[Federal Register: August 17, 2010 (Volume 75, Number 158)]
[Notices]
[Page 50760]
[DOCID:fr17au10-45]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Intent To File License Application, Filing of Pre-
Application Document, and Approving Use of the Traditional Licensing
Process

August 10, 2010.
    a. Type of Filing: Notice of Intent to File License Application and
Request to Use the Traditional Licensing Process.
    b. Project No.: 13318-000.
    c. Date Filed: June 9, 2010.
    d. Submitted by: Swan Lake North Hydro, LLC.
    e. Name of Project: Swan Lake North Hydroelectric Project.
    f. Location: Approximately 11 miles northeast of Klamath Falls in
Klamath County, Oregon. The project would be a closed-loop pumped
storage project utilizing ground water, and would not be built on any
existing body of water. The project would occupy United States lands
administered by the U.S. Bureau of Land Management.
    g. Filed Pursuant to: 18 CFR 5.3 of the Commission's regulations.
    h. Potential Applicant Contact: Mr. Brent Smith; Symbiotics LLC;
P.O. Box 535; Rigby, Idaho 83442;<PHONE_NUMBER>; or e-mail at
<EMAIL_ADDRESS>    i. FERC Contact: Dianne Rodman at<PHONE_NUMBER>; or e-mail at
<EMAIL_ADDRESS>    j. Swan Lake North Hydro filed its request to use the Traditional
Licensing Process on June 9, 2010. Swan Lake North Hydro provided
public notice of its request on June 25 through July 29, 2010. In a
letter dated August 6, 2010, the Director of the Division of Hydropower
Licensing approved Swan Lake North Hydro's request to use the
Traditional Licensing Process.
    k. With this notice, we are initiating informal consultation with:
(a) The U.S. Fish and Wildlife Service under section 7 of the
Endangered Species Act and the joint agency regulations thereunder at
50 CFR, Part 402; and (b) the Oregon State Historic Preservation
Officer, as required by section 106, National Historical Preservation
Act, and the implementing regulations of the Advisory Council on
Historic Preservation at 36 CFR 800.2.
    l. Swan Lake North Hydro filed a Pre-Application Document (PAD;
including a proposed process plan and schedule) with the Commission,
pursuant to 18 CFR 5.6 of the Commission's regulations.
    m. A copy of the PAD is available for review at the Commission in
the Public Reference Room or may be viewed on the Commission's Web site
(http://www.ferc.gov), using the ``eLibrary'' link. Enter the docket
number, excluding the last three digits in the docket number field, to
access the document. For assistance, contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at 1-866-208-3676, or for TTY,
(202) 502-8659. A copy is also available for inspection and
reproduction at the address in paragraph h.
    n. Register online at http://www.ferc.gov/docs-filing/
esubscription.asp to be notified via e-mail of new filings and
issuances related to this or other pending projects. For assistance,
contact FERC Online Support.

Kimberly D. Bose,
Secretary.
[FR Doc. 2010-20203 Filed 8-16-10; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: October 13, 2006 (Volume 71, Number 198)]
[Proposed Rules]
[Page 60635-60644]
[DOCID:fr13oc06-18]

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Part III

 Securities and Exchange Commission

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 17 CFR Part 240

 Amendments to Rule 15c3-1 and Rule 17a-11 Applicable to Broker-Dealers
Also Registered as Futures Commission Merchants; Proposed Rule

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-54575; File No. S7-16-06]
RIN 3235-AJ72

Amendments to Rule 15c3-1 and Rule 17a-11 Applicable to Broker-
Dealers Also Registered as Futures Commission Merchants

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission is proposing for
comment amendments to conform provisions of its net capital rule to
changes to the net capital rule of the Commodity Futures Trading
Commission. The proposed amendments would apply to broker-dealers also
registered as futures commission merchants with the Commodity Futures
Trading Commission. The Securities and Exchange Commission also is
proposing to amend certain rules related to subordinated debt
agreements to conform those rules to the Commodity Futures Trading
Commission's amended net capital rules. Finally, the Securities and
Exchange Commission is proposing to amend its early warning provisions
to require that it be notified if a broker-dealer also registered as a
futures commission merchant must warn the Commodity Futures Trading
Commission or a designated self-regulatory organization that its
adjusted net capital has fallen below specified levels.

DATES: Comments should be received on or before November 13, 2006.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/.
[fxsp0]rules/proposed.shtml); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number S7-16-06 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

Paper Comments

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

All submissions should refer to File Number S7-16-06. This file number
should be included on the subject line if e-mail is used. To help us
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/proposed.shtml). Comments

also are available for public inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Michael A. Macchiaroli, Associate
Director, at<PHONE_NUMBER>; Thomas K. McGowan, Assistant Director, at
(202) 551-5521; or Bonnie L. Gauch, Special Counsel, at<PHONE_NUMBER>,
Division of Market Regulation, Securities and Exchange Commission, 100
F Street, NE., Washington, DC 20549-6628.

I. Introduction

    The Securities and Exchange Commission (``Commission'') is
proposing to amend its financial responsibility rules for broker-
dealers registered with the Commodity Futures Trading Commission
(``CFTC'') under the Commodity Exchange Act (``CEA'') as futures
commission merchants (``FCMs''). The Commission's net capital rule,
Rule 15c3-1,\1\ imposes minimum financial (net capital) requirements on
broker-dealers. The CFTC's adjusted net capital rule, Rule 1.17,\2\
similarly imposes minimum financial requirements on FCMs. Under Rule
15c3-1(a)(1)(iii), a broker-dealer/FCM must maintain net capital of no
less than the greater of its requirements under the applicable
provisions of Rule 15c3-1 or four percent of the funds that must be
segregated under the CEA and its rules. The requirement to maintain at
least four percent of segregated funds was intended to conform Rule
15c3-1 to the CFTC's Rule 1.17.\3\
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    \1\ 17 CFR 240.15c3-1. Section 15(c)(3) of the Securities
Exchange Act of 1934 (the ``Exchange Act'') authorizes the
Commission to impose, by regulation, minimum financial requirements
on broker-dealers (15 U.S.C. 78o(c)(3)).
    \2\ 17 CFR 1.17.
    \3\ See Exchange Act Release No. 15898 (Jun. 5, 1979), 44 FR
24884 (Jun. 15, 1979).
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    In 2004, the CFTC amended Rule 1.17 and adopted certain new net
capital requirements applicable to FCMs.\4\ Before adoption of the
amended capital requirements, Rule 1.17(a)(1)(i)(A)-(D) required an FCM
to maintain minimum adjusted net capital equal to, or in excess of, the
greatest of the following: (1) $250,000; (2) four percent of an amount
that equals the total of funds required to be segregated for customer
trading on U.S. commodity markets under section 4d(a)(2) of the CEA and
the funds required to be secured for customer trading on foreign
commodity markets under Rule 30.7 to the CEA, less the market value of
options purchased by customers for which the full premiums have been
paid (``segregated funds''); (3) the amount of adjusted net capital
required by a registered futures association; or (4) for broker-dealer/
FCMs, the amount of net capital required under Rule 15c3-1(a).
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    \4\ The new rules became effective on September 30, 2004. See 69
FR 49784 (Aug. 12, 2004).
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    CFTC Rule 1.17(a)(1)(i)(B), as amended, eliminates the four percent
of segregated funds provision. Instead, the amended rule requires an
FCM to maintain adjusted net capital equal to a specified percentage of
the margin required to be collected under exchange or clearing
organization rules. Under amended CFTC Rule 1.17(a)(1)(i)(B), an FCM
must maintain adjusted net capital equal to the following: (1) Eight
percent of the total risk margin requirement \5\ for positions carried
by the FCM in customer accounts; \6\ plus (2) four percent of the total
risk margin requirement for positions carried by the FCM in noncustomer
accounts.\7\
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    \5\ CFTC Rule 1.17(b)(8) defines ``risk margin'' (17 CFR
1.17(b)(8)).
    \6\ CFTC Rule 1.17(b)(7) defines ``customer account'' (17 CFR
1.17(b)(7)).
    \7\ CFTC Rule 1.17(b)(4) defines ``noncustomer account'' (17 CFR
1.17(b)(4)).
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    The CFTC intended changes to Rule 1.17 to address material
limitations on the segregated funds method of computing net capital.\8\
For example, the segregated funds method did not reflect fully the
extent to which an FCM was exposed to commodity positions carried for
both customers and noncustomers. The segregated funds method did not
include ``funds held by an FCM on behalf of foreign-domiciled customers
trading on foreign commodity markets, nor [did] it include funds held
by an FCM on behalf of noncustomers trading on either U.S. or foreign
futures and options markets.'' \9\ This method also did not include
``letters of credit deposited as margin or reflect the additional risks
posed by open positions in customer accounts that liquidate to a
deficit.'' \10\ Finally, the segregated funds method of calculating net
capital ``subjects an FCM to a higher

requirement in situations where the FCM requires additional margin from
customers or carries free credit balances for its customers, despite
the risk reducing effect of holding higher levels of customer funds.''
\11\ The CFTC amended Rule 1.17 to address these concerns and conform
its net capital requirement to the net capital requirements implemented
by the National Futures Association (``NFA''), two exchanges, and a
clearing organization.
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    \8\ See 68 FR 40835, 40837 (July 9, 2003).
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    The Commission is proposing to amend Rule 15c3-1 to reflect the
amendments to CFTC Rule 1.17, and is also proposing to amend paragraph
(c) of Rule 17a-11,\12\ which generally requires a broker-dealer to
notify the Commission and its designated examining authority (``DEA'')
if it fails to maintain certain levels of net capital.
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    \12\ 17 CFR 240.17a-11(c).
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II. Proposed Amendments

A. Amendments to Rule 15c3-1

1. Amendments to Rule 15c3-1(a)(1)(iii)
    The Commission is proposing to amend Rule 15c3-1(a)(1)(iii) to
conform to amended CFTC Rule 1.17. The proposed amendments to Rule
15c3-1(a)(1)(iii) would require a broker-dealer/FCM to maintain net
capital of not less than the greater of the following: (1) Its
requirement under paragraph (a)(1)(i) or (ii) of Rule 15c3-1; or (2)
eight percent of the total risk margin requirement for positions
carried by the FCM in customer accounts plus four percent of the total
risk margin requirement for positions carried by the FCM in noncustomer
accounts (``risk margin-based capital requirement'').
2. Amendments to Rule 15c3-1(e)(2)(ii)
    The Commission also is proposing to amend Rule 15c3-1(e)(2)(ii) to
conform it to CFTC Rule 1.17(e)(1)(ii). Rule 15c3-1(e)(2)(ii) prohibits
a broker-dealer/FCM from withdrawing equity capital if the withdrawal
would cause the broker-dealer/FCM's net capital to fall below, among
other standards, a specified percentage of its minimum net capital
dollar amount or a specified level of aggregate indebtedness, or its
``net capital would be less than 7 percent of the funds required to be
segregated pursuant to the Commodity Exchange Act and the regulations
thereunder'' after the withdrawal. The Commission is proposing to
replace the seven percent of segregated funds requirement with the
amended CFTC Rule 1.17(e)(1)(ii) requirement of 120 percent of the risk
margin-based capital requirement.

