[Federal Register Volume 83, Number 146 (Monday, July 30, 2018)]
[Notices]
[Pages 36635-36638]
[FR Doc No: 2018-16168]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83691; File No. SR-LCH SA-2018-003]

Self-Regulatory Organizations; LCH SA; Order Approving Proposed
Rule Change Relating to Liquidity Risk Management

July 24, 2018.

I. Introduction

    On June 4, 2018, Banque Centrale de Compensation, which conducts
business under the name LCH SA (``LCH SA''), filed with the Securities
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change (the ``Proposed Rule Change'') to
amend its Risk Management Procedures (the ``Procedures'') to adopt a
Liquidity Risk Modelling Framework (the ``Framework''). The proposed
rule change was published for comment in the Federal Register on June
22, 2018.\3\ The Commission has not received any comments on the
proposed rule change. For the reasons discussed below, the Commission
is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-83456 (June 18,
2018), 83 FR 29146 (June 22, 2018) (SR-LCH-2018-003) (``Notice'').
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II. Description of the Proposed Rule Change

    The Framework \4\ describes the Liquidity Stress Testing framework
by which the Collateral and Liquidity Risk Management department
(``CaLRM'') of LCH Group Holdings Limited (``LCH Group'') assures that
LCH SA has enough cash available to meet any financial obligations,
both expected and unexpected, that may arise over the liquidation
period for each of the clearing services that LCH SA offers.\5\ The
Framework compliments other policies and procedures LCH uses to

