms, it would be
inconsistent with the purposes of the Advisers Act to specify
differences for small entities under the proposed amendment to Rule
204-2. While it is the staff's experience that some small and mid-size
advisers do not currently retain these records--whereas most larger
advisers already retain them--the Commission believes that the initial
burden on small advisers of retaining the proposed records would not be
large.\455\ As discussed above, the Commission believes these advisers
would need to update their policies and procedures and instruct
personnel to retain these records in their electronic recordkeeping
systems, including any confirmations that they may have retained in
paper format. However, because the Commission believes these advisers
already have recordkeeping systems to accommodate these records (which
would include, at a minimum, existing spreadsheet formats and email
retention systems), the Commission does not believe the two hour
additional burden of complying with this proposed amendment would
warrant establishing a different timetable for compliance for small
advisers. In addition, as discussed above, our staff would use the
information that advisers would maintain to help prepare for
examinations of investment advisers and verify that an adviser has
completed the steps necessary to complete settlement in a timely manner
in accordance with proposed rule 15c6-1(a). Establishing different
conditions for large and small advisers would negate these benefits.
Regarding the second alternative, we believe the current proposal is
clear and that further clarification, consolidation, or simplification
of the compliance requirements is not necessary. Our proposal states
the types of communications--confirmations, any allocations, and
affirmations--that advisers must retain in their records, and that
allocations (if applicable) and affirmations must be date and time
stamped. We believe that by proposing to clearly list these types of
communications as required records, advisers will not need to parse
whether, and if so which, current requirement under Rule 204-2 captures
these post-trade communications. Further, the proposed requirement to
date and time stamp the allocations (if applicable) and affirmations
sent to a broker or dealer is clear and consistent with many advisers'
current practices of date and time stamping these records, as discussed
in Part VI.A, above.\456\ Regarding the third alternative, the proposed
amendment to Rule 204-2 is narrowly tailored to correspond to the
proposed rules and rule amendments under the Exchange Act, and using
performance rather than design standards would be inconsistent with our
statutory mandate to protect investors, as advisers must maintain books
and records in a uniform and quantifiable manner that it is useful to
our regulatory and examination program.
---------------------------------------------------------------------------

    \455\ See supra Part III.C.
    \456\ As noted above, however, we estimate that 50% of small and
mid-sized advisers that have institutional clients do not currently
maintain these records, and 1% of advisers that have institutional
clients, do not send allocations or affirmations electronically to
brokers or dealers.
---------------------------------------------------------------------------

7. Request for Comment
    The Commission encourages written comments on matters discussed in
the initial RFA. In particular, the Commission seeks comment on the
number of small entities that would be affected by the proposed
amendments to Rule 15c6-1, proposed Rule 15c6-2, and the proposed
amendment to Rule 204-2, and whether the effect(s) on small entities
would be economically significant. Commenters are asked to describe the
nature of any effect(s) the proposed amendments to Rule 15c6-1,
proposed Rule 15c6-2, and the proposed amendment to Rule 204-2 may have
on small entities, and to provide empirical data to support their
views.

B. Proposed Rule 17Ad-27

    Proposed Rule 17Ad-27 would apply to clearing agencies that are
CMSPs. For the purposes of Commission rulemaking, a small entity
includes, when used with reference to a clearing agency, a clearing
agency that (i) compared, cleared, and settled less than $500 million
in securities transactions during the preceding fiscal year, (ii) had
less than $200 million of funds and securities in its custody or
control at all times during the preceding fiscal year (or at any time
that it has been in business, if shorter), and (iii) is not affiliated
with any person (other than a natural person) that is not a small
business or small organization.\457\
---------------------------------------------------------------------------

    \457\ See 17 CFR 240.0-10(d).
---------------------------------------------------------------------------

    Based on the Commission's existing information about the CMSPs that
would be subject to Rule 17Ad-27, the Commission believes that all such
CMSPs would not fall within the definition of a small entity described
above.\458\ While other CMSPs may emerge and seek to register as
clearing agencies or obtain exemptions from registration as a clearing
agency with the Commission, the Commission does not believe that any
such entities would be ``small entities'' as defined in 17 CFR 240.0-
10(d). Accordingly, the Commission believes that any such CMSP would
exceed the thresholds for ``small entities'' set forth in in 17 CFR
240.0-10.
---------------------------------------------------------------------------

    \458\ DTCC ITP Matching is a subsidiary of DTCC, and in 2020,
DTCC processed $2.329 quadrillion in financial transactions. DTCC,
2020 Annual Report. As of December 1, 2021, SS&C Technologies
Holdings, Inc. (NASDAQ: SSNC) had a market capitalization of $19.35
billion. Bloomberg STP LLC is a wholly-owned by Bloomberg L.P., a
global business and financial information and news company.
---------------------------------------------------------------------------

    For the reasons described above, the Commission preliminarily
believes that proposed Rule 17Ad-27 would not have a significant
economic impact on a substantial number of small entities and requests
comment on this analysis.