B. Amendments to Appendix D to Rule 15c3-1

    The Commission also is proposing to amend certain provisions of
Appendix D to Rule 15c3-1 (``Rule 15c3-1d''),\13\ which contains
minimum and non-exclusive requirements for satisfactory broker-dealer
subordination agreements. Specifically, the Commission is proposing to
amend paragraphs (b)(6)(iii), (b)(7), (b)(8)(i)(A), (b)(10)(ii)(B),
(c)(2), (c)(5)(i)(B), (c)(5)(ii)(A), and (c)(7) of Rule 15c3-1d, which
relate to repayment and prepayment of subordinated debt. Both Rule
15c3-1 and CFTC Rule 1.17 prohibit a broker-dealer or an FCM,
respectively, from repaying or prepaying subordinated debt if the
payments would cause the broker-dealer's or FCM's net capital to fall
below certain thresholds.
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    \13\ 17CFR 240.15c3-1d.
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1. Amendments to Rule 15c3-1d(b)(6)(iii)
    The Commission is proposing to replace the segregated funds
requirement of Rule 15c3-1d(b)(6)(iii) with a risk margin-based capital
requirement to conform it to the CFTC's amended Rule
1.17(h)(2)(vi)(C)(2). Rule 15c3-1d(b)(6)(iii) permits a subordinated
lender to reduce the unpaid principal amount of a secured demand note
pledged to a broker-dealer with the consent of the broker-dealer and
its DEA. The reduction, however, may not cause the broker-dealer's
aggregate indebtedness to exceed a specified level of net capital or
its net capital to fall below a specified level of aggregate debit
items or, if the broker-dealer also is registered as an FCM, its net
capital to fall below seven percent of the funds that must be
segregated under the CEA and its rules, if that segregated amount is
greater. The proposed amendment to Rule 15c3-1d(b)(6)(iii) would
conform to amended CFTC Rule 1.17(h)(2)(vi)(C)(2) and replace the seven
percent of segregated funds requirement with 120 percent of the risk
margin-based capital requirement.
2. Amendments to Rule 15c3-1d(b)(7)
    The Commission is proposing to replace the segregated funds
requirement of Rule 15c3-1d(b)(7) with a risk margin-based capital
requirement to conform it to the CFTC's amended Rule
1.17(h)(2)(vii)(A)(2). Rule 15c3-1d(b)(7) permits a broker-dealer to
prepay subordinated debt if the prepayment occurs at least one year
after the effective date of the subordination agreement and the broker-
dealer meets certain other requirements. A broker-dealer/FCM may not
prepay subordinated debt, however, if the prepayment would cause its
aggregated indebtedness to exceed a specified level of net capital or
its net capital to fall below a specified percentage of the minimum net
capital dollar amount, fall below a specified level of aggregate debit
items or, if the broker-dealer also is registered as an FCM, its net
capital to fall below seven percent of the funds that must be
segregated under the CEA and its rules, if that amount is greater. The
proposed amendment to Rule 15c3-1d(b)(7) would conform to amended CFTC
Rule 1.17(h)(2)(vii)(A)(2) and replace the seven percent of segregated
funds requirement with 120 percent of the risk margin-based capital
requirement.
3. Amendments to Rule 15c3-1d(b)(8)(i)(A)
    The Commission is proposing to replace the segregated funds
requirement of Rule 15c3-1d(b)(8)(i)(A) with a risk margin-based
capital requirement to conform it to the CFTC's amended Rule
1.17(h)(2)(viii)(A)(2). Rule 15c3-1d(b)(8)(i)(A) requires a broker-
dealer/FCM to suspend repayment of subordinated debt if the repayment
would cause its aggregated indebtedness to exceed a specified level of
net capital or its net capital to fall below a specified level of
aggregate debit items or, if the broker-dealer also is registered as an
FCM, its net capital to fall below six percent of the funds required to
be segregated under the CEA and its rules, if that amount is greater.
The proposed amendment to Rule 15c3-1d(b)(8)(i)(A) would conform to
amended CFTC Rule 1.17(h)(2)(viii)(A)(2) and replace the six percent of
segregated funds requirement with 120 percent of the risk margin-based
capital requirement.
4. Amendments to Rule 15c3-1d(b)(10)(ii)(B)
    The Commission also is proposing to replace the segregated funds
requirement of Rule 15c3-1d(b)(10)(ii)(B) to reflect the CFTC's risk
margin-based capital requirements. Rule 15c3-1d(b)(10)(ii)(B) limits
the events of default that may accelerate a broker-dealer/FCM's
obligation to repay subordinated debt. Those events of default occur if
a broker-dealer/FCM's aggregate indebtedness exceeds 1500 percent of
its net capital, its net capital computed under Rule 15c3-1(a)(1)(ii)
is less than two percent of aggregate debit

items as computed under Rule 15c3-3a, or its net capital is less than
four percent of the funds required to be segregated under the CEA and
its rules, if that amount is greater. The proposed amendment to Rule
15c3-1(b)(10)(ii)(B) would replace the four percent of segregated funds
requirement with the risk margin-based capital requirements of proposed
Rule 15c3-1(a)(1)(iii).
5. Amendments to Rule 15c3-1d(c)(2)
    Furthermore, the Commission is proposing to replace the segregated
funds requirement of Rule 15c3-1d(c)(2) with a risk margin-based
capital requirement to conform it to the CFTC's amended Rule
1.17(h)(3)(ii)(B). Rule 15c3-1d(c)(2) requires a broker-dealer/FCM to
notify its DEA if repayment of its subordinated debt would cause its
aggregate indebtedness to exceed 1200 percent of its net capital; its
net capital to be less than 120 percent of the minimum dollar amount
required by Rule 15c3-1; less than five percent of aggregate debit
items computed in accordance with Rule 15c3-3a; or its net capital to
be less than six percent of the funds required to be segregated under
the CEA and its rules, if that amount is greater. The proposed
amendment to Rule 15c3-1d(c)(2) would conform to amended CFTC Rule
1.17(h)(3)(ii)(B) and replace the six percent of segregated funds
requirement with 120 percent of the risk margin-based capital
requirement.
6. Amendments to Rule 15c3-1d(c)(5)(i)(B)
    The Commission also is proposing to replace the segregated funds
requirement of Rule 15c3-1d(c)(5)(i)(B) with a risk margin-based
capital requirement to conform it to the CFTC's amended Rule
1.17(h)(3)(v)(B). Rule 15c3-1d(5)(i)(B) permits a broker-dealer to
enter into temporary subordination agreements (terms of no more than 45
days), subject to specified conditions, so that the broker-dealer may
engage in securities underwriting and other extraordinary activities. A
broker-dealer/FCM operating under Rule 15c3-1(a)(1)(ii) may not enter
into a temporary subordination agreement, however, if its net capital
is less than five percent of its aggregate debit items computed under
Rule 15c3-3a or seven percent of the funds required to be segregated
under the CEA or its rules, if that amount is greater. The proposed
amendment to Rule 15c3-1d(c)(5)(i)(B) would conform to amended CFTC
Rule 1.17(h)(3)(v)(B) and replace the seven percent of segregated funds
requirement with 120 percent of the risk margin-based capital
requirement.
7. Amendments to Rule 15c3-1d(c)(5)(ii)(A)
    Finally, the Commission is proposing to replace the segregated
funds requirement of Rule 15c3-1d(c)(5)(ii)(A) with a risk margin-based
capital requirement to conform it to the CFTC's amended Rule
1.17(h)(2)(vii)(B)(2). Rule 15c3-1d(c)(5)(ii)(A) permits a broker-
dealer to enter into a revolving subordinated loan agreement that
provides for prepayment within less than one year. A broker-dealer/FCM
may not prepay subordinated debt, however, if, as a result of the
prepayment, its aggregate indebtedness would exceed 900 percent of its
net capital; its net capital would be less than 200 percent of the
minimum dollar amount required under Rule 15c3-1; its net capital would
be less than six percent of aggregate debit items computed under Rule
15c3-3a (for broker-dealer operating under Rule 15c3-1(a)(1)(ii)); or
its net capital would be less than ten percent of the funds required to
be segregated under the CEA or its rules, if that amount is greater.
The proposed amendment to Rule 15c3-1d(c)(5)(ii)(A) would conform to
amended CFTC Rule 1.17(h)(2)(vii)(B)(2) and replace the ten percent of
segregated funds requirement with 125 percent of the risk margin-based
capital requirement.
8. Applicability of Amendments to Rule 15c3-1d to Existing
Subordination Agreements
    Under the proposed amendments to Rule 15c3-1d(c)(7), satisfactory
subordination agreements that comply with Rule 15c3-1d, as in effect
before adoption of these proposed amendments to that rule, would
continue to be deemed satisfactory until their maturity date, if the
agreements are not amended or renewed. However, all subordination
agreements would be required to meet the requirements of amended Rule
15c3-1d within five years of adoption of these proposed amendments to
that rule. Amendments to, or renewals of, subordination agreements
would be required to comply with the proposed amendments to Rule 15c3-
1d, as would any new subordination agreements. This proposed
``grandfathering'' provision is intended to allow broker-dealer/FCMs
sufficient time to comply with the proposed amendments to subordinated
debt rules in a manner that is not unduly burdensome on either the
broker-dealer/FCMs or their DEAs, which must approve subordinated debt
agreements under Appendix D.