manage its liquidity risk, i.e., the risk that LCH SA will not have
enough cash available, in extreme but plausible circumstances, to
settle margin payments or delivery obligations when they become due, in
particular upon the default of a clearing member.\6\ Such policies and
procedures include, among others: (i) The Group Liquidity Risk Policy;
(ii) the Group Liquidity Plan; (iii) the Group Financial Resource
Adequacy Plan; (iv) the Group Collateral Risk Policy; (v) the Group
Investment Risk Policy; and (vi) the LCH SA Collateral Control
Framework.\7\ The Framework complements these existing policies and
procedures and develops further the Group Liquidity Risk Policy.\8\
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    \4\ Capitalized terms used herein but not otherwise defined have
the meaning set forth in the Framework and LCH SA rulebook, which is
available at https://www.lch.com/system/files/media_root/CDSClear_Rule_Book_04.01.2018.pdf.
    \5\ Notice, 83 FR at 29146.
    LCH SA, a wholly owned subsidiary of LCH Group, manages its
liquidity risk pursuant to, among other policies and procedures, the
Group Liquidity Risk Policy and the Group Liquidity Plan applicable
to each entity within LCH Group.
     In addition to its CDSClear service, LCH SA provides clearing
services in connection with cash equities and derivatives listed for
trading on Euronext (EquityClear), commodity derivatives listed for
trading on Euronext (CommodityClear), and tri-party Repo
transactions (RepoClear).
    \6\ Notice, 83 FR 29146-29147.
    \7\ Notice, 83 FR 29147.
    \8\ Id.
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    The Framework: (i) Identifies LCH SA's sources of liquidity and
corresponding liquidity risks; (ii) identifies LCH SA's liquidity
requirements with respect to its members and its interoperable central
counterparty (``CCP''), Cassa di Compensazione e Garanzia (``CC&G'');
\9\ (iii) describes the metrics and limits that LCH SA monitors
regarding liquidity risk; and (iv) describes the scenarios under which
these metrics are computed.\10\
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    \9\ LCH SA has an interoperability agreement with CC&G, an
Italian CCP, pursuant to which LCH SA's clearing members and CC&G's
clearing members are able to benefit from common clearing services
without having to join the other CCP. Each CCP is a clearing member
of the other one with a particular status when accessing the
clearing system of the other counterparty.
    \10\ Notice, 83 FR 29147.
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    The proposed Framework identifies the main sources of liquidity
available to LCH SA, including cash and non-cash collateral, and
assigns non-cash collateral to one of three tiers.\11\ Tier 1 assets
are limited to those securities that are deemed to be of sufficient
quality and demand to generate liquidity at little or no loss in the
event of a default of a clearing member or a major market stress.\12\
LCH SA is able to pledge these securities to the Banque de France to
generate cash on the same day.\13\ Only Tier 1 assets are included as
liquidity resources in liquidity stress testing.\14\ Tier 2 assets are
those securities that have a market and may be financed but are of
lesser quality than Tier 1 assets.\15\ Tier 3 assets are deemed to have
little or no liquidity value in the event of a default or major market
stress or are deemed to be too illiquid to be converted in the
timeframe that a CCP would require.\16\
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    \11\ Id. Securities comprising non-cash collateral are comprised
of the following components: (i) Margin collateral, i.e., non-cash
collateral pledged by clearing members for margin cover; (ii)
Collateral and Liquidity Management (``CaLM'') collateral, i.e.,
direct securities holdings that are part of the CaLRM's investment
activities; and (iii) clearing settlement collateral, i.e.,
collateral resulting from the physical settlement of contracts on
behalf of a defaulting clearing member.
    \12\ Notice, 83 FR 29147.
    \13\ Id.
    \14\ Id.
    \15\ Notice, 83 FR 29147, n.6.
    \16\ Notice, 83 FR 29147, n.6.
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    The Framework highlights the three principal categories under which
LCH SA would require liquidity: (i) The default of one or more clearing
members; (ii) the default of CC&G and (iii) operational liquidity
needs.\17\
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    \17\ Notice, 83 FR 29147.
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    Liquidity needs arising from clearing members' defaults are those
needs arising from fulfilment of the settlement of the securities of
the defaulted clearing member(s); posting of variation margin to non-
defaulting members on the positions held by the defaulted clearing
member(s); the value of bonds pledged at the Banque de France; haircuts
by the European Central Bank on securities posted by the defaulting
Clearing Member; and investment losses.\18\
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    \18\ Id.
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    Liquidity needs arising from the default of CC&G are those needs
arising from the service closure of the Italian clearing activity,
including reimbursement of the margins and default funds related to the
Italian clearing activity and cash settlement of the Italian repo
positions.\19\
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    \19\ Id.
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    Operational liquidity needs relate to the operational management of
LCH SA in a stressed environment that does not lead to a member's
default. Such a liquidity requirement may arise from a number of
factors, including the need to repay excess cash posted by members, the
need to repay margin when margin requirements are reduced, and the
substitution of cash collateral and European Central Bank eligible
securities.\20\
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    \20\ Notice, 83 FR 29147.
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    The proposed Framework describes the metrics used to determine LCH
SA's liquidity needs, which are calculated each day over a five-day
period. These metrics include: (i) The liquidity coverage ratio; (ii) a
monthly rolling average liquidity buffer; (iii) a daily minimum
liquidity buffer; and (iv) required cash collateral.\21\ Moreover, the
Framework describes how the liquidity coverage ratio, monthly rolling
average liquidity buffer, and daily minimum liquidity buffer are
reported to LCH SA senior management daily.
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    \21\ Id.
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    With respect to the liquidity coverage ratio, the Framework
explains how the liquidity coverage ratio is determined for each of the
clearing services that LCH SA offers in a Cover 2 scenario, i.e., the
liquidity risk arising from the default of at least two clearing group
members to which LCH SA has the largest exposures during the 5 days
following default.\22\ The Cover 2 amount is computed by aggregating
the liquidity risks related to clearing members within the same group
across all of LCH SA's services.\23\ The two largest group members are
chosen according to the liquidity needs related to these members.\24\
These liquidity requirements are generated by settlement risk, market
risk, and ECB haircuts.\25\ For the CDSClear service, LCH SA determines
the liquidity risk by considering variation margin modelled at member
level by applying the most punitive CDS spread widening stress scenario
for both ITraxx Main and CrossOver (currently the historical scenario
considering the 2007 crisis).\26\ The liquidity coverage ratio also
considers the provision of liquidity to facilitate settlement including
fails, such as delays in posting securities by members. The Framework
focuses on the principal risks for which LCH SA must assure that it has
sufficient liquidity.\27\
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    \22\ Id.
    \23\ Id.
    \24\ Id.
    \25\ Notice, 83 FR 29147.
    \26\ Id.
    \27\ Id.
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    Finally, the Framework describes the reverse stress test that LCH
SA runs at least quarterly. The reverse stress test is designed to help
determine the limits of LCH SA's liquidity models and of the Framework
by modelling extreme market conditions that go beyond what are
considered plausible market conditions over a 5-day time horizon.\28\
The Framework stresses seven risk factors independently, and also
considers these risk factors together in two combined reverse stress
test scenarios, the Behavioural and Macro-economic.\29\
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    \28\ Id.
    \29\ Id.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the 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
Act and the