Statutory Authority and Text of the Proposed Rules and Rule Amendments

    The Commission is proposing amendments to Rule 15c6-1, new Rule
15c6-2, and new Rule 17Ad-27 under the Commission's rulemaking
authority set forth in Sections 15(c)(6), 17A and 23(a) of the Exchange
Act [15 U.S.C. 78o(c)(6), 78q-1, and 78w(a) respectively]. The
Commission is proposing amendments to Rule 204-2 under the Advisers Act
under the authority set forth in Sections 204 and 211 of the Advisers
Act [15 U.S.C. 80b-4 and 80b-11].

List of Subjects in 17 CFR Parts 232, 240, and 275

    Reporting and recordkeeping requirements, Securities.

Text of Amendment

    For the reasons stated in the preamble, the Securities and Exchange
Commission proposes to amend 17 CFR parts 232, 240, and 275 as set
forth below:

PART 232-- REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS

0
1. The authority citation for part 232 continues to read as follows:

    Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
* * * * *
0
2. Amend Sec.  232.101 by adding paragraph (xxii) to read as follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (xxii) Reports filed pursuant to Rule 17Ad-27 (Sec.  240.17Ad-27)
under the Exchange Act.
0
3. Add Sec.  232.409 to read as follows:

Sec.  232.409  Straight-through processing report interactive data.

    The straight-through processing report required by Rule 17Ad-27
(Sec.  240.17Ad-27) under the Exchange Act must be submitted in Inline
XBRL in accordance with the EDGAR Filer Manual.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
4. The authority citation for part 240 continues to read as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20,
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et. seq., and
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350;
Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106,
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
5. Amend Sec.  240.15c6-1 by reserving paragraph (c) and revising
paragraphs (a), (b), and (d) to read as follows:

Sec.  240.15c6-1   Settlement cycle.

    (a) Except as provided in paragraphs (b) and (d) of this section, a
broker or dealer shall not effect or enter into a contract for the
purchase or sale of a security (other than an exempted security, a
government security, a municipal security, commercial paper, bankers'
acceptances, or commercial bills) that provides for payment of funds
and delivery of securities later than the first business day after the
date of the contract unless otherwise expressly agreed to by the
parties at the time of the transaction.
    (b) Paragraph (a) of this section shall not apply to contracts:
    (1) For the purchase or sale of limited partnership interests that
are not listed on an exchange or for which quotations are not
disseminated through an automated quotation system of a registered
securities association;
    (2) For the purchase or sale of securities that the Commission may
from time to time, taking into account then existing market practices,
exempt by order from the requirements of paragraph (a) of this section,
either unconditionally or on specified terms and conditions, if the
Commission determines that such exemption is consistent with the public
interest and the protection of investors.
    (c) Reserved.
    (d) For purposes of paragraph (a) of this section, the parties to a
contract shall be deemed to have expressly agreed to an alternate date
for payment of funds and delivery of securities at the time of the
transaction for a contract for the sale for cash of securities pursuant
to a firm commitment offering if the managing underwriter and the
issuer have agreed to such date for all securities sold pursuant to
such offering and the parties to the contract have not expressly agreed
to another date for payment of funds and delivery of securities at the
time of the transaction.
0
6. Add Sec.  240.15c6-2 to read as follows:

Sec.  240.15c6-2  Same-day allocation, confirmation, and affirmation.

    For contracts where parties have agreed to engage in an allocation,
confirmation, or affirmation process, no broker or dealer shall effect
or enter into a contract for the purchase or sale of a security (other
than an exempted security, a government security, a municipal security,
commercial paper, bankers' acceptances, or commercial bills) on behalf
of a customer unless such broker or dealer has entered into a written
agreement with the customer that requires the allocation, confirmation,
affirmation, or any combination thereof, be completed as soon as
technologically practicable and no later than the end of the day on
trade date in such form as may be necessary to achieve settlement in
compliance with paragraph (a) of Sec.  240.15c6-1.
0
7. Add Sec.  240.17Ad-27 to read as follows:

Sec.  240.17Ad-27   Straight-through processing by central matching
service providers.