C. Rationale for the Amendments to Rules 15c3-1 and 15c3-1d

    The Commission believes that the proposed amendments to Rules 15c3-
1 and 15c3-1d are necessary and appropriate. First, compliance with
both the current Commission and the amended CFTC rules could impose
duplicative or conflicting obligations on a broker-dealer/FCM because
the rules may apply different standards. Under current Rule 15c3-
1(a)(1)(iii) and amended CFTC Rule 1.17, a broker-dealer/FCM must
maintain net capital equal to at least the greatest of its requirements
under Rule 15c3-1(a)(1)(i) or (ii), four percent of the funds required
to be segregated under the CEA and its applicable rules, or the risk
margin-based capital requirement under amended CFTC Rule 1.17. That is,
a broker-dealer/FCM must maintain net capital equal to at least the
Commission minimum applicable to broker-dealers, the now-eliminated
CFTC segregated funds minimum, or the new CFTC minimum applicable to
FCMs. Section 15 of the Exchange Act requires the Commission to issue
those rules, in consultation with the CFTC, that are necessary to avoid
imposing duplicative or conflicting financial responsibility
regulations on broker-dealer/FCMs.\14\ The proposed amendments to Rules
15c3-1 and 15c3-1d are intended to avoid imposing potentially
duplicative or conflicting regulations on broker-dealer/FCMs by
eliminating the four percent of segregated funds requirement and
replacing it with a risk margin-based capital requirement identical to
that contained in amended CFTC Rule 1.17.
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    \14\ Section 15 of the Exchange Act requires the Commission, in
consultation with the CFTC, to: issue such rules, regulations, or
orders as are necessary to avoid duplicative or conflicting
regulations applicable to any broker or dealer registered with the
Commission pursuant to section 15(b) (except paragraph (11)
thereof), that is also registered with the Commodity Futures Trading
Commission pursuant to section 4f(a) of the Commodity Exchange Act *
* * with respect to application of * * * financial responsibility
rules. 15 U.S.C. 78o(c)(3)(B).
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    Second, the risk margin-based capital requirement applicable to
FCMs should be an adequate substitute for the previous segregated funds
standard. The risk margin-based requirement has been in place at
futures exchanges for a number of years without significant problems.
    Third, the proposed amendments to Rule 15c3-1 also are necessary to
avoid potentially placing a broker-dealer/FCM at a competitive
disadvantage with respect to entities registered solely as broker-
dealers or FCMs. Sole registrants might be subject to lower regulatory

costs than a combined broker-dealer/FCM, which could be required to
maintain higher capital than either the broker-dealer or FCM net
capital rules would require a sole registrant to maintain.
    Fourth, the proposed amendments should provide the Commission with
enhanced ability to monitor the financial position of broker-dealer/
FCMs. The proposed amendments to Rule 15c3-1 would permit the
Commission to oversee a broker-dealer/FCM for capital problems arising
from the firm's futures business. A broker-dealer/FCM might be in a
financial position in which its net capital otherwise is sufficient for
the securities aspect of Rule 15c3-1, but is insufficient for purposes
of the risk margin-based capital requirement for its futures business.
Under the proposed amendments to Rule 15c3-1, a broker-dealer's failure
to maintain sufficient risk margin-based capital, which is a violation
of CFTC Rule 1.17, also would be a violation of the Commission's net
capital rule. The Commission, therefore, could force the broker-dealer/
FCM to take corrective action (or require it to cease conducting
business), an ability the Commission would not have without the
proposed amendments.

D. Amendments to Rule 17a-11, Notification Provisions for Brokers and
Dealers

    We are proposing to amend paragraph (c) of Rule 17a-11,\15\ which
generally requires a broker-dealer to notify the Commission and its DEA
if it fails to maintain certain levels of net capital. Specifically,
the Commission is proposing to amend paragraph (c) of Rule 17a-11 to
redesignate existing paragraph (c)(4) as paragraph (c)(5); and add a
new paragraph (c)(4).
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    \15\ 17 CFR 240.17a-11(c).
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    Proposed new paragraph (c)(4) would require a broker-dealer/FCM to
notify the Commission and its DEA under circumstances in which the
CFTC's rules would require an FCM to provide notification to the CFTC
that its adjusted net capital had fallen below a particular threshold.
We are proposing these amendments to help protect customers from
broker-dealer failures. Current Rule 17a-11 does not require a broker-
dealer/FCM to notify the Commission if its adjusted net capital under
the CFTC's net capital rule falls below specified requirements. The
proposed notification requirement should provide an early warning to
the Commission that a broker-dealer/FCM may be experiencing financial
difficulties whatever the source and allow the Commission to take
corrective action with respect to the firm, if necessary. The proposed
amendments to Rule 17a-11 also are consistent with amended CFTC Rule
1.12(b)(2),\16\ which requires an FCM to notify the CFTC and its
designated self-regulatory organization if its adjusted net capital
falls below 110% of its risk margin-based requirements under
1.17(a)(1)(i)(B).
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    \16\ 17 CFR 1.12(b)(2).
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III. Request for Comments

    We invite interested persons to submit written comments on all
aspects of the proposed amendments. Further, we invite comment on other
matters that might have an effect on the proposals contained in the
release.

IV. Paperwork Reduction Act

    Certain provisions of the proposed amendments to Rule 17a-11 \17\
contain ``collection of information requirements'' within the meaning
of the Paperwork Reduction Act of 1995.\18\ The Commission has
submitted the proposed amendments to the Office of Management and
Budget (``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5
CFR 1320.11. The Commission is revising the collection of information
entitled, ``Rule 17a-11 (17 CFR 240.17a-11) Notification Provision for
Brokers and Dealers,'' OMB Control Number 3235-0085. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid control
number.
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    \17\ There is no new collection of information imposed on
broker-dealer/FCMs under the amendments to Rules 15c3-1 and 15c3-1d.
The Commission's and CFTC's rules, both in previous form and as
amended, require broker-dealer/FCMs to comply with the net capital
rules of both agencies. Accordingly, the proposed amendments to
Rules 15c3-1 and 15c3-1d do not impose any new requirements on
broker-dealer/FCMs.
    \18\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

A. Collection of Information under these Amendments

    As discussed, the Commission is proposing to amend Rule 17a-11 to
provide the Commission with an early warning of a broker-dealer/FCM's
low capital level, which should help protect customers from broker-
dealer failures. The proposed amendments to paragraph 17a-11(c)(4)
would require a broker-dealer/FCM to notify the Commission and its DEA
under circumstances in which the CFTC's rules would require an FCM to
provide notification that its adjusted net capital had fallen below a
particular threshold.

B. Proposed Use of Information

    The Commission would use the information collected under the
proposed amendments to Rule 17a-11 to determine if a broker-dealer is
in compliance with financial responsibility rules. Specifically, the
Commission would use the information to monitor whether broker-dealer/
FCMs are complying with the net capital rule and relevant notification
requirements.

C. Respondents

    The proposed amendments to Rule 17a-11 would apply only to broker-
dealer/FCMs. As of July 31, 2006, there were approximately 67 broker-
dealer/FCMs.\19\ A broker-dealer/FCM would be required to notify the
Commission and its DEA under circumstances in which the CFTC's rules
would require an FCM to provide notification that its adjusted net
capital had fallen below a particular threshold.
---------------------------------------------------------------------------

    \19\ Selected FCM Financial Data as of July 31, 2006, CFTC
Division of Clearing and Intermediary Oversight.
---------------------------------------------------------------------------

D. Total Annual Reporting and Recordkeeping Burden

    Under the proposed amendment to Rule 17a-11(c)(4), a broker-dealer/
FCM would be required to notify the Commission and its DEA under
circumstances in which the CFTC's rules would require an FCM to provide
notification that its adjusted net capital had fallen below a
particular threshold. The Commission staff estimates that 5 out of 67
broker-dealer/FCMs will file Rule 17a-11 notifications annually.\20\
The staff further estimates that these broker-dealer/FCMs would spend
annually approximately 1.25 hours (or .25 hours each x 5 broker-dealer/
FCMs) to send the notifications.\21\
---------------------------------------------------------------------------

    \20\ There were approximately 5,980 registered broker-dealers as
of December 31, 2005. Approximately 450, or 7.5% (450/5,980), of
those firms filed early warning notices under Rule 17a-11. The
Commission, therefore, expects that 5 broker-dealer/FCMs
(approximately 7.5% of 67 broker-dealer/FCMs) would file early
warning notices annually under Rule 17a-11.
    \21\ A broker-dealer/FCM is already required to draft and send
these notifications to the CFTC or DSROs pursuant to CFTC Rules.
Consequently, the only additional cost relates to the additional
time it would take the broker-dealer/FCM's staff to send the
notification to the Commission and its DEA. The Staff estimates,
based on its experience, that it would take an individual 15 minutes
to send these additional notifications.
---------------------------------------------------------------------------

E. Collection of Information Is Mandatory

    The collection of information under the proposed amendments to Rule
17a-11 is mandatory if a broker-dealer/FCM's net capital falls below
the Commission's or the CFTC's early warning thresholds.