rules and regulations thereunder applicable to such organization.\30\
For the reasons given below, the Commission finds that the proposed
rule change is consistent with Section 17A(b)(3)(F) of the Act \31\ and
Rules 17Ad-22(e)(7)(i) and (vi) thereunder.\32\
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    \30\ 15 U.S.C. 78s(b)(2)(C).
    \31\ 15 U.S.C. 78q-1(b)(3)(F).
    \32\ 17 CFR 240.17Ad-22(e)(7)(i), (vi).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of LCH SA be designed to promote the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivative agreements, contracts, and transactions, as well
as to assure the safeguarding of securities and funds which are in the
custody or control of LCH SA or for which it is responsible, and, in
general, to protect investors and the public interest.\33\
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    \33\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Framework would assess the sources of LCH SA's liquidity needs,
including the liquidity needs arising from the default of one or more
clearing members and liquidity needs arising from LCH SA operating in a
stressed environment that does not lead to a member's default. The
Framework would also identify the sources of liquidity that LCH SA may
use to satisfy those needs, describe the metrics LCH SA would use to
quantify those liquidity needs, and the tests and reports LCH SA would
use to confirm that its sources of liquidity can satisfy those
liquidity needs.
    The Commission believes that by setting out in advance the
liquidity needs of LCH SA in stressed market conditions, including
member defaults and stressed environments not leading to member
defaults and identifying sources of liquidity to meet those needs, the
Framework would increase the likelihood that LCH SA would have the
liquid resources necessary to continue operations in such stressed
market conditions. Specifically, the Commission believes that by
enabling LCH SA to quantify its liquidity needs and confirm that its
sources of liquidity can satisfy those liquidity needs, the Framework
would allow LCH SA to determine whether it has sufficient resources to
meet all of its current and future liquidity needs. The Commission
believes that this would, in turn, enhance LCH SA's ability to avoid
any potential disruptions to its operations caused by unmet liquidity
needs, especially in stressed market conditions, including member
defaults and stressed environments not leading to member defaults.
    The Commission therefore believes that the Framework would increase
the likelihood that LCH SA can continue to provide clearing services
without disruption in times of member default or other stressed market
conditions not leading to member default. The Commission finds that
this, in turn, would promote the prompt and accurate clearance and
settlement of securities transactions by reducing the likelihood of a
disruption to LCH SA's operations arising from a liquidity need.
Similarly, the Commission believes the Framework would help assure the
safeguarding of securities and funds which are in the custody or
control of LCH SA or for which it is responsible by increasing the
likelihood that LCH SA can avoid disruptions to its operations which
could impede access to such securities and funds. For both of these
reasons, the Commission also believes that the Framework would, in
general, protect investors and the public interest.
    Therefore, the Commission finds that the proposed rule change would
promote the prompt and accurate clearance and settlement of securities
transactions, assure the safeguarding of securities and funds in LCH
SA's custody and control, and, in general, protect investors and the
public interest, consistent with the Section 17A(b)(3)(F) of the
Act.\34\
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    \34\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(7)(i) of the Act

    Rule 17Ad-22(e)(7)(i) requires that LCH SA establish, implement,
maintain and enforce written policies and procedures reasonably
designed to effectively measure, monitor, and manage the liquidity risk
that arises in or is borne by LCH SA, including measuring, monitoring,
and managing its settlement and funding flows on an ongoing and timely
basis, and its use of intraday liquidity by maintaining sufficient
liquid resources at the minimum in all relevant currencies to effect
same-day and, where appropriate, intraday and multiday settlement of
payment obligations with a high degree of confidence under a wide range
of foreseeable stress scenarios that includes, but is not limited to,
the default of the participant family that would generate the largest
aggregate payment obligation for LCH SA in extreme but plausible market
conditions.\35\
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    \35\ 17 CFR 240.17Ad-22(e)(7)(i).
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    As discussed above, the Framework would assess the sources of LCH
SA's liquidity needs, including the liquidity needs arising from the
default of one or more clearing members and liquidity needs arising
from LCH SA operating in a stressed environment that does not lead to a
member's default. The Framework would also identify the sources of
liquidity that LCH SA would use to satisfy those needs, describe the
metrics LCH SA would use to quantify its liquidity needs, and the tests
and reports LCH SA would use to confirm that its sources of liquidity
can satisfy those liquidity needs. These metrics would include: (i) The
liