[Federal Register Volume 81, Number 70 (Tuesday, April 12, 2016)]
[Notices]
[Pages 21573-21574]
[FR Doc No: 2016-08333]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2014-E-1222]

Determination of Regulatory Review Period for Purposes of Patent
Extension; APOQUEL

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) has determined the
regulatory review period for APOQUEL and is publishing this notice of
that determination as required by law. FDA has made the determination
because of the submission of an application to the Director of U.S.
Patent and Trademark Office (USPTO), Department of Commerce, for the
extension of a patent which claims that animal drug product.

DATES: Anyone with knowledge that any of the dates as published (in the
SUPPLEMENTARY INFORMATION section) are incorrect may submit either
electronic or written comments and ask for a redetermination by June
13, 2016. Furthermore, any interested person may petition FDA for a
determination regarding whether the applicant for extension acted with
due diligence during the regulatory review period by October 11, 2016.
See ``Petitions'' in the SUPPLEMENTARY INFORMATION section for more
information.

ADDRESSES: You may submit comments as follows:

Electronic Submissions

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

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Division of
Dockets Management, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2014-E-1222 for ``Determination of Regulatory Review Period for
Purposes of Patent Extension; APOQUEL.'' Received comments will be
placed in the docket and, except for those submitted as ``Confidential
Submissions,'' publicly viewable at http://www.regulations.gov or at
the Division of Dockets Management between 9 a.m. and 4 p.m., Monday
through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on http://www.regulations.gov.
Submit both copies to the Division of Dockets Management. If you do not
wish your name and contact information to be made publicly available,
you can provide this information on the cover sheet and not in the body
of your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access

the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Division of Dockets Management, 5630 Fishers
Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Beverly Friedman, Office of Regulatory
Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
51, Rm. 6250, Silver Spring, MD 20993,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    The Drug Price Competition and Patent Term Restoration Act of 1984
(Pub. L. 98-417) and the Generic Animal Drug and Patent Term
Restoration Act (Pub. L. 100-670) generally provide that a patent may
be extended for a period of up to 5 years so long as the patented item
(human drug product, animal drug product, medical device, food
additive, or color additive) was subject to regulatory review by FDA
before the item was marketed. Under these acts, a product's regulatory
review period forms the basis for determining the amount of extension
an applicant may receive.
    A regulatory review period consists of two periods of time: A
testing phase and an approval phase. For animal drug products, the
testing phase begins on the earlier date when either a major
environmental effects test was initiated for the drug or when an
exemption under section 512(j) of the Federal Food, Drug, and Cosmetic
Act (the FD&C Act) (21 U.S.C. 360b(j)) became effective and runs until
the approval phase begins. The approval phase starts with the initial
submission of an application to market the animal drug product and
continues until FDA grants permission to market the drug product.
Although only a portion of a regulatory review period may count toward
the actual amount of extension that the Director of USPTO may award
(for example, half the testing phase must be subtracted as well as any
time that may have occurred before the patent was issued), FDA's
determination of the length of a regulatory review period for an animal
drug product will include all of the testing phase and approval phase
as specified in 35 U.S.C. 156(g)(4)(B).
    FDA has approved for marketing the animal drug product APOQUEL
(oclacitinib). APOQUEL is indicated for control of pruritus associated
with allergic dermatitis and control of atopic dermatitis in dogs at
least 12 months of age. Subsequent to this approval, the USPTO received
a patent term restoration application for APOQUEL (U.S. Patent No.
6,890,929) from Pfizer Inc., and the USPTO requested FDA's assistance
in determining this patent's eligibility for patent term restoration.
In a letter dated May 11, 2015, FDA advised the USPTO that this animal
drug product had undergone a regulatory review period and that the
approval of APOQUEL represented the first permitted commercial
marketing or use of the product. Thereafter, the USPTO requested that
FDA determine the product's regulatory review period.

II. Determination of Regulatory Review Period

    FDA has determined that the applicable regulatory review period for
APOQUEL is 2,226 days. Of this time, 2,172 days occurred during the
testing phase of the regulatory review period, while 54 days occurred
during the approval phase. These periods of time were derived from the
following dates:
    1. The date an exemption under section 505(i) of the Federal Food,
Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 355(i)) became
effective: April 12, 2007. FDA has verified the applicant's claim that
the date the investigational new animal drug application (INAD) became
effective was on April 12, 2007.
    2. The date the application was initially submitted with respect to
the animal drug product under section 512 of the FD&C Act (21 U.S.C.
360b): March 22, 2013. FDA has verified the applicant's claim that the
new animal drug application (NADA) for APOQUEL (NADA 141-345) was
submitted on March 22, 2013.
    3. The date the application was approved: May 14, 2013. FDA has
verified the applicant's claim that NADA 141-345 was approved on May
14, 2013.
    This determination of the regulatory review period establishes the
maximum potential length of a patent extension. However, the USPTO
applies several statutory limitations in its calculations of the actual
period for patent extension. In its application for patent extension,
this applicant seeks 1,139 days of patent term extension.

III. Petitions

    Anyone with knowledge that any of the dates as published are
incorrect may submit either electronic or written comments and ask for
a redetermination (see DATES). Furthermore, any interested person may
petition FDA for a determination regarding whether the applicant for
extension acted with due diligence during the regulatory review period.
To meet its burden, the petition must be timely (see DATES) and contain
sufficient facts to merit an FDA investigation. (See H. Rept. 857, part
1, 98th Cong., 2d sess., pp. 41-42, 1984.) Petitions should be in the
format specified in 21 CFR 10.30.
    Submit petitions electronically to http://www.regulations.gov at
Docket No. FDA-2013-S-0610. Submit written petitions (two copies are
required) to the Division of Dockets Management (HFA-305), Food and
Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

    Dated: April 6, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-08333 Filed 4-11-16; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register: March 11, 2008 (Volume 73, Number 48)]
[Notices]
[Page 13066]
[DOCID:fr11mr08-120]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Notice of Intent To Rule on Request To Release Airport Property
at the Shafter-Minter Field Airport, Shafter, CA

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of request to release airport property.

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SUMMARY: The FAA proposes to rule and invite public comment on the
release of land at the Shafter-Minter Field Airport under the
provisions of section 125 of the Wendell H. Ford Aviation Investment
Reform Act for the 21st Century (AIR 21).

DATES: Comments must be received on or before April 10, 2008.

ADDRESSES: Comments on this application may be mailed or delivered to
the FAA at the following address: Mr. Brian Armstrong, Manager, Federal
Aviation Administration, Los Angeles Airports District Office, LAX-600,
15000 Aviation Blvd., Lawndale, CA 90261. In addition, one copy of any
comments submitted to the FAA must be mailed or delivered to Dana
Mulder, President, Board of Directors, Minter Field Airport District,
at the following address: Shafter Airport/Minter Field, 201 Aviation
Street, Shafter, CA 93263.

FOR FURTHER INFORMATION CONTACT: Mr. Brian Armstrong, Manager, Federal
Aviation Administration, Los Angeles Airports District Office, LAX-600,
15000 Aviation Blvd., Lawndale, CA 90261, Telephone:<PHONE_NUMBER>, e-
mail<EMAIL_ADDRESS>fax:<PHONE_NUMBER>. The request to
release property may be reviewed in person at this same location.