F. Confidentiality

    The collection of information under the proposed amendments to Rule
17a-11(c)(4) would be provided to the Commission and to a broker-
dealer/FCM's DEA, but would not be subject to public availability.

G. Record Retention Period

    Rule 17a-4(b)(4) requires a broker-dealer to preserve copies of all
communications sent relating to its business as such for no less than
three years, the first two years in an accessible place.

H. Request for Comment

    Under 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments to:
    (i) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information would have practical
utility;
    (ii) Evaluate the accuracy of the Commission's estimate of the
burden of the proposed collection of information;
    (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
required to respond, including through the use of automated collection
techniques or other forms of information technology.
    Persons who desire to submit comments on the collection of
information requirements should direct them to OMB, Attention: Desk
Officer for the Securities and Exchange Commission, Office of
Information and Regulatory Affairs, Washington, DC 20503, and should
also send a copy of their comments to Nancy M. Morris, Secretary,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090, and refer to File No. S7-16-06. OMB is required to make a
decision concerning the collections of information between 30 and 60
days after publication of this document in the Federal Register;
therefore, comments to OMB are best assured of having full effect if
OMB receives them within 30 days of this publication. The Commission
has submitted the proposed collections of information to OMB for
approval. Requests for the materials submitted to OMB by the Commission
with regard to these collections of information should be in writing,
refer to File No. S7-16-06, and be submitted to the Securities and
Exchange Commission, Records Management, Office of Filings and
Information Services, 100 F Street, NE., Washington, DC 20549.

V. Costs and Benefits of the Proposed Amendments

A. Introduction

    As discussed, the Commission is proposing to amend Exchange Act
Rules 15c3-1(a)(1)(iii) and (e)(2)(ii); 15c3-1d(b)(6)(iii), (b)(7),
(b)(8)(i)(A), (b)(10)(ii)(B), (c)(2), (c)(5)(i)(B), (c)(5)(ii)(A), and
(c)(7); and 17a-11(c)(3), (c)(4), and (c)(5). The CFTC amended Rules
1.17 and 1.12 to adopt certain new net capital requirements applicable
to FCMs.\22\ Broker-dealer/FCMs must comply with both the CFTC's and
the Commission's net capital rules under Rule 15c3-1(a)(1)(iii).
Accordingly, the Commission is amending Rules 15c3-1 and 15c3-1d to
conform those rules to the CFTC's amendments. Finally, the Commission
is amending Rule 17a-11 to provide itself with an early warning that a
broker-dealer/FCM may be experiencing financial difficulties.
---------------------------------------------------------------------------

    \22\ See supra, note 4.
---------------------------------------------------------------------------

    The Commission has identified below certain costs and benefits
associated with its proposed amendments. We encourage commenters to
discuss, analyze, and supply relevant data regarding any additional
costs or benefits.

B. Benefits

    We believe that the proposed amendments to Rules 15c3-1 and 15c3-1d
will benefit both broker-dealer/FCMs and investors. As discussed, the
Commission is proposing to amend Rule 15c3-1(a)(1)(iii) by eliminating
the rule's segregated funds requirement and replacing it with the risk
margin-based capital requirement. Rule 15c3-1(a)(1)(iii) requires a
broker-dealer/FCM to maintain net capital of not less than the greater
of its requirement under Rule 15c3-1 or four percent of the funds
required to be segregated under the CEA and its rules. The four percent
of segregated funds requirement was intended to conform Rule 15c3-
1(a)(1)(iii) to Rule 1.17, the CFTC's adjusted net capital rule, and
ensure that a broker-dealer/FCM complied with the net capital rules of
both the CFTC and the Commission. Rule 1.17, as amended, eliminates the
four percent of segregated funds requirement and replaces it with a new
risk margin-based capital requirement. Proposed Rule 15c3-1(a)(1)(iii)
would require a broker-dealer/FCM to maintain net capital of not less
than the greater of its requirement under Rule 15c3-1 or a risk margin-
based capital requirement identical to the one contained in CFTC Rule
1.17, as amended.
    We also are proposing to amend Rule 15c3-1(e)(2)(ii) to conform it
to the CFTC's new risk margin-based capital requirement. Rule 15c3-
1(e)(2)(ii) prohibits a broker-dealer/FCM from withdrawing equity
capital if the withdrawal would cause the broker-dealer/FCM's net
capital to fall below, among other standards, a specified percentage of
its minimum net capital dollar amount, a specified level of aggregate
indebtedness, or a specified percentage of the funds required to be
segregated under the CEA. CFTC Rule 1.17(e)(1)(ii), as amended,
prohibits an FCM from withdrawing equity capital if the withdrawal
would cause the FCM's adjusted net capital to fall below a specified
percentage of risk margin-based capital, rather than a specified
percentage of segregated funds. The proposed amendments would
substitute the segregated funds requirement in Rule 15c3-1(e)(2)(ii)
with a risk margin-based requirement calculated under Rule 15c3-
1(a)(1)(iii).
    Furthermore, the Commission is proposing amendments to various
provisions of Rule 15c3-1d, which contains minimum and non-exclusive
requirements for satisfactory subordination agreement involving broker-
dealers. Repayment and prepayment of subordinated debt under Rule 15c3-
1d generally is permissible only if the broker-dealer/FCM maintains net
capital equal to at least a specified percentage of net capital
calculated under Rule 15c3-1 and a specified percentage of segregated
funds. Rather than permitting repayment or prepayment of subordinated
debt if an FCM maintains a specified percentage of segregated funds,
the CFTC's Rule 1.17, as amended, permits repayment or prepayment if
the FCM maintains net capital equal to at least a specified percentage
of its risk margin-based capital requirement. Accordingly, the
Commission is proposing to amend Rule 15c3-1d by substituting the risk
margin-based capital requirement for the segregated funds requirement
to avoid subjecting broker-dealer/FCMs to conflicting or duplicative
regulation.
    The Commission believes that the risk margin-based capital
requirement is appropriate. Each of the amendments to Rules 15c3-1 and
15c3-1d substitutes the risk margin-based capital requirement for the
segregated funds standard. The risk margin-based capital requirement
should be an adequate substitute for the segregated funds standard
based on its implementation and use by the futures exchanges and FCMs'
comfort level with the requirement.

    As noted, the Commission also believes that the amendments to Rules
15c3-1 and 15c3-1d would benefit both broker-dealer/FCMs and investors.
First, the proposed amendments would prevent the imposition of
potentially conflicting or duplicative regulation on a broker-dealer/
FCM. Current Rule 15c3-1(a)(1)(iii) requires a broker-dealer/FCM to
maintain net capital equal to the greater of its net capital
requirement under Rule 15c3-1 or four percent of the funds required to
be segregated under the CEA and its rules. The four percent of
segregated funds requirement reflects the previous version of CFTC Rule
1.17 and has been substituted in current CFTC Rule 1.17 with the risk
margin-based capital requirement. The proposed amendments would
substitute the risk margin-based capital requirement for the segregated
funds requirement in Rules 15c3-1 and 15c3-1d and, therefore, free a
broker-dealer/FCM from complying with a capital requirement no longer
applicable to FCMs that are sole registrants.
    Second, the proposed amendments would help to avoid potentially
placing a broker-dealer/FCM at a competitive disadvantage with respect
to an entity registered solely as a broker-dealer or FCM. Neither a
broker-dealer nor an FCM is subject to the four percent of segregated
funds requirement; a broker-dealer/FCM is subject to such a requirement
unless the proposed amendments are adopted. Accordingly, the proposed
amendments could free a broker-dealer/FCM from making three separate
capital computations (one based on Rule 15c3-1(a)(1)(i) or (ii), one
based on CFTC Rule 1.17, and one based on the four percent of
segregated requirement under current Rule 15c3-1(a)(1)(iii)) and
holding unnecessarily more net capital than its sole registrant
competitors.
    Third, the proposed amendments would enhance the Commission's
ability to monitor the financial condition of a broker-dealer/FCM.
Under the proposed amendments to Rule 15c3-1, a broker-dealer's failure
to maintain sufficient risk margin-based capital, which is a violation
of CFTC Rule 1.17, also would be a violation of the Commission's net
capital rule. The Commission, therefore, could force the broker-dealer/
FCM to take corrective action (or require it to cease conducting
business), an ability the Commission would not have without the
proposed amendments.
    Finally, the proposed amendments to Rule 17a-11 would help protect
customers from broker-dealer failures. Current Rule 17a-11 does not
require a broker-dealer/FCM to notify the Commission if its adjusted
net capital falls below specified requirements. The proposed amendments
to Rule 17a-11 would require a broker-dealer/FCM to notify the
Commission if its net capital falls below certain thresholds determined
in accordance with Rule 15c3-1 or if the CFTC's rules would require it
to notify the CFTC or a DSRO that its adjusted net capital had breached
certain thresholds. This notification requirement should provide an
early warning to the Commission that a broker-dealer/FCM may be
experiencing financial difficulties.