    A clearing agency that provides a central matching service for
transactions involving broker-dealers and their customers must
establish, implement, maintain, and enforce policies and procedures
that facilitate straight-through processing. Such clearing agency also
must submit to the Commission every twelve months a report that
describes the following:
    (a) Its current policies and procedures for facilitating straight-
through processing;
    (b) Its progress in facilitating straight-through processing during
the twelve-month period covered by the report; and
    (c) The steps it intends to take to facilitate straight-through
processing during the twelve-month period that follows the period
covered by the report.
    The report must be filed electronically on EDGAR and must be
provided as interactive data as required by Sec.  232.409 of this
chapter (Rule 409 of Regulation S-T) in accordance with the EDGAR Filer
Manual.

PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940

0
8. The authority citation for part 275 continues to read as follows:

    Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-
2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, and 80b-11, unless
otherwise noted.
* * * * *
    Section 275.204-2 is also issued under 15 U.S.C 80b-6.
* * * * *

0
9. Amend Sec.  275.204-2 by revising paragraph (a)(7)(iii) to read as
follows:

 Sec.  275.204-2  Books and records to be maintained by investment
advisers.

    (a) * * *
    (7) * * *
    (iii) The placing or execution of any order to purchase or sell any
security; and if the adviser is a party to a contract under rule Sec.
240.15c6-2, each confirmation received, and any allocation and each
affirmation sent, with a date and time stamp for each allocation (if
applicable) and affirmation that indicates when the allocation or
affirmation was sent to the broker or dealer.
* * * * *

    By the Commission.

    Dated: February 9, 2022.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2022-03143 Filed 2-23-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 206 (Wednesday, October 24, 2018)]
[Notices]
[Page 53686]
[FR Doc No: 2018-23203]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736

Extension:
    Rule 17Ad-4(b) & (c), SEC File No. 270-264, OMB Control No.
3235-0341.

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.) the Securities and Exchange Commission
(``Commission'') is soliciting comments on the existing collection of
information provided for in the following rule: Rule 17Ad-4(b) & (c)
under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
(``Exchange Act''). The Commission plans to submit this existing
collection of information to the Office of Management and Budget
(``OMB'') for extension and approval.
    Rule 17Ad-4(b) & (c) (17 CFR 240.17Ad-4) is used to document when
transfer agents are exempt, or no longer exempt, from the minimum
performance standards and certain recordkeeping provisions of the
Commission's transfer agent rules. Pursuant to Rule 17Ad-4(b), if the
Commission or the Office of the Comptroller of the Currency (``OCC'')
is the appropriate regulatory authority (``ARA'') for an exempt
transfer agent, that transfer agent is required to prepare and maintain
in its possession a notice certifying that it is exempt from certain
performance standards and recordkeeping and record retention provisions
of the Commission's transfer agent rules. This notice need not be filed
with the Commission or OCC. If the Board of Governors of the Federal
Reserve System (``Fed'') or the Federal Deposit Insurance Corporation
(``FDIC'') is the transfer agent's ARA, that transfer agent must
prepare a notice and file it with the Fed or FDIC.
    Rule 17Ad-4(c) sets forth the conditions under which a registered
transfer agent loses its exempt status. Once the conditions for
exemption no longer exist, the transfer agent, to keep the appropriate
ARA apprised of its current status, must prepare, and file if the ARA
for the transfer agent is the Fed or the FDIC, a notice of loss of
exempt status under paragraph (c). The transfer agent then cannot claim
exempt status under Rule 17Ad-4(b) again until it remains subject to
the minimum performance standards for non-exempt transfer agents for
six consecutive months.
    ARAs use the information contained in the notices required by Rules
17Ad-4(b) and 17Ad-4(c) to determine whether a registered transfer
agent qualifies for the exemption, to determine when a registered
transfer agent no longer qualifies for the exemption, and to determine
the extent to which that transfer agent is subject to regulation.
    The Commission estimates that approximately 10 registered transfer
agents each year prepare or file notices in compliance with Rules 17Ad-
4(b) and 17Ad-4(c). The Commission estimates that each such registered
transfer agent spends approximately 1.5 hours to prepare or file such
notices for an aggregate total annual burden of 15 hours (1.5 hours
times 10 transfer agents).
    Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimates of the burden of the proposed collection of information; (c)
ways to enhance the quality, utility, and clarity of the information on
respondents; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or other forms of information technology.
Consideration will be given to comments and suggestions submitted in
writing within 60 days of this publication.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
    Please direct your written comments to: Charles Riddle, Acting
Director/Chief Information Officer, Securities and Exchange Commission,
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an
email to: [email protected].

    Dated: October 19, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23203 Filed 10-23-18; 8:45 am]
 BILLING CODE 8011-01-P