SUPPLEMENTARY INFORMATION: The FAA invites public comment on the
request to release property at the Shafter-Minter Field Airport under
the provisions of the AIR 21. The following is a brief overview of the
request:
    The Minter Field Airport District, the owner of Shafter-Minter
Field Airport requests the release of certain land to enable the
exchange of that land for other property contiguous to airport
property. The land identified for release consists of approximately
44.7 acres located north of Lerdo Highway and west of the Friant Kern
Canal. The Friant Kern Canal is an open canal located on an easement
that has existed since the property was owned by the Federal
government. The canal physically separates the subject property from
the remainder of the airport. The property to be acquired consists of
approximately 32 acres located contiguous to the previous eastern
boundary of the airport, north of Lerdo Highway and east of State
Highway 99. Appraisals of the two parcels were completed in 1993 and
again in 2000. In 2000, the Kern County General Services Administration
concluded that the market value of property being released was
$745,000. The value of the property acquired was $816,000. Based on
this information, the Minter Field Airport District and Shafter-Minter
Field Airport benefited from the exchange as a result of the higher
property value of the land acquired.
    Any person may inspect the request in person at the FAA office
listed above under FOR FURTHER INFORMATION CONTACT. In addition, any
person may, upon request, inspect the application, notice and other
documents relevant to the application in person at the Shafter-Minter
Field Airport, telephone number<PHONE_NUMBER>.

    Issued in Los Angeles, California on February 27, 2008.
Mark McClardy,
Manager, Airports Division.
[FR Doc. E8-4520 Filed 3-10-08; 8:45 am]

BILLING CODE 4910-13-M


[Federal Register: June 15, 2006 (Volume 71, Number 115)]
[Notices]
[Page 34652-34653]
[DOCID:fr15jn06-66]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53947; File No. SR-MSRB-2006-04]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Amendment to Rule A-11, on Indemnification of
Members and Employees

June 6, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ Rule 19b-4 thereunder,\2\ notice is hereby given that on
May 25, 2006, the Municipal Securities Rulemaking Board (``MSRB'' or
``Board''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items, I, II and III below, which Items have been prepared by the MSRB.
The MSRB has filed the proposal pursuant to Section 19(b)(3)(A)(iii) of
the Act,\3\ and Rule 19b-4(f)(3) thereunder,\4\ which renders the
proposal effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The MSRB is filing with the Commission a proposed rule change
consisting of an amendment to Rule A-11, on indemnification of members
and employees, to delete the entire rule language. The text of the
proposed rule change is available on the MSRB's Web site (http://www.msrb.org
), at the MSRB's principal office, and at the Commission's

Public Reference Room.

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

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

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

1. Purpose
    Rule A-11, on Indemnification of members and employees, states that
each member and employee of the MSRB shall be indemnified and held
harmless against all liabilities and related expenses incurred in
connection with the performance of his or her official duties, provided
that such member or employee has acted, or omitted to act, in good
faith and within the scope of his or her authority. The MSRB recently
approved expanding the indemnification provisions for Board members and
employees. Because the language of the expanded provisions was broader
than the indemnification provided under Virginia law, where the MSRB is
incorporated as a nonstock corporation, the expanded provisions needed
to be included in the MSRB's Articles of Incorporation in order to be
effective. The SEC recently approved a proposed rule change consisting
of the MSRB's Restated Articles of Incorporation and By-Laws, which
included the expanded indemnification provisions in the Restated
Articles of Incorporation.\5\ Thus, the proposed rule change removes
the indemnification provisions from Rule A-11 (and By-Law Article
11).\6\
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    \5\ See Securities Exchange Act Release No. 53804 (May 15,
2006), 71 FR 29194 (May 19, 2006).
    \6\ The MSRB stated in its filing of the Restated Articles of
Incorporation and By-Laws that, once the MSRB obtains approval for
the Restated Articles of Incorporation by the Commonwealth of
Virginia, the MSRB would file with the SEC to delete Rule A-11 (and
B-Law Article 11) for immediate effectiveness. See File No. SR-MSRB-
2006-02, Securities Exchange Act Release No. 53616 (April 7, 2006),
71 FR 19571 (April 14, 2006).
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2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(I) of the Act,\7\ which

authorizes the MSRB to adopt rules that provide for the operation and
administration of the MSRB. The MSRB believes that the proposed rule
change is consistent with this provision because it is concerned solely
with the operation and administration of the MSRB.
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    \7\ 15 U.S.C. 78o-4(b)(2)(I).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act since it only applies to the operation and
administration of the MSRB.

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

    Written comments were neither solicited nor received.

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

    The proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(3) thereunder \9\ because
it is concerned solely with the administration of the MSRB. At any time
within 60 days of the filing of the proposed rule change, the
Commission may summarily abrogate such rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(3).
    \10\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(c).
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IV. Solicitation of Comments

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

Electronic Comments

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

File Number SR-MSRB-2006-04 on the subject line:

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2006-04. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the MSRB. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-MSRB-2006-04 and should be submitted on or before July
6, 2006.
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    \11\17 CFR 200.30-(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-5416 Filed 6-14-06; 8:45 am]

BILLING CODE 8010-01-M


[Federal Register Volume 80, Number 24 (Thursday, February 5, 2015)]
[Notices]
[Pages 6512-6513]
[FR Doc No: 2015-02290]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP15-61-000]

Northern Natural Gas Company; Notice of Request Under Blanket
Authorization

    Take notice that on January 20, 2015, Northern Natural Gas Company
(Northern), 1111 South 103rd Street, Omaha, Nebraska 68124, filed in
the above Docket, a prior notice request pursuant to sections 157.205,
157.208, and 157.216 of the Commission's regulations under the Natural
Gas Act (NGA) and Northern's blanket certificate issued in Docket CP82-
401-000, for authorization to: (1) Construct and operate a new 1,590
horsepower Willow Lake compressor station; (2) install and operate a
new Watertown branch line takeoff and lateral; (3) construct and
operate a new interconnect with Northern Border Pipeline Company; and
(4) abandon short segments of pipeline. All facilities are located in
South Dakota and designed to provide up to 31, 550 dekatherms (Dth) per
day of incremental firm transportation capacity for industrial,
commercial and residential use, all as more fully set forth in the
application which is on file with the Commission and open to public
inspection. The filing may also be viewed on the Commission's Web site
at 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 at
<EMAIL_ADDRESS>or call toll-free,<PHONE_NUMBER> or TTY,
(202) 502-8659.
    Any questions regarding this application should be directed to
Laura Demman, Vice President of Regulatory and Government Affairs,
phone<PHONE_NUMBER>, facsimile<PHONE_NUMBER>, or by email at:
<EMAIL_ADDRESS>Dari R. Dornan, Senior Counsel, phone (402)
398-7077, facsimile<PHONE_NUMBER>, or by email at:
<EMAIL_ADDRESS>or Michael T. Loeffler, Senior Director of
Certificates and External Affairs, phone<PHONE_NUMBER>, facsimile
(402) 398-7592, or by email at<EMAIL_ADDRESS>All persons
located at Northern Natural Gas Company, P.O. Box 3330, Omaha, Nebraska
68103-0330.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
Complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding; or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    Any person may, within 60 days after the issuance of the instant
notice by the Commission, file pursuant to Rule 214 of the Commission's
Procedural Rules (18 CFR 385.214) a motion to intervene or notice of
intervention. Any person filing to intervene or the Commission's staff
may, pursuant to section 157.205 of the Commission's Regulations under
the Natural Gas Act (NGA) (18 CFR 157.205) file a protest to the
request. If no protest is filed within the time allowed therefore, the
proposed activity shall be deemed to be authorized effective the day
after the time allowed for protest. If a protest is filed and not
withdrawn

within 30 days after the time allowed for filing a protest, the instant
request shall be treated as an application for authorization pursuant
to section 7 of the NGA.
    The Commission strongly encourages electronic filings of comments,
protests, and interventions via the internet in lieu of paper. See 18
CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web
site (www.ferc.gov) under the ``e-Filing'' link.

    Dated: January 30, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015-02290 Filed 2-4-15; 8:45 am]
BILLING CODE 6717-01-P


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MEMORANDUM

TO:	Steam Electric Rulemaking Record

FROM:	 Danielle Lewis, ERG
	Anna Dimling, ERG

DATE:	September 30, 2015

SUBJECT:	Evaluation of Chemical Precipitation Costs for Ash Transport Water

	ERG is providing technical support to the U.S. Environmental Protection Agency's Office of Water, Engineering and Analysis Division (EAD) for development of effluent limitations guidelines and standards (ELGs) for the Steam Electric Power Generating Industry. As part of this technical support, EPA, with support from ERG, evaluated chemical precipitation as a potential basis for a technology option for the treatment of fly ash transport water and bottom ash transport water.  Based on EPA's analysis, described below, EPA found costs for chemical precipitation treatment of fly ash and bottom ash transport water to be comparable or higher than the cost for converting to dry handling or closed loop technologies. Additionally, the chemical precipitation technology removes fewer pollutants compared to conversion to dry handling; therefore, EPA did not include chemical precipitation treatment as part of the regulatory options (see Section 8 of the Technical Development Document for the Final Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category (EPA-821-R15-007) for more details on the regulatory options).  This memorandum describes the methodology EPA used to estimate capital costs to install a chemical precipitation system for the treatment of fly ash transport water and bottom ash transport water, and a comparison of chemical precipitation treatment system capital costs to estimated capital costs for the dry handling or closed-loop technologies.

	For this evaluation, EPA used the chemical precipitation cost module along with generating unit-level discharge flow rates for fly ash transport water and bottom ash transport water to estimate plant-level capital costs to install a chemical precipitation treatment system. EPA included the following pieces of equipment in the chemical precipitation design basis:

   * Pumps.
   * Tanks (e.g., reaction tanks, holding tanks).
   * Chemical feed systems for the addition of lime, organosulfide, ferric chloride, and polymers.
   * Mixers.
   * Clarifiers.
   * Filter presses.
   * Sand filters.
   * Mercury analyzer.

 For each piece of equipment, EPA obtained cost information from vendors for various sizes of the equipment (e.g., flow, volume). Then EPA related all of these to an associated flow rate using information based on the technology design basis (e.g., tank volume related to flow by design residence time). EPA then used the cost and flow information to generate an equation that could estimate the costs for any steam electric power plant wastewater flow rate.
	The chemical precipitation cost module, as described in the Incremental Costs and Pollutant Removals for the Final Effluent Limitation Guidelines and Standards for the Steam Electric Generating Point Source Category ("Costs and Loads Report"; DCN SE05831), is the same cost module used to estimate costs associated with chemical precipitation systems used to treat flue gas desulfurization (FGD) wastewater.  As described in Section 6.1 of the Costs and Loads Report, the chemical precipitation cost module estimates capital and operation and maintenance (O&M) costs to install and operate a chemical precipitation system specifically designed and operated to treat steam electric power plant wastewater. To estimate the capital costs associated with the treatment of fly ash transport water and bottom ash transport water, EPA summed the capital cost output elements, including purchased equipment (with the exception of the equalization tank), direct capital costs, and indirect capital costs,  from the cost module for the purposes of this cost analysis.  EPA excluded capital costs associated with equalization tanks (See Section <IP_ADDRESS> of DCN SE05831) because EPA believes plants would be likely to continue operating existing ash settling impoundments instead of installing large holding tanks for equalization.  EPA used the same residence time and other equipment sizing bases as described in the Costs and Loads Report to cost chemical precipitation for FGD wastewater.

	EPA estimated plant-level capital costs for each plant discharging fly ash, bottom ash, or combined ash transport water to treat these wastestreams with a chemical precipitation system. Cost estimates reflect separate treatment system costs for the treatment of fly ash transport water and bottom ash transport water. EPA used discharge flow rates from the "Ash Transport Water Input Table" (See Section 4.1.2 of DCN SE05831), which is the basis for the ash transport water loadings calculations.  For plants with ash transport water flows identified as combined ash sluice, EPA used responses from the Questionnaire for the Steam Electric Power Generating Effluent Guidelines (DCN SE05903) to separate the flow into contributions from fly ash sluice and bottom ash sluice using the unit flow fraction consistent with the methodology used to develop the "Ash Transport Water Input Table" (See Section <IP_ADDRESS> of DCN SE05831).  To allow EPA to compare the cost of chemical precipitation treatment to the dry/closed-loop ash handling technologies, EPA then identified which plants discharge ash transport water (fly ash or bottom ash) and incur costs for dry ash handling or closed-loop systems for use in this analysis. EPA identified 16 plants discharging fly ash transport water and 95 plants discharging bottom ash transport water and incurring dry ash handling costs. Tables A-1 and A-2, included as attachments to this memorandum, include the plant-level discharge flow rates used to estimate the costs associated with a chemical precipitation treatment system for fly ash transport water and bottom ash transport water, respectively.

	For the 16 plants included in this analysis that discharge fly ash transport water, EPA estimated a total capital cost of $2.3 billion to install chemical precipitation systems.  For the 95 plants included in this analysis that discharge bottom ash transport water, EPA estimated a total capital cost of $6.7 billion to install chemical precipitation systems. Tables A-1 and A-2 include the plant-level cost estimates.

	EPA compared the capital costs estimated for the chemical precipitation systems to the capital cost estimated for the dry ash handling or closed loop ash handling system on a plant-level.  Plant-level capital costs for dry handling or closed loop ash handling systems are included in Tables A-1 and A-2.  For the 16 plants discharging fly ash transport water, chemical precipitation treatment systems capital costs are almost 17 times more expensive than dry handling on an industry-level.  For the 95 plants discharging bottom ash transport water, chemical precipitation systems capital costs are almost two times more expensive than dry handling or closed loop systems on an industry-level. Because the costs for chemical precipitation treatment of fly ash and bottom ash transport water were found to be higher than the cost for converting to dry handling or closed loop technologies, and the chemical precipitation treatment removes fewer pollutants, EPA did not include this treatment technology as part of the regulatory options.