C. Costs

    There would be no costs associated with the proposed amendments to
Rules 15c3-1 and 15c3-1d. A broker-dealer/FCM already must comply with
the net capital rules of both the Commission and the CFTC. Likewise, a
broker-dealer/FCM already must comply with Rule 15c3-1d and comparable
CFTC subordinated debt rules.
    The proposed amendments would help ensure that broker-dealer/FCMs
are not subject to inconsistent or duplicative regulation under Rules
15c3-1 and 15c3-1d by eliminating the four percent of segregated funds
standard in those rules and replacing it with the risk margin-based
capital requirement. With respect to 15c3-1d, the applicable thresholds
no longer will be calculated based upon a segregated funds, but upon
risk margin-based, capital, which the broker-dealer/FCM already
calculates under CFTC Rule 1.17.
    As discussed, proposed Rule 17a-11(c)(4) would require a broker-
dealer/FCM to notify the Commission and its DEA under circumstances in
which the CFTC's rules would require an FCM to notify the CFTC or a
DRSO that its adjusted net capital had fallen below a particular
threshold. The cost of notification in these circumstances should be
minimal because the broker-dealer/FCM already must notify the CFTC.\23\
We estimate the annual cost of notification under Rule 17a-11(c)(4)
would be $331 (.25 hours x $265 per hour for a financial reporting
manager \24\ x 5 broker-dealer/FCMs).\25\
---------------------------------------------------------------------------

    \23\ See supra, note 21.
    \24\ A financial reporting manager is a person at a broker-
dealer with responsibility for helping to ensure that the broker-
dealer complies with its financial reporting requirements with
respect to the Commission, other federal or state agencies and SROs.
    \25\ Security Industry Association's (``SIA'') Report on
Management & Professional Earnings in the Securities Industry 2005,
modified to account for an 1800-hour work-year and multiplied by
5.35 to account for bonuses, firm size, employee benefits and
overhead. The amount also reflects the average between New York City
salaries and Non-New York City salaries. This is the latest report
on financial industry salaries that is available from the SIA.
---------------------------------------------------------------------------

VI. Consideration of Burden on Competition, and Promotion of
Efficiency, Competition, and Capital Formation

    Section 3(f) of the Exchange Act \26\ requires the Commission,
whenever it engages in rulemaking and must consider or determine if an
action is necessary or appropriate in the public interest, to consider
if the action will promote efficiency, competition, and capital
formation. Under section 23(a)(2) of the Exchange Act,\27\ the
Commission must consider the impact of its rulemaking on competition.
It also prohibits the Commission from adopting any rule that would
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78c(f).
    \27\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    We preliminarily believe that the amendments to Rules 15c3-1, 15c3-
1d, and 17a-11 would promote efficiency, competition, and capital
formation. The amendments to Rules 15c3-1 and 15c3-1d should promote
efficiency because they would help to ensure that broker-dealer/FCMs
are not subject to net capital requirements beyond those that the
Commission already imposes on broker-dealers and those that the CFTC
already imposes on FCMs. That is, the amendments would not subject
broker-dealer/FCMs to any new requirements and, consequently, would not
impose any new costs. Furthermore, the proposed amendments to Rule 17a-
11(c)(4) should promote efficiency because they would require a broker-
dealer/FCM to notify the Commission that it has fallen below a
specified percentage of its adjusted net capital requirement under CFTC
rules, a notification that it already must provide to the CFTC. This
notification should help the Commission address potential financial
difficulties at a broker-dealer/FCM before a liquidation becomes
necessary and, therefore, should help protect customers. Each of these
provisions also should help foster competition because they would allow
firms to function jointly as broker-dealer/FCMs without imposing
regulatory requirements beyond those already applicable to broker-
dealers and FCMs individually.
    We preliminarily believe that the proposed amendments to Rules
15c3-1, 15c3-1d and 17a-11would promote capital formation. By
eliminating potentially duplicative or conflicting regulation, the
proposed amendments to

Rules 15c3-1 and 15c3-1d should help to ensure that a broker-dealer/FCM
does not unnecessarily use its assets to meet regulatory capital
requirements, freeing those assets for business uses. Similarly, the
proposed amendments to Rule 17a-11 should help the Commission to
identify a broker-dealer/FCM that faces potential financial
difficulties and allow the Commission to take corrective action to help
that broker-dealer/FCM preserve its capital which, in turn, should help
protect the broker-dealer/FCM's customers.
    Finally, we preliminarily believe that the proposed amendments do
not impose any competitive burden that is not necessary and appropriate
in furtherance of the purposes of the Exchange Act. As discussed, the
Commission is proposing amendments to Rules 15c3-1 and 15c3-1d to
conform those rules to the CFTC's amended net capital rule. The
proposed rules are intended to eliminate inconsistent and duplicative
regulation on broker-dealer/FCMs. Furthermore, we preliminarily believe
that the proposed amendments to Rule 17a-11 are necessary to provide
the Commission with an early warning of potential capital
insufficiencies at broker-dealer/FCMs. This early warning should help
the Commission to protect customers and the integrity of the markets.
The amendments to Rule 17a-11(c)(4), moreover, would require only that
a broker-dealer/FCM forward to the Commission a notice that it already
must provide to the CFTC.

VII. Regulatory Flexibility Act Certification

    The Commission hereby certifies, pursuant to 5 U.S.C. 605(b), that
the proposed amendments to Rule 15c3-1, Rule 15c3-1d, and Rule 17a-11,
if adopted, would not have a significant economic impact on a
substantial number of small entities. The proposed amendments would
apply only to broker-dealers also registered as FCMs. As of July 31,
2006, there were approximately 67 broker-dealer/FCMs.\28\ Only one of
those broker-dealers would qualify as a small entity.\29\ Accordingly,
we do not believe that the proposed amendments would have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \28\ Selected FCM Financial Data as of July 31, 2006, CFTC
Division of Clearing and Intermediary Oversight.
    \29\ See 17 CFR 240.0-10.
---------------------------------------------------------------------------

    We encourage written comments regarding this certification. We
request that commenters describe the nature of any impact on small
entities and provide empirical data to support the extent of the
impact.

VIII. Consideration of Impact on The Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \30\ we must advise OMB as to whether the
proposed regulation constitutes a ``major'' rule. Under SBREFA, a rule
is considered ``major'' if, upon adoption, it results or is likely to
result in:
---------------------------------------------------------------------------

    \30\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effect on competition, investment or
innovation.
    If a rule is ``major,'' its effectiveness will generally be delayed
for 60 days pending Congressional review. We request comment on the
potential impact of the proposed regulation on the economy on an annual
basis. Commenters are requested to provide empirical data and other
factual support for their view to the extent possible.

IX. Statutory Authority

    The Commission is proposing amendments to Rule 15c3-1, Rule 15c3-
1d, and Rule 17a-11 under the Exchange Act pursuant to the authority
conferred by the Exchange Act, including Sections 15, 17 and 23(a).\31\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78o, 78q and 78w(a).
---------------------------------------------------------------------------

Text of Proposed Rule Amendments

List of Subjects in 17 CFR Part 240

    Brokers, Reporting and recordkeeping requirements, Securities.
    In accordance with the foregoing, the Commission hereby proposes
that Title 17, Chapter II of the Code of Federal Regulation be amended
as follows.

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

    1. The authority citation for part 240 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-l, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-
3, 80b-4, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless
otherwise noted.

* * * * *
    2. Section 240.15c3-1 is amended by revising paragraphs (a)(1)(iii)
and (e)(2)(ii) to read as follows:

Sec.  240.15c3-1  Net capital requirements for brokers or dealers.

    (a) * * *
    (1) * * *
    (iii) No broker or dealer registered as a futures commission
merchant shall permit its net capital to be less than the greater of
its requirement under paragraph (a)(1)(i) or (ii) of this section, or
eight percent of the total risk margin requirement for positions
carried by the futures commission merchant in customer accounts plus
four percent of the total risk margin requirement for positions carried
by the futures commission merchant in noncustomer accounts, as defined
in the Commodity Exchange Act (7 U.S.C. 1 et seq.) and the rules
thereunder.
* * * * *
    (e) * * *
    (2) * * *
    (ii) The broker-dealer is registered as a futures commission
merchant, its net capital would be less than 120 percent of the
aggregate amount of its total risk margin requirements for positions
carried in customer and noncustomer accounts under paragraph
(a)(1)(iii) of this section;
* * * * *
    3. Section 240.15c3-1d is amended by removing the authority
citation at the end of the section and revising paragraphs (b)(6)(iii),
(b)(7), (b)(8)(i)(A), (b)(10)(ii)(B), (c)(2), (c)(5)(i)(B),
(c)(5)(ii)(A), and (c)(7) to read as follows:

Sec.  240.15c3-1d  Satisfactory Subordination Agreements (Appendix D to
17 CFR 240.15c3-1).

* * * * *
    (b) * * *
    (6) * * *
    (iii) The secured demand note agreement also may provide that, in
lieu of the procedures specified in the provisions required by
paragraph (b)(6)(ii) of this section, the lender, with the prior
written consent of the broker or dealer and the Examining Authority for
the broker or dealer, may reduce the unpaid principal amount of the
secured demand note. After giving effect to such reduction, the
aggregate indebtedness of the broker or dealer may not exceed 1000
percent of its net capital or, in the case of a broker or dealer
operating pursuant to paragraph (a)(1)(ii) of Sec.  240.15c3-1, net
capital may not be less than 5 percent of aggregate debit items
computed in accordance with Sec.  240.15c3-3a, or, if registered as a
futures commission merchant, 120

percent of the aggregate amount of its total risk margin requirements
for positions carried in customer and noncustomer accounts under
paragraph (a)(1)(iii) of Sec.  240.15c3-1, if greater. No single
secured demand note shall be permitted to be reduced by more than 15
percent of its original principal amount and after such reduction no
excess collateral may be withdrawn. No Examining Authority shall
consent to a reduction of the principal amount of a secured demand note
if, after giving effect to such reduction, net capital would be less
than 120 percent of the minimum dollar amount required by Sec.
240.15c3-1.

Permissive Prepayments

    (7) A broker or dealer at its option, but not at the option of the
lender may, if the subordination agreement so provides, make a Payment
of all or any portion of the Payment Obligation thereunder prior to the
scheduled maturity date of such Payment Obligation (hereinafter
referred to as a ``Prepayment''), but in no event may any Prepayment be
made before the expiration of one year from the date such subordination
agreement became effective. This restriction shall not apply to
temporary subordination agreements that comply with the provisions of
paragraph (c)(5) of this Appendix D. No Prepayment shall be made, if,
after giving effect thereto (and to all Payments of Payment Obligations
under any other subordinated agreements then outstanding the maturity
or accelerated maturities of which are scheduled to fall due within six
months after the date such Prepayment is to occur pursuant to this
provision or on or prior to the date on which the Payment Obligation in
respect of such Prepayment is scheduled to mature disregarding this
provision, whichever date is earlier) without reference to any
projected profit or loss of the broker or dealer, either aggregate
indebtedness of the broker or dealer would exceed 1000 percent of its
net capital or its net capital would be less than 120 percent of the
minimum dollar amount required by Sec.  240.15c3-1 or, in the case of a
broker or dealer operating pursuant to paragraph (a)(1)(ii) of Sec.
240.15c3-1, its net capital would be less than 5 percent of its
aggregate debit items computed in accordance with Sec.  240.15c3-3a, or
if registered as a futures commission merchant, 120 percent of the
aggregate amount of its total risk margin requirements for positions
carried in customer and noncustomer accounts under paragraph
(a)(1)(iii) of Sec.  240.15c3-1, if greater, or its net capital would
be less than 120 percent of the minimum dollar amount required by
paragraph (a)(1)(ii) of Sec.  240.15c3-1. Notwithstanding the
provisions of this paragraph, no Prepayment shall occur without the
prior written approval of the Examining Authority for such broker or
dealer.

Suspended Repayment

    (8)(i) * * *
    (A) The aggregate indebtedness of the broker or dealer would exceed
1200 percent of its net capital, or in the case of a broker or dealer
operating pursuant to paragraph (a)(1)(ii) of Sec.  240.15c3-1, its net
capital would be less than 5 percent of aggregate debit items computed
in accordance with Sec.  240.15c3-3a or, if registered as a futures
commission merchant, 120 percent of the aggregate amount of its total
risk margin requirements for positions carried in customer and
noncustomer accounts under paragraph (a)(1)(iii) of Sec.  240.15c3-1,
if greater, or
* * * * *
    (10) * * *
    (ii) * * *
    (B) The aggregate indebtedness of the broker or dealer exceeding
1500 percent of its net capital or, in the case of a broker or dealer
that has elected to operate under paragraph (a)(1)(ii) of Sec.
240.15c3-1, its net capital is less than 2 percent of its aggregate
debit items computed in accordance with Sec.  240.15c3-3a or, if
registered as a futures commission merchant, the aggregate amount of
its total risk margin requirements for positions carried in customer
and noncustomer accounts under paragraph (a)(1)(iii) of Sec.  240.15c3-
1, if greater, throughout a period of 15 consecutive business days,
commencing on the day the broker or dealer first determines and
notifies the Examining Authority for the broker or dealer, or the
Examining Authority or the Commission first determines and notifies the
broker or dealer of such fact;
* * * * *
    (c) * * *
    (2) Every broker or dealer shall immediately notify the Examining
Authority for such broker or dealer if, after giving effect to all
Payments of Payment Obligations under subordination agreements then
outstanding that are then due or mature within the following six months
without reference to any projected profit or loss of the broker or
dealer either the aggregate indebtedness of the broker or dealer would
exceed 1200 percent of its net capital or its net capital would be less
than 120 percent of the minimum dollar amount required by Sec.
240.15c3-1, or, in the case of a broker or dealer operating pursuant to
paragraph (a)(1)(ii) of Sec.  240.15c3-1, its net capital would be less
than 5 percent of aggregate debit items computed in accordance with
Sec.  240.15c3-3a, or, if registered as a futures commission merchant,
120 percent of the aggregate amount of its total risk margin
requirements for positions carried in customer and noncustomer accounts
under paragraph (a)(1)(iii) of Sec.  240.15c3-1, if greater, or less
than 120 percent of the minimum dollar amount required by paragraph
(a)(1)(ii) of Sec.  240.15c3-1.
* * * * *
    (5) * * *
    (i) * * *
    (B) In the case of a broker or dealer operating pursuant to
paragraph (a)(1)(ii) of Sec.  240.15c3-1, its net capital is less than
5 percent of aggregate debits computed in accordance with Sec.
240.15c3-3a, or, if registered as a futures commission merchant, less
than 120 percent of the aggregate amount of its total risk margin
requirements for positions carried in customer and noncustomer accounts
under paragraph (a)(1)(iii) of Sec.  240.15c3-1, if greater, or less
than 120 percent of the minimum dollar amount required by paragraph
(a)(1)(ii) of this section, or
* * * * *
    (ii) * * *
    (A) After giving effect thereto (and to all Payments of Payment
Obligations under any other subordinated agreements then outstanding,
the maturity or accelerated maturities of which are scheduled to fall
due within six months after the date such prepayment is to occur
pursuant to this provision or on or prior to the date on which the
Payment Obligation in respect of such prepayment is scheduled to mature
disregarding this provision, whichever date is earlier) without
reference to any projected profit or loss of the broker or dealer,
either aggregate indebtedness of the broker or dealer would exceed 900
percent of its net capital or its net capital would be less than 200
percent of the minimum dollar amount required by Sec.  240.15c3-1 or,
in the case of a broker or dealer operating pursuant to paragraph
(a)(1)(ii) of Sec.  240.15c3-1, its net capital would be less than 6
percent of aggregate debit items computed in accordance with Sec.
240.15c3-3a, or, if registered as a futures commission merchant, 125
percent of the aggregate amount of its total risk margin requirements
for positions carried in customer and noncustomer accounts under
paragraph (a)(1)(iii) of Sec.  240.15c3-1, if greater, or its net
capital

would be less than 200 percent of the minimum dollar amount required by
paragraph (a)(1)(ii) of this section or
* * * * *
    (7) Subordination agreements in effect before adoption. Any
subordination agreement that incorporates the net capital requirements
in paragraphs (b)(6)(iii), (b)(7), (b)(8)(i), (b)(10)(ii)(B), (c)(2),
(c)(5)(i)(B), and (c)(5)(ii)(A) of this section, as in effect before
adoption of the amendments incorporating the risk margin-based capital
requirement in those paragraphs, and that has been deemed to be
satisfactorily subordinated pursuant to Sec.  240.15c3-1 as in effect
before adoption of those amendments, shall continue to be deemed a
satisfactory subordination agreement until the maturity of the
agreement. Provided, That if the agreement is amended or renewed for
any reason, then the agreement shall not be deemed a satisfactory
subordination agreement unless the amended or renewed agreement meets
the requirements of this Appendix D. Provided, further, That all
subordination agreements must meet the requirements of this Appendix D
within 5 years of the adoption of the amendments incorporating the risk
margin-based capital requirements.
    4. Section 240.17a-11 is amended by:
    a. Revising the introductory text of paragraph (c);
    b. In paragraph (c)(3) remove the period at the end of the
paragraph and in its place add ``; or'';
    c. Redesignating paragraph (c)(4) as paragraph (c)(5); and
    d. Adding new paragraph (c)(4) to read as follows:

Sec.  240.17a-11  Notification provisions for brokers and dealers.

* * * * *
    (c) Every broker or dealer shall send notice promptly (but within
24 hours) after the occurrence of the events specified in paragraph
(c)(1), (c)(2), (c)(3), (c)(4) or (c)(5) of this section in accordance
with paragraph (g) of this section:
* * * * *
    (4) For a broker or dealer registered as a futures commission
merchant, if the Commodity Exchange Act (7 U.S.C. 1 et seq.) and the
rules promulgated under the Commodity Exchange Act would require a
futures commission merchant to provide notification to the Commodity
Futures Trading Commission or a designated self-regulatory organization
that its adjusted net capital has fallen below a specified threshold;
or
* * * * *

     Dated: October 5, 2006.

    By the Commission.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-16956 Filed 10-12-06; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Notices]
[Pages 3468-3470]
[FR Doc No: 2019-01977]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2012-N-0294]

Agency Information Collection Activities; Submission for Office
of Management and Budget Review; Comment Request; Food Contact
Substance Notification Program

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing that a
proposed collection of information has been submitted to the Office of
Management and Budget (OMB) for review and clearance under the
Paperwork Reduction Act of 1995.

DATES: Fax written comments on the collection of information by March
14, 2019.

ADDRESSES: To ensure that comments on the information collection are
received, OMB recommends that written comments be faxed to the Office
of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer,
Fax:<PHONE_NUMBER>, or emailed to<EMAIL_ADDRESS>All
comments should be identified with the OMB control number 0910-0495.
Also include the FDA docket number found in brackets in the heading of
this document.

FOR FURTHER INFORMATION CONTACT: JonnaLynn Capezzuto, Office of
Operations, Food and Drug Administration, Three White Flint North, 10A-
12M, 11601 Landsdown St., North Bethesda, MD 20852,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: In compliance with 44 U.S.C. 3507, FDA has
submitted the following proposed collection of information to OMB for
review and clearance.