[Federal Register Volume 77, Number 115 (Thursday, June 14, 2012)]
[Notices]
[Pages 35719-35723]
[FR Doc No: 2012-14530]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67165; File No. SR-BATS-2012-021]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
Rules Related to Risk Management Functionality for BATS Options

June 8, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 1, 2012, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt Rule 21.16, entitled ``Risk Monitor
Mechanism'', to codify the risk monitoring functionality offered to all
Users \5\ of the BATS equity options trading platform (``BATS
Options'').
---------------------------------------------------------------------------

    \5\ As defined in Exchange Rule 16.1(a)(63), a User is any
Exchange member or sponsored participant authorized to obtain access
to the Exchange.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's
Web site at http://www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to reflect in the
Exchange's rules that Users are able to establish certain risk control
parameters. Specifically, the Exchange proposes to adopt new Rule
21.16, Risk Monitor Mechanism, which is similar to NASDAQ Options
Market (``NOM'') Chapter VI, Section 19 and the rules of other options
exchanges (as explained in detail below). The Risk Monitor Mechanism
provides protection from the risk of multiple executions across
multiple series of an option or across multiple options. The risk to
Users is not limited to a single series in an option or even to all
series of an option; Users that quote in multiple series of multiple
options have significant exposure, requiring them to offset or hedge
their overall positions.
    In particular, the Risk Monitor Mechanism will be useful for market
makers on BATS Options (``Market Makers''), who are required to
continuously quote in assigned options. Quoting across many series in
an option creates the possibility of ``rapid fire'' executions that can
create large, unintended principal positions that expose the Market
Maker to unnecessary market risk. The Risk Monitor Mechanism is
intended to assist such Users in managing their market risk.
    Though the Risk Monitor Mechanism will be most useful to Market
Makers, the Exchange proposes to offer the functionality to all
participant types. There are other firms that trade on a proprietary
basis and provide liquidity to the Exchange; these firms could
potentially benefit, similarly to Market Makers, from the Risk Monitor
Mechanism. The Exchange believes that the Risk Monitor Mechanism should
help liquidity providers generally, market makers and other
participants alike, in managing risk and providing deep and liquid
markets to investors.
    Pursuant to new Rule 21.16, the Risk Monitor Mechanism operates by
the System maintaining a counting program for each User. As proposed, a
single User may configure a single counting program or multiple
counting programs to govern its trading activity (i.e., on a per port
basis). The counting program will count executions of contracts traded
by each User and in specific Option Categories (as defined below) by
each User. The counting program counts executions, contract volume and
notional value, within a specified time period established by each User
(the ``specified time period'') and on an absolute basis for the
trading day (``absolute limits''). The specified time period will
commence for an option when a transaction occurs in any series in such
option. The counting program will count executions in the following
``Options Categories'': front-month puts, front-month calls, back-month
puts, and back-month calls (each an ``Option Category''). The counting
program will also count a User's executions, contract volume and
notional value across all options which a User trades (``Firm
Category''). For the purposes of new Rule 21.16, a front-month put or
call is an option that expires within the next two calendar months,
including weeklies and other non-standard expirations, and a back-month
put or call is an option that expires in any month more than two
calendar months away from the current month.
    The System will engage the Risk Monitor Mechanism in a particular
option when the counting program has determined that a User's trading
has reached a Specified Engagement Trigger (as defined below)
established by such User during the specified time period or on an
absolute basis. When a Specified Engagement Trigger is reached in an
Options Category, the Risk Monitor Mechanism will automatically remove
such User's orders in all series of the particular option and reject
any additional orders from a User in such option until the counting
program has been reset in accordance with paragraph (d) of new Rule
21.16. Similarly, when a Specified Engagement Trigger is reached in the
Firm Category, the Risk Monitor Mechanism will automatically remove
such User's orders in all series of all options and reject any
additional orders from a User until the counting program has been reset
in accordance with paragraph (d) of new Rule 21.16. The Risk Monitor
Mechanism will also attempt to cancel any orders that have been routed
away to other options exchanges on behalf of the User.
    As provided in proposed subparagraph (b)(ii), each User can,
optionally, establish Specified Engagement Triggers in each Options
Category, per option, or in the Firm Category. Specified Engagement
Triggers can be set as follows: (A) A contract volume trigger, measured
against the number of contracts executed (the ``volume trigger''); (B)
A notional value trigger, measured against the notional value of
executions \6\ (``notional trigger''); and (C) An execution count
trigger, measured against the number of executions (``count trigger'').
Each of these triggers can be established in isolation (e.g., a User
may choose only to implement a volume trigger) or a User can establish
multiple separate triggers with different parameters. Also, as
described above, the triggers can be implemented either as absolute
limits or over a specified period of time.
---------------------------------------------------------------------------

    \6\ Notional value is calculated as the sum of all premiums paid
times the number of contracts executed. For example, an option
executed with a premium of $3.00 for 5 contracts would count as
$15.00 notional value.
---------------------------------------------------------------------------

    For example, assume a User is quoting orders in several series of a
particular option issue, and sets Specified Engagement Triggers in an
Options Category as follows: (i) A volume trigger at 500 contracts per
second, (ii) a count trigger at 100 executions per minute, and (iii) an
absolute notional value trigger of $30,000. In this example, there are
three Specified Engagement Triggers for the option issue, any one of
which, if reached, would result in cancellations of any additional
orders of the User in the specified option issue, rejection of
additional orders by the User in that issue and attempted cancellation
of any orders in the option issue already routed to an away options
exchange on behalf of the User. The following examples illustrate the
operation of each of the User's Specified Engagement Triggers:
Volume Specified Engagement Trigger in an Options Category
    If within one second, executions against the User's quotations in
any series of front-month calls of the option issue equaled or exceeded
500 contracts, the Risk Monitor Mechanism would be engaged. To
illustrate this example, assume the following quotations and executions
within the current second in front-month calls of the specified option
issue:

----------------------------------------------------------------------------------------------------------------
                                                                                Number of         Number of
                                           Series 1 quoted   Series 2 quoted      contracts         contracts
               Price level                      size              size        executed  Series  executed  Series
                                                                                1                 2
----------------------------------------------------------------------------------------------------------------
Level 1.................................               100                50               100                50
Level 2.................................               100                50               100                50
Level 3.................................               150                50               150                 0
Level 4.................................               150               200                 0                 0
Level 5.................................               150               200                 0                 0
                                         -----------------------------------------------------------------------
    Total...............................               650               600               350               100
----------------------------------------------------------------------------------------------------------------

    At this moment in time, the User has executed 450 contracts within
the applicable second (350 contracts of Series 1 and 100 contracts of
Series 2), which is less than the User's limit of 500 contracts per
second. As such, the User's established volume trigger in an Options
Category has not yet been reached. If, however, prior to the completion
of the applicable second, an order executed against the User's Level 3
quotation in Series 2, the number of contracts executed in front-month
calls of the option issue would be 500. The Risk Monitor would be
engaged, and the User's remaining orders in all series of the option
issue would be cancelled, additional orders by the User in that issue
would be rejected, and the Exchange would attempt to cancel any orders
in the option issue that had already been routed to an away options
exchange on behalf of the User.
Execution Count Specified Engagement Trigger in an Options Category
    If within one minute, executions against the User's quotations in
any series of front-month puts of the option issue equaled or exceeded
100 executions per minute, the Risk Monitor Mechanism would be engaged.
To illustrate this example, assume the following quotations and
executions within the current minute in front-month puts of the
specified option issue:

------------------------------------------------------------------------
                                          Number of         Number of
             Price level                 executions        executions
                                          Series 1          Series 2
------------------------------------------------------------------------
Level 1.............................                40                20
Level 2.............................                20                15
Level 3.............................                 0                 0
                                     -----------------------------------
    Total...........................                60                35
------------------------------------------------------------------------

    At this moment in time, the User has received 95 total executions
within the applicable minute (60 executions in Series 1 options and 35
executions in Series 2 options), which is less than the User's limit of
100 executions per minute. As such, the User's established count
trigger in an Options Category has not yet been reached. If, however,
prior to the completion of the applicable minute, the User executed 5
more orders in either series, the number of executions in front-month
puts of the option issue would be 100. The Risk Monitor would be
engaged, and the User's remaining orders in all series of the option
issue would be cancelled, additional orders by the User in that issue
would be rejected, and the Exchange would attempt to cancel any orders
in the option issue that had already been routed to an away options
exchange on behalf of the User.
Notional Value Specified Engagement Trigger in an Options Category
    If, as of any time during the trading day, executions against the
User's quotations in any series of front-month calls of the option
issue equaled or exceeded a notional value of $30,000, the Risk Monitor
Mechanism would be engaged. To illustrate this example, assume the
current notional value of all front-month calls in the option issue was
$29,900 as of 1:30 p.m. Eastern Time and the following executions
occurred:

----------------------------------------------------------------------------------------------------------------
                                                                Number of
            Execution number                    Price           contracts          Series        Notional value
----------------------------------------------------------------------------------------------------------------
1.......................................             $5.00                 5          Series 1            $25.00
2.......................................              3.00                15          Series 2             45.00
3.......................................              5.00                 6          Series 1             30.00
                                         -----------------------------------------------------------------------
    Total...............................  ................  ................  ................            100.00
----------------------------------------------------------------------------------------------------------------

    At this moment in time, execution number 3 has raised the total
notional value of all front-month calls to $30,000 for the trading day.
The Risk Monitor would be engaged, and the User's remaining orders in
all series of the option issue would be cancelled, additional orders by
the User in that issue would be rejected, and the Exchange would
attempt to cancel any orders in the option issue that had already been
routed to an away options exchange on behalf of the User.
    As noted above, in addition to counting programs established across
Options Categories, any of the available Specified Engagement Triggers
are

configurable on a Firm Category level as well (either as absolute
limits or over a specified time period). When a Firm Category risk
limit is triggered, then all options orders of a User are cancelled,
additional orders by the User are rejected and the Exchange will
attempt to cancel any orders already routed to an away options exchange
on behalf of the User.
    While the Risk Monitor Mechanism is a useful feature that serves an
important risk management purpose, it operates consistent with the firm
quote obligations of a broker-dealer pursuant to Rule 602 of Regulation
NMS. Specifically, proposed paragraph (c) provides that any marketable
orders or quotes that are executable against a User's quotation that
are received prior to the time the Risk Monitor Mechanism is engaged
will be automatically executed at the price up to the User's size,
regardless of whether such an execution results in executions in excess
of the User's Specified Engagement Trigger. Accordingly, the Risk
Monitor Mechanism cannot be used to circumvent a User's firm quote
obligation.
    If a User is quoting in two series of a particular option, at
several price levels in each, and sets an Options Category volume
trigger at 400 contracts, one contra side order can result in
executions in excess of the Specified Engagement Trigger. Specifically,
if a market order to sell 500 contracts is received in Series 1, the
order will execute against the first four levels that the User is
quoting, as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                Number of         Number of
                                                                                contracts         contracts
               Price level                  Series 1 size     Series 2 size   executed  Series  executed  Series
                                                                                1                 2
----------------------------------------------------------------------------------------------------------------
Level 1.................................               100                50               100                 0
Level 2.................................               100                50               100                 0
Level 3.................................               150               100               150                 0
Level 4.................................               150               200               150                 0
Level 5.................................               150               200                 0                 0
                                         -----------------------------------------------------------------------
    Total...............................               650               600               500                 0
----------------------------------------------------------------------------------------------------------------

    Although the User set a volume trigger at 400 contracts, the contra
side order executes in its entirety and the Risk Protection Mechanism
is engaged after the resulting executions have surpassed the Specified
Engagement Trigger. The remaining quoted contracts in Series 1 and all
quoted contracts in Series 2 would then be cancelled.
    Proposed Rule 21.16(d) further provides that the system will reset
the counting period for absolute limits when a User refreshes its risk
limit thresholds. In addition, proposed Rule 21.16(d) provides that the
System will reset the counting program and commence a new specified
time period when: (i) A previous counting period has expired and a
transaction occurs in any series in such option; or (ii) A User
refreshes its risk limit thresholds prior to the expiration of the
specified time period. For example, assume that a User has set Options
Category limits for a particular option as follows: Volume triggers at
500 contracts per second and 20,000 contracts per minute, a count
trigger at 20 executions per second, and an absolute notional value
trigger of $30,000. Assume that at a particular point in time, 400
front-month calls have executed in the current second, 19,000 front-
month calls have executed in the current minute, 10 executions of
front-month calls have occurred in the current second and a total of
$25,000 notional has been executed in front-month calls over the course
of the trading day. Next, an incoming order from another User of BATS
Options is received that results in another 1,000 front-month call
contracts executing within the current minute, thus triggering the
volume trigger of 20,000 contracts per minute. If the User reset the
risk limit threshold, all values, including the absolute notional
calculation for the trading day, would be reset to zero.
2. Statutory Basis
    The rule change proposed in this submission is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\7\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\8\
because it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to, and perfect
the mechanism of, a free and open market and a national market system.
The Exchange believes that the proposal is appropriate and reasonable,
because it offers functionality for Users to manage their risk.
Offering of a Risk Monitor Mechanism will allow Market Makers and other
Users to quote aggressively which removes impediments to a free and
open market and benefits all Users of BATS Options. The Exchange notes
that a similar functionality is offered by NOM and other options
exchanges.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See NOM Chapter VI, Section 19; see also NASDAQ OMX PHLX
Rule 1093; CBOE Rule 8.18; NYSE AMEX Options Rule 928; NYSE ARCA
Options Rule 6.40.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes
any burden on competition.

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

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\ In addition, the Exchange provided the
Commission with written notice of its intent to file the proposed rule
change, along with a brief description and text of the

proposed rule change, at least five business days prior to the date of
filing, or such shorter time as designated by the Commission.\12\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ Id.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-BATS-2012-021 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BATS-2012-021. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule changes between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-BATS-2012-021 and should be
submitted on or before July 5, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14530 Filed 6-13-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 242 (Tuesday, December 17, 2019)]
[Notices]
[Pages 68992-68995]
[FR Doc No: 2019-27087]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87718; File No. SR-OCC-2019-010]

Self-Regulatory Organizations; the Options Clearing Corporation;
Order Approving Proposed Rule Change Related to Proposed Changes to the
Options Clearing Corporation's Rules, Margin Policy, Margin
Methodology, Clearing Fund Methodology Policy, and Clearing Fund and
Stress Testing Methodology To Address Specific Wrong-Way Risk

December 11, 2019.

I. Introduction

    On October 10, 2019, the Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2019-010 (``Proposed Rule Change'')
pursuant to Section 19(b) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 \2\ thereunder to revise OCC's
Rules, margin policy and methodology, Clearing Fund policy, and
Clearing Fund and stress testing methodology to adopt new margin
charges and other risk measures to address the specific wrong-way risk
presented by certain cleared positions.\3\ The Proposed Rule Change was
published for public comment in the Federal Register on October 29,
2019.\4\ The Commission has received no comments regarding the Proposed
Rule Change.\5\ This order approves the Proposed Rule Change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Notice of Filing infra note 4, at 84 FR 57890.
    \4\ Securities Exchange Act Release No. 87387 (Oct. 23, 2019),
84 FR 57890 (Oct. 29, 2019) (SR-OCC-2019-010) (``Notice of
Filing''). OCC also filed a related advance notice (SR-OCC-2019-807)
(``Advance Notice'') with the Commission pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled the Payment, Clearing, and
Settlement Supervision Act of 2010 and Rule 19b-4(n)(1)(i) under the
Exchange Act. 12 U.S.C. 5465(e)(1). 15 U.S.C. 78s(b)(1) and 17 CFR
240.19b-4, respectively. The Advance Notice was published in the
Federal Register on November 12, 2019. Securities Exchange Act
Release No. 87476 (Nov. 6, 2019), 84 FR 61114 (Nov. 12, 2019) (SR-
OCC-2019-807).
    \5\ Since the proposal contained in the Proposed Rule Change was
also filed as an advance notice, all public comments received on the
proposal are considered regardless of whether the comments are
submitted on the Proposed Rule Change or Advance Notice.
---------------------------------------------------------------------------

II. Background 6
---------------------------------------------------------------------------

    \6\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at https://www.theocc.com/about/publications/bylaws.jsp.
---------------------------------------------------------------------------

    As a central counterparty (``CCP''), OCC is exposed to its Clearing
Members' positions. To the extent that the value of a Clearing Member's
positions is positively correlated with the creditworthiness of the
Clearing Member, OCC faces specific wrong-way risk (``SWWR'').\7\ OCC
proposes changes to address such SWWR. Specifically OCC proposes to:
(1) Adopt a new SWWR margin add-on charge for OCC's margin methodology
(``SWWR Add-on''); (2) introduce stress test scenarios to measure the
SWWR, to the extent not addressed in margin, of cleared positions
involving Clearing Member-

issued exchange-traded notes (``ETNs''); and (3) impose restrictions on
stock lending activity cleared by OCC.\8\
---------------------------------------------------------------------------

    \7\ SWWR arises when an exposure to a participant is highly
likely to increase when the creditworthiness of that participant is
deteriorating. See Securities Exchange Act Release No. 78961
(September 28, 2016), 81 FR 70786, 70816, n. 317 (October 13, 2016)
(S7-03-14) (``Covered Clearing Agency Standards'').
    \8\ OCC also proposes clarifying and conforming changes to the
Clearing Fund Methodology Policy (``CFM Policy'') and Stress Testing
and Clearing Fund Methodology Description (``Methodology
Description'').
---------------------------------------------------------------------------

A. SWWR Margin Add-On

    As a general matter, OCC uses its System for Theoretical Analysis
and Numerical Simulations (``STANS'') methodology for calculating
Clearing Member margin requirements. OCC also incorporates add-on
charges to address risks not otherwise addressed by its STANS
methodology.\9\ OCC proposes to adopt a new margin add-on to address
SWWR at the Clearing Member account level (i.e., the SWWR Add-on). The
SWWR Add-on would address SWWR presented by cleared positions involving
equities and ETNs issued by a Clearing Member and its affiliates and
would comprise three components: (1) ``SWWR Equity Charge,'' (2) ``SWWR
ETN Charge,'' and (3) ``SWWR Residual.'' Each of these components is
discussed below.
---------------------------------------------------------------------------

    \9\ See e.g. Securities Exchange Act Release No. 86119 (Jun. 17,
2019), 84 FR 29267 (Jun. 21, 2019) (approving implementation of an
add-on charge ``to guard against potential shortfalls in margin
requirements that may arise due to the costs of liquidating the
portfolio of a defaulted Clearing Member.'')
---------------------------------------------------------------------------

1. SWWR Equity Charge
    The proposed SWWR Equity Charge is based on the assumption that,
when a Clearing Member defaults, the value of any equity security
issued by the Clearing Member or its affiliates would fall to zero. For
purposes of calculating the SWWR Equity Charge, OCC would value a
Clearing Member's positions accordingly (i.e., all stocks, single stock
futures, call options, and put options would be valued at zero).\10\
Any potential gain from the SWWR positions would be excluded by
defining the minimum SWWR Equity Charge as zero. OCC stated that the
purpose of the SWWR Equity Charge would be to provide protection from
the risk of potential market exposure to products based on a Clearing
Member Group's own equity in a default or bankruptcy scenario.\11\
---------------------------------------------------------------------------

    \10\ Because the SWWR arising from equities issued by a Clearing
Member or its affiliates would be fully covered as part of margins,
OCC proposes to remove such positions from Clearing Fund
calculations under OCC's Clearing Fund methodology and would revise
its Methodology Description accordingly.
    \11\ See Notice of Filing, 84 FR at 57892.
---------------------------------------------------------------------------

2. SWWR ETN Charge
    The SWWR ETN Charge would be designed to address the risk that the
value of open positions related to uncollateralized ETNs issued by a
Clearing Member or its affiliates would be correlated with the Clearing
Member's credit quality. Similar to the SWWR Equity Charge, the SWWR
ETN Charge assumes that a degradation in the value of securities issued
by a Clearing Member or its affiliates would occur concurrently with
the Clearing Member's default. The SWWR ETN Charge, however, would not
assume a complete loss of value for the relevant securities (i.e., ETNs
issued by the Clearing Member or its affiliates). OCC states that such
uncollateralized ETNs are generally equivalent to unsecured senior
debt.\12\ OCC, in turn, proposes to utilize an industry standard
recovery rate assumption designed to reflect potential losses to ETN
positions for the purpose of setting the SWWR ETN Charge component of
the SWWR Add-on.
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    \12\ See Notice of Filing, 84 FR at 57892.
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3. SWWR Residual
    The SWWR Residual would ensure that implementation of the SWWR Add-
on would not reduce a Clearing Member's overall margin
requirements.\13\ To determine the SWWR Residual, OCC would first
calculate a ``base margin'' under on OCC's current methodology (i.e.,
not assuming any specific degradation in the value of securities issued
by a Clearing Member or its affiliates). Next, OCC would calculate a
``residual margin,'' which would represent the Clearing Member's margin
requirement for only those positions unaffected by the SWWR Equity
Charge and SWWR ETN Charge. Finally, the SWWR Residual would be the
difference between the residual margin and the base margin; however,
OCC would adjust the value of the SWWR Residual if the sum of the SWWR
Equity Charge, SWWR ETN Charge, and SWWR Residual would otherwise
reduce a Clearing Member's margin requirement.
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    \13\ OCC noted that where a customer of a Clearing Member has
net short positions referencing that Clearing Member's issued
equities, such positions may actually present ``right-way risk,''
whereby the position would result in a gain or margin credit for
that account as the credit quality of the Clearing Member
deteriorates. See Notice of Filing, 84 FR at 57893, n. 20.
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B. SWWR Stress Test Scenarios

    As noted above, the proposed SWWR ETN Charge would not assume a
complete loss of value for ETNs issued by a Clearing Member or its
affiliates. The SWWR Add-on, in turn, would not generate margin
requirements designed to cover a scenario in which the recovery rate
for such ETNs would be zero. To address such a scenario, OCC proposes
to introduce new scenarios into the set of stress tests that OCC uses
to test the sufficiency of its financial resources (``SWWR Sufficiency
Scenarios''). To construct the SWWR Sufficiency Scenarios, OCC would
revise certain of its existing stress test scenarios by assuming a
value of zero for ETNs issued by a Clearing Member or its affiliates.
OCC stated that the introduction of SWWR Sufficiency Scenarios would
enable OCC to more accurately measure its credit risks as they relate
to SWWR and better test the sufficiency of its overall financial
resources as well as to call for additional resources as
appropriate.\14\ OCC believes, therefore, it would have sufficient
financial resources to cover the SWWR associated with SWWR ETN
positions if such positions were to be liquidated for less than the
assumed recovery rate.\15\
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    \14\ See Notice of Filing, 84 FR at 57893. OCC's current rules
authorize OCC to call for additional resources based on the results
of stress scenarios used to test the sufficiency of OCC's financial
resources. See Securities Exchange Act Release No. 83735 (Jul. 27,
2018), 83 FR 37855 (Aug. 2, 2018) (SR-OCC-2018-008). OCC's rules
also authorize adjustments to OCC's monthly Clearing Fund sizing
process based on the results of stress scenarios used to test the
sufficiency of OCC's financial resources. OCC believes, however,
that SWWR is more appropriately charged to the Clearing Member
presenting the risk. See Notice of Filing, 84 FR at 57893. Based on
that belief, OCC proposes to revise the CFM Policy such that the
results of the SWWR Sufficiency Scenarios would not be used to
adjust OCC's monthly Clearing Fund sizing.
    \15\ See Notice of Filing, 84 FR at 57893.
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C. Stock Lending Restrictions

    Through its stock loan programs,\16\ OCC novates stock loan
transactions and becomes the lender to each Borrowing Clearing Member
and the borrower to each Lending Clearing Member. OCC is exposed to
SWWR in such programs when a Clearing Member lends equity securities or
ETNs issued by the Clearing Member or its affiliates. To mitigate such
risks, OCC proposes prohibiting Clearing Members from lending equity
securities or ETNs issued by the Clearing Member or its affiliates
within OCC's stock loan programs. OCC does not believe that the
proposed prohibition would have a material impact on Clearing Members
because Clearing Members do not typically lend their own equity
securities, and borrowers do not typically accept equity securities
issued by their lending

counterparty.\17\ Further, market participants are able to engage in,
and would continue to be able to engage in, securities lending on an
uncleared basis outside of OCC.\18\
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    \16\ OCC operates programs for clearing stock loan transactions
initiated either bilaterally between market participants or through
anonymous matching by a Loan Market. See Notice of Filing, 84 FR at
57891.
    \17\ See Notice of Filing, 84 FR at 57892.
    \18\ The proposed restrictions on lending activity cleared by
OCC would not prevent Clearing Members from lending equities or ETNs
issued by the Clearing Member or any affiliate outside of OCC.
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    OCC proposes to implement the prohibition on Clearing Members
lending their own securities only on a going-forward basis. The
proposal would not affect stock lending activity cleared by OCC before
the implementation of the prohibition. Existing stock loan transactions
would, however, be subject to the SWWR Add-on described above.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Exchange Act directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to such organization.\19\ After carefully
considering the Proposed Rule Change, the Commission finds that the
proposal is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to OCC. More
specifically, the Commission finds that the proposal is consistent with
Section 17A(b)(3)(F) of the Exchange Act \20\ and Rules 17Ad-22(e)(4)
and (6) thereunder.\21\
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    \19\ 15 U.S.C. 78s(b)(2)(C).
    \20\ 15 U.S.C. 78q-1(b)(3)(F).
    \21\ 17 CFR 240.17Ad-22(e)(4) and 17 CFR 240.17Ad-22(e)(6).
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A. Consistency With Section 17A(b)(3)(F) of the Exchange Act

    Section 17A(b)(3)(F) of the Exchange Act requires, among other
things, that the rules of a clearing agency be designed to (i) promote
the prompt and accurate clearance and settlement of securities
transactions, and to the extent applicable, derivatives agreements,
contracts, and transactions; and (ii) assure the safeguarding of
securities and funds which are in the custody or control of the
clearing agency or for which it is responsible.\22\ Based on its review
of the record, the Commission believes that the proposed changes are
designed to promote prompt and accurate clearance and settlement as
well as assure the safeguarding of securities and funds which are in
OCC's custody or control for the reasons set forth below.
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    \22\ 15 U.S.C. 78q-1(b)(3)(F).
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    First, the Commission believes that the adoption of the SWWR Add-on
would be consistent with assuring the safeguarding of securities and
funds. To the extent that the value of a Clearing Member's positions is
positively correlated with the creditworthiness of the Clearing Member,
OCC faces SWWR. OCC's current margin methodology does not incorporate a
specific component designed to address SWWR for cleared positions. As
described above, the proposed SWWR Add-on would address SWWR arising
out of equities and ETNs issued by the relevant Clearing Member or its
affiliates underlying a Clearing Member's cleared positions. Further,
the SWWR Add-on would be designed to avoid any unintended reduction in
margin requirements resulting from ``right-way risk'' in a Clearing
Member's accounts.\23\ The Commission believes that the proposal would
provide for more comprehensive management of the potential risks posed
by the default of a Clearing Member because OCC would adopt an add-on
charge to address a risk not captured elsewhere in its margin
methodology. Management of such risks through the collection of margin
collateral could, in turn, help reduce the amount of credit losses that
would potentially be charged to the Clearing Fund contributions of
surviving Clearing Members. The Commission believes, therefore, that
the proposed SWWR charge would be consistent with assuring the
safeguarding of securities and funds posted by surviving Clearing
Members as collateral.
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    \23\ See supra at note 13.
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    Second, the Commission believes that introduction of the SWWR
Sufficiency Scenarios and the proposed prohibition of certain stock
lending activity as described above would be consistent with the
promotion prompt and accurate clearance and settlement. As an initial
matter, OCC is the only clearing agency for standardized U.S.
securities options listed on Commission-registered national securities
exchanges (``listed options'').\24\ The ETN component of the SWWR Add-
on would not address the exposures presented by a complete loss of
value for ETNs issued by the Clearing Member or its affiliates. To
address the potential credit exposure represented by the value of such
ETNs going to zero, OCC proposes to introduce the new SWWR Sufficiency
Scenarios described above. OCC would use the SWWR Sufficiency Scenarios
to test its total financial resources. The proposed introduction of new
scenarios to test the sufficiency of OCC's financial resources in the
Clearing Fund would address assumptions underlying OCC's proposed
margin methodology (i.e., a non-zero ETN recovery rate). OCC relies on
the resources in its Clearing Fund to manage the risk of losses arising
out of the default of a Clearing Member under extreme but plausible
market conditions. Additionally, prohibiting certain stock loan
activity that could generate losses in the event of a Clearing Member
default would avoid those potential losses all together. Strengthening
the methodology that OCC uses to manage its financial resources or
avoiding the risk of loss all together, strengthens OCC's ability to
manage Clearing Member defaults, which, in turn, facilitates the
clearance and settlement of listed options.
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    \24\ See Securities Exchange Act Release No. 85121 (Feb. 13,
2019), 84 FR 5157 (Feb. 20, 2019) (File No. SR-OCC-2015-02).
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    The Commission believes, therefore, that the Proposed Rule Change
is consistent with the requirements of Section 17A(b)(3)(F) of the
Exchange Act.\25\
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    \25\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(4) Under the Exchange Act