Food Contact Substance Notification Program--21 CFR 170.101, 170.106,
and 171.1

OMB Control Number 0910-0495--Extension

    This information collection supports FDA regulations regarding Food
Contact Substance Notification, as well as associated guidance and
accompanying forms. Section 409(h) of the Federal Food, Drug, and
Cosmetic Act (FD&C Act) (21 U.S.C. 348(h)) establishes a premarket
notification process for food contact substances. Section 409(h)(6) of
the FD&C Act defines a ``food contact substance'' as ``any substance
intended for use as a component of materials used in manufacturing,
packing, packaging, transporting, or holding food if such use is not
intended to have any technical effect in such food.'' Section 409(h)(3)
of the FD&C Act requires that the notification process be used for
authorizing the marketing of food contact substances except when: (1)
We determine that the submission and premarket review of a food
additive petition (FAP) under section 409(b) of the FD&C Act is
necessary to provide adequate assurance of safety or (2) we and the
manufacturer or supplier agree that an FAP should be submitted. Section
409(h)(1) of the FD&C Act requires that a notification include: (1)
Information on the identity and the intended use of the food contact
substance and (2) the basis for the manufacturer's or supplier's
determination that the food contact substance is safe under the
intended conditions of use.
    Sections 170.101 and 170.106 of FDA's regulations (21 CFR 170.101
and 170.106) specify the information that a notification must contain
and require that: (1) A food contact substance notification (FCN)
includes Form FDA 3480 and (2) a notification for a food contact
substance formulation includes Form FDA 3479. These forms serve to
summarize pertinent information in the notification. The forms
facilitate both preparation and review of notifications because the
forms will serve to organize information necessary to support the
safety of the use of the food contact substance. The burden of filling
out the appropriate form has been included in the burden estimate for
the notification.
    Currently, interested persons transmit an FCN submission to the
Office of Food Additive Safety in the Center for Food Safety and
Applied Nutrition using Form FDA 3480 whether it is submitted in
electronic or paper format. We estimate that the amount of time for
respondents to complete Form FDA 3480 will continue to be the same.
    In addition to its required use with FCNs, Form FDA 3480 is
recommended to be used to organize information within a Pre-
notification Consultation or Master File submitted in support of an FCN
according to the items listed on the form. Master Files can be used as
repositories for information that can be referenced in multiple
submissions to FDA, thus minimizing paperwork burden for food contact
substance authorizations. We estimate that the amount of time for
respondents to complete the Form FDA 3480 for these types of
submissions is 0.5 hours.
    FDA recommends using Form FDA 3480A for each submission of
additional information (i.e., amendment) to an FCN submission currently
under Agency review. Form FDA 3480A helps the respondent organize the
submission to focus on the information needed for FDA's safety review.
    FDA's guidance documents entitled: (1) ``Preparation of Food
Contact Notifications: Administrative,'' (2) ``Preparation of Food
Contact Notifications and Food Additive Petitions for Food Contact
Substances: Chemistry Recommendations,'' and (3) ``Preparation of Food
Contact Notifications for Food Contact Substances: Toxicology
Recommendations'' provide assistance to industry regarding the
preparation of an FCN and a petition for a food contact substances
(FCSs). FDA has also developed a draft guidance entitled, ``Preparation
of Food Contact Notifications for Food Contact Substances in Contact
with Infant Formula and/or Human Milk.'' Once finalized, the guidance
will provide our current thinking on how to prepare an FCN for FDA
review and evaluation of the safety of FCSs used in contact with infant
formula and/or human milk. These guidances are available at https://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/IngredientsAdditivesGRASPackaging/default.htm.
    Section 171.1 of FDA's regulations (21 CFR 171.1) specifies the
information that a petitioner must submit in order to: (1) Establish
that the proposed use of an indirect food additive is safe and (2)
secure the publication of an indirect

food additive regulation in parts 175 through 178 (21 CFR parts 175
through 178). Parts 175 through 178 describe the conditions under which
the additive may be safely used.
    In addition, the guidance entitled ``Use of Recycled Plastics in
Food Packaging: Chemistry Considerations,'' provides assistance to
manufacturers of food packaging in evaluating processes for producing
packaging from post-consumer recycled plastic. The recommendations in
the guidance address the process by which manufacturers certify to us
that their plastic products are safe for food contact.
    Description of Respondents: The respondents to this information
collection are manufacturers of food contact substances sold in the
United States. Respondents are from the private sector (for-profit
businesses).
    In the Federal Register of September 13, 2018 (83 FR 46493), we
published a 60-day notice requesting public comment on the proposed
collection of information. One comment was received unrelated to the
information collection and therefore is not discussed here.
    We estimate the burden of the information collection as follows:

                                                     Table 1--Estimated Annual Reporting Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Number of
          21 CFR Section; Activity            FDA Form No.      Number of     responses per   Total annual   Average burden per response    Total hours
                                                               respondents     respondent       responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
170.106 2 (Category A).....................        FDA 3479              10               2              20  2..........................              40
170.101 3 7 (Category B)...................        FDA 3480               6               1               6  25.........................             150
170.101 4 7 (Category C)...................        FDA 3480               6               2              12  120........................           1,440
170.101 5 7 (Category D)...................        FDA 3480              42               2              84  150........................          12,600
170.101 6 7 (Category E)...................        FDA 3480              38               1              38  150........................           5,700
Pre-notification Consultation or Master            FDA 3480             190               1             190  0.5 (30 minutes)...........              95
 File (concerning a food contact substance)
 \8\.
Amendment to an existing notification             FDA 3480A             100               1             100  0.5 (30 minutes)...........              50
 (170.101), amendment to a Pre-notification
 Consultation, or amendment to a Master
 File (concerning a food contact substance)
 \9\.
171.1 Indirect Food Additive Petitions.....             N/A               1               1               1  10,995.....................          10,995
Use of Recycled Plastics in Food Packaging:             N/A              10               1              10  25.........................             250
 Chemistry Considerations.
Preparation of Food Contact Notifications    ..............               2               1               2  5..........................              10
 for Food Contact Substances in Contact
 with Infant Formula and/or Human Milk.
                                            ------------------------------------------------------------------------------------------------------------
    Total..................................  ..............  ..............  ..............  ..............  ...........................          31,330
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.
\2\ Notifications for food contact substance formulations and food contact articles. These notifications require the submission of Form FDA 3479
  (``Notification for a Food Contact Substance Formulation'') only.
\3\ Duplicate notifications for uses of food contact substances.
\4\ Notifications for uses that are the subject of exemptions under 21 CFR 170.39 and very simple food additive petitions.
\5\ Notifications for uses that are the subject of moderately complex food additive petitions.
\6\ Notifications for uses that are the subject of very complex food additive petitions.
\7\ These notifications require the submission of Form FDA 3480.
\8\ These notifications recommend the submission of Form FDA 3480.
\9\ These notifications recommend the submission of Form FDA 3480A.

    The estimates are based on our current experience with the Food
Contact Substance Notification Program and informal communication with
industry. Our estimated burden for the information collection reflects
an overall increase of 10 hours and a corresponding increase of 2
responses from the currently approved burden. We attribute this
adjustment to reviewing and submitting FCNs consistent to the draft
guidance entitled, ``Preparation of Food Contact Notifications for Food
Contact Substances in Contact with Infant Formula and/or Human Milk.''
    Beginning in row 1, we estimate 10 respondents will submit 2
notifications annually for food contact substance formulations (Form
FDA 3479), for a total of 20 responses. We calculate a reporting burden
of 2 hours per response, for a total of 40 hours. In row 2 we estimate
six respondents. We believe the hourly burden for preparing these
notifications will primarily consist of the manufacturer or supplier
completing Form FDA 3480, verifying that a previous notification is
effective and preparing necessary documentation. We estimate one
submission for each respondent, for a total of six responses. We
calculate a reporting burden of 25 hours per response, for a total of
150 hours.
    In rows 3, 4, and 5, we identify three tiers of FCNs that reflect
different levels of burden applicable to the respective information
collection items (denoted as Categories C, D, and E). We estimate 6
respondents will submit 2 Category C submissions annually, for a total
of 12 responses. We calculate a reporting burden of 120 hours per
response, for a total burden of 1,440 hours. We estimate 42 respondents
will submit 2 Category D submissions annually, for a total of 84
responses. We calculate a reporting burden of 150 hours per response,
for a total burden of 12,600 hours. We estimate 38 respondents will
submit 1 Category E submission annually, for a total of 38 responses.
We calculate a reporting burden of 150 hours per response, for a total
burden of 5,700 hours.
    In row 6, we estimate 190 respondents will submit information to a
pre-notification consultation or a master file in support of FCN
submission using Form FDA 3480. We calculate a reporting burden of 0.5
hours per response, for a total burden of 95 hours. In row 7 we
estimate 100 respondents will submit an amendment (Form FDA 3480A) to a
substantive or non- substantive request of additional

information to an incomplete FCN submission, an amendment to a pre-
notification consultation, or an amendment to a master file in support
of an FCN. We calculate a reporting burden of 0.5 hours per response,
for a total burden of 50 hours.
    In row 8, we estimate one respondent will submit one indirect food
additive petition under Sec.  171.1, for a total of one response. We
calculate a reporting burden of 10,995 hours per response, for a total
burden of 10,995 hours.
    In row 9, we estimate 10 respondents will utilize the
recommendations in the guidance document entitled, ``Use of Recycled
Plastics in Food Packaging: Chemistry Considerations,'' to develop the
additional information for one such submission annually, for a total of
10 responses. We calculate a reporting burden of 25 hours per response,
for a total burden of 250 hours.
    Finally, in row 10, we estimate 2 respondents will utilize the
recommendations in the draft guidance, once finalized, entitled,
``Preparation of Food Contact Notifications for Food Contact Substances
in Contact with Infant Formula and/or Human Milk,'' to develop the
additional information for one such submission annually, for a total of
2 responses. We calculate a reporting burden of 5 hours per response,
for a total burden of 10 hours.

    Dated: February 6, 2019.
Lowell J. Schiller,
Acting Associate Commissioner for Policy.
[FR Doc. 2019-01977 Filed 2-11-19; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register: February 25, 2009 (Volume 74, Number 36)]
[Notices]
[Page 8549-8550]
[DOCID:fr25fe09-64]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2009-N-0050]

Agency Information Collection Activities; Proposed Collection;
Comment Request; Importer's Entry Notice

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing an
opportunity for public comment on the proposed collection of certain
information by the agency. Under the Paperwork Reduction Act of 1995
(the PRA), Federal agencies are required to publish notice in the
Federal Register concerning each proposed collection of information,
including each proposed extension of an existing collection of
information, and to allow 60 days for public comment in response to the
notice. This notice solicits comments on FDA's need to collect
additional information in the Importer's Entry Notice.

DATES: Submit written or electronic comments on the collection of
information by April 27, 2009.

ADDRESSES: Submit electronic comments on the collection of information
to http://www.regulations.gov. Submit written comments on the
collection of information to the Division of Dockets Management (HFA-
305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852. All comments should be identified with the docket
number found in brackets in the heading of this document.

FOR FURTHER INFORMATION CONTACT: Elizabeth G. Berbakos, Office of
Information Management (HFA-710), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal
agencies must obtain approval from the Office of Management and Budget
(OMB) for each collection of information they conduct or sponsor.
``Collection of information'' is defined in 44 U.S.C. 3502(3) and 5 CFR
1320.3(c) and includes agency requests or requirements that members of
the public submit reports, keep records, or provide information to a
third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A))
requires Federal agencies to provide a 60-day notice in the Federal
Register concerning each proposed collection of information, including
each proposed extension of an existing collection of information,
before submitting the collection to OMB for approval. To comply with
this requirement, FDA is publishing notice of the proposed collection
of information set forth in this document.
    With respect to the following collection of information, FDA
invites comments on these topics: (1) Whether the proposed collection
of information is necessary for the proper performance of FDA's
functions, including whether the information will have practical
utility; (2) the accuracy of FDA's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques, when
appropriate, and other forms of information technology.

Importer's Entry Notice (OMB Control Number 0910-0046-Extension)

    In order to make an admissibility decision for each entry, FDA
needs four additional pieces of information that are not available in
the U.S. Customs and Border Protection's (CBP's) data set. These data
elements are the FDA Product Code, FDA country of production, FDA
manufacturer/shipper, and ultimate consignee. It is the ``automated''
collection of these four data elements for which OMB approval is
requested. FDA construes this request

as an extension of the prior approval of collection of this data via a
different media, i.e., paper. There are additional data elements that
filers can provide to FDA along with other entry-related information
that, by doing so, may result in their receiving an FDA admissibility
decision more expeditiously, e.g., the quantity, value, and
Affirmation(s) of Compliance with Qualifier(s).
    At each U.S. port of entry (seaport, landport, and airport) where
foreign-origin FDA-regulated products are offered for import, FDA is
notified through CBP's Automated Commercial System (ACS) by the
importer (or his agent) of the arrival of each entry. Following such
notification FDA reviews relevant data to ensure the imported product
meets the standards as are required for domestic products, makes an
admissibility decision, and informs the importer and CBP of its
decision. A single entry frequently contains multiple lines of
different products. FDA may authorize specific lines to enter the U.S.
unimpeded, while others in the same entry are to be held pending
further FDA review/action.
    An important feature developed and programmed into FDA's automated
system is that all entry data passes through a screening criteria
program. FDA's electronic screening criteria module makes the initial
screening decision on every entry of foreign-origin FDA-regulated
product. Virtually instantaneously after the entry is filed, the filer
receives FDA's admissibility decision covering each entry, i.e., ``MAY
PROCEED'' or ``FDA REVIEW.''
    Examples of FDA's need to further review an entry include: Products
originating from a specific country or manufacturer known to have a
history of problems, FDA has no previous knowledge of the foreign
manufacturer and/or product, and an import alert covering the product
has been issued, etc. The system assists FDA entry reviewers by
notifying them of information such as the issuance of import alerts,
thus averting the chance that such information will be missed.
    With the inception of the interface with CBP's ACS, FDA's
electronic screening criteria program is applied nationwide. This
virtually eliminates problems such as ``port shopping,'' e.g., attempts
to intentionally slip products through one FDA port when refused by
another, or to file entries at a port known to receive a high volume of
entries. Every electronically submitted entry line of foreign-origin
FDA-regulated product undergoes automated screening described
previously in this document. The screening criteria can be set to be as
specific or as broad as applicable; changes are virtually immediately
effective. This capability is of tremendous value in protecting the
public in the event there is a need to immediately halt a specific
product from entering the United States.
    FDA estimates the burden of this collection of information as
follows:

                                                     Table 1.--Estimated Annual Reporting Burden\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Annual Frequency per
                    No. of Respondents                              Response         Total Annual  Responses   Hours per  Response       Total Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
3,727                                                                         1,070                3,988,371                  .263             1,048,447
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.

    Dated: February 17, 2009.
Jeffrey Shuren,
Associate Commissioner for Policy and Planning.
[FR Doc. E9-3938 Filed 2-24-09; 8:45 am]

BILLING CODE 4160-01-S


[Federal Register Volume 77, Number 87 (Friday, May 4, 2012)]
[Notices]
[Pages 26587-26588]
[FR Doc No: 2012-10757]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-30057]

Notice of Applications for Deregistration Under Section 8(f) of
the Investment Company Act of 1940

April 30, 2012.
    The following is a notice of applications for deregistration under
section 8(f) of the Investment Company Act of 1940 for the month of
April 2012. A copy of each application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>. An order granting each
application will be issued unless the SEC orders a hearing. Interested
persons may request a hearing on any application by writing to the
SEC's Secretary at the address below and serving the relevant applicant
with a copy of the request, personally or by mail. Hearing requests
should be received by the SEC by 5:30 p.m. on May 24, 2012, and should
be accompanied by proof of service on the applicant, in the form of an
affidavit or, for lawyers, a certificate of service. Hearing requests
should state the nature of the writer's interest, the reason for the
request, and the issues contested. Persons who wish to be notified of a
hearing may request notification by writing to the Secretary, U.S.
Securities and Exchange Commission, 100 F Street NE., Washington, DC
20549-1090.

FOR FURTHER INFORMATION CONTACT: Diane L. Titus at<PHONE_NUMBER>, SEC,
Division of Investment Management, Office of Investment Company
Regulation, 100 F Street NE., Washington, DC 20549-8010.

PNC Absolute Return Fund LLC [File No. 811-21088]

PNC Absolute Return Master Fund LLC [File No. 811-21814]

    Summary: Each applicant, a closed-end investment company, seeks an
order declaring that it has ceased to be an investment company. On
December 27, 2011, each applicant made a liquidating distribution to
its shareholders, based on net asset value. Each applicant incurred
approximately $2,888 in expenses in connection with its liquidation.
    Filing Dates: The applications were filed on March 5, 2012, and
amended on April 19, 2012.
    Applicants' Address: Two Hopkins Plaza, Baltimore, MD 21201.

PNC Alternative Strategies Fund LLC [File No. 811-21257]

PNC Alternative Strategies Master Fund LLC [File No. 811-21816]

    Summary: Each applicant, a closed-end investment company, seeks an
order declaring that it has ceased to be an investment company. On
December 23, 2011, each applicant made a liquidating distribution to
its shareholders, based on net asset value. Each applicant incurred
approximately $2,888 in expenses in connection with its liquidation.
    Filing Dates: The applications were filed on March 5, 2012, and
amended on April 19, 2012.
    Applicant's Address: Two Hopkins Plaza, Baltimore, MD 21201.

PNC Long-Short Master Fund LLC [File No. 811-21818]

PNC Long-Short Fund LLC [File No. 811-21258]

    Summary: Each applicant, a closed-end investment company, seeks an
order declaring that it has ceased to be an investment company. On
December 28, 2011, each applicant made a liquidating distribution to
its shareholders, based on net asset value. Each applicant incurred
approximately $2,888 in expenses in connection with its liquidation.
    Filing Dates: The applications were filed on March 5, 2012, and
amended on April 19, 2012.
    Applicant's Address: Two Hopkins Plaza, Baltimore, MD 21201.

PNC Alternative Strategies TEDI Fund LLC [File No. 811-21817]

PNC Absolute Return TEDI Fund LLC [File No. 811-21815]

PNC Long-Short TEDI Fund LLC [File No. 811-21819]

    Summary: Each applicant, a closed-end investment company, seeks an
order declaring that it has ceased to be an investment company. On
December 23, 2011, December 27, 2011, and December 28, 2011,
respectively, each applicant made a liquidating distribution to its
shareholders, based on net asset value. Each applicant incurred
approximately $4,867, $4,740 and $4,470, respectively, in expenses in
connection with its liquidation.
    Filing Dates: The applications were filed on March 5, 2012, and
amended on April 19, 2012.
    Applicants' Address: Two Hopkins Plaza, Baltimore, MD 21201.

American Beacon Mileage Funds [File No. 811-9018]

American Beacon Master Trust [File No. 811-9098]

    Summary: Each applicant seeks an order declaring that it has ceased
to be an investment company. On September 30, 2011, each applicant made
a liquidating distribution to its shareholders, based on net asset
value. Expenses of approximately $5,767 and $1,585, respectively,
incurred in connection with the liquidations were paid by the
applicants and American Beacon Advisors, Inc., applicants' investment
adviser.
    Filing Date: The applications were filed on March 26, 2012.
    Applicants' Address: 4151 Amon Carter Blvd., MD 2450, Fort Worth,
TX 76155.

Old Mutual Funds III [File No. 811-22149]

    Summary: Applicant seeks an order declaring that it has ceased to
be an investment company. On December 7, 2009, applicant made a
liquidating distribution to its shareholders, based on net asset value.
Expenses of $23,000 incurred in connection with the liquidation were
paid by applicant, with all legal expenses being incurred by Old Mutual
Capital, applicant's investment adviser.
    Filing Date: The application was filed on March 27, 2012.
    Applicant's Address: 4643 South Ulster St., Suite 800, Denver, CO
80237.

RAM Funds [File No. 811-22162]

    Summary: Applicant seeks an order declaring that it has ceased to
be an investment company. On November 15, 2011, applicant made a
liquidating distribution to its shareholders, based on net asset value.
Expenses of approximately $5,135 incurred in connection with the
liquidation were paid by Riazzi Asset Management, LLC, applicant's
investment adviser.
    Filing Date: The application was filed on April 4, 2012.
    Applicant's Address: Riazzi Asset Management, LLC, 2331 Far Hills
Ave., Suite 200, Dayton, OH 45419.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10757 Filed 5-3-12; 8:45 am]
BILLING CODE 8011-01-P