    Rule 17Ad-22(e)(4) under the Exchange Act requires, in part, that a
covered clearing agency establish, implement, maintain, and enforce
written policies and procedures reasonably designed to effectively
identify, measure, monitor, and manage its credit exposures to
participants and those arising from its payment, clearing, and
settlement processes.\26\
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    \26\ 17 CFR 240.17Ad-22(e)(4).
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    As described above, OCC proposes to prohibit each Clearing Member
submitting for clearing any stock loan activity involving the lending
of equity securities or ETNs issued by such a Clearing Member or its
affiliates going forward. Under the proposal, OCC would identify those
stock loan transactions presenting SWWR and avoid any potential
exposures arising out of such transactions through the proposed
prohibition. Further, for those transactions that would not be affected
by the prohibition (i.e., existing transactions), OCC proposes to
measure, monitor, and manage its exposures through the use of the SWWR
Add-on described above and discussed below. Accordingly, the Commission
believes that OCC's proposal in the Proposed Rule Change to prohibit
certain stock loan transactions is consistent with Rule 17Ad-22(e)(4)
under the Exchange Act.\27\
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    \27\ 17 CFR 240.17Ad-22(e)(4).

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    Rules 17Ad-22(e)(4)(i) and (iii) under the Exchange Act require
that a covered clearing agency's policies and procedures meet the
requirements of Rule 17Ad-22(e)(4) by maintaining financial resources
at the minimum to enable OCC to cover a wide range of foreseeable
stress scenarios that include, but are not limited to, the default of
the participant family that would potentially cause the largest
aggregate credit exposure for OCC in extreme but plausible market
conditions.\28\ Further, Rule 17Ad-22(e)(4)(vi) under the Exchange Act
requires that a covered clearing agency's policies and procedures meet
the requirements of Rule 17Ad-22(e)(4) by testing the sufficiency of a
covered clearing agency's total financial resources available to meet
the minimum financial resource requirements under Rules 17Ad-
22(e)(4)(i) through (iii).\29\
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    \28\ 17 CFR 240.17Ad-22(e)(4)(i) and 17 CFR 240.17Ad-
22(e)(4)(iii).
    \29\ 17 CFR 240.17Ad-22(e)(4)(vi).
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    As described above and discussed below, the proposed SWWR Add-on is
designed to measure and manage OCC's credit exposures to Clearing
Members to the extent those exposures arise out of SWWR related to
cleared positions. One component of the SWWR Add-on--the SWWR ETN
Charge--would not, however, fully cover OCC's potential exposure
through margin because it would not assume a complete loss of value for
ETNs issued by the Clearing Member or its affiliates. To address the
potential credit exposure represented by the value of ETNs issued by
the Clearing Member or its affiliates going to zero, OCC proposes to
introduce the new SWWR Sufficiency Scenarios described above. OCC would
use the SWWR Sufficiency Scenarios to test its total financial
resources and to call for additional resources as necessary to ensure
the resources it holds would be sufficient to enable OCC to cover
exposures arising under the relevant stress scenarios. Accordingly, and
for the reasons stated above, the Commission believes the changes
proposed in the Proposed Rule Change are consistent with Rule 17Ad-
22(e)(4)(i), (iii), and (vi) under the Exchange Act.\30\
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    \30\ 17 CFR 240.17Ad-22(e)(4)(i); 17 CFR 240.17Ad-22(e)(4)(iii);
17 CFR 240.17Ad-22(e)(4)(vi).
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C. Consistency With Rule 17Ad-22(e)(6) Under the Exchange Act

    Rule 17Ad-22(e)(6)(i) under the Exchange Act requires that a
covered clearing agency establish, implement, maintain, and enforce
written policies and procedures reasonably designed to cover, if the
covered clearing agency provides central counterparty services, its
credit exposure to participants by establishing a risk-based margin
system that, at a minimum, considers, and produces margin levels
commensurate with, the risks and particular attributes of each relevant
product, portfolio, and market.\31\
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    \31\ 17 CFR 240.17Ad-22(e)(6)(i).
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    As noted above, OCC faces SWWR to the extent that the value of a
Clearing Member's positions is positively correlated with the
creditworthiness of the Clearing Member. OCC proposes to cover its
exposure to such SWWR posted by its Clearing Members through the
introduction of the SWWR Add-on. The SWWR Add-on consists of three
components. Two of those components--the SWWR Equity Charge and SWWR
ETN Charge--are designed to produce margin levels commensurate with the
particular attributes of certain products that OCC clears in terms of
the likely recovery available in the event of a default by the issuing
Clearing Member. Further, the SWWR Residual would ensure that the
introduction of the SWWR Add-on could not inadvertently weaken OCC's
current margin methodology due to the potential existence of ``right-
way risk'' in a Clearing Member's accounts.\32\ Accordingly, and for
the reasons stated above, the Commission believes the adoption of a
margin add-on charge designed to cover exposures arising out of SWWR is
consistent with Rule 17Ad-22(e)(6)(i) under the Exchange Act.\33\
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    \32\ See supra at note 13.
    \33\ 17 CFR 240.17Ad-22(e)(6)(i).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
Proposed Rule Change is consistent with the requirements of the
Exchange Act, and in particular, the requirements of Section 17A of the
Exchange Act \34\ and the rules and regulations thereunder.
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    \34\ In approving this Proposed Rule Change, the Commission has
considered the proposed rules' impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\35\ that the Proposed Rule Change (SR-OCC-2019-010) be,
and hereby is, approved.
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    \35\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-27087 Filed 12-16-19; 8:45 am]
BILLING CODE 8011-01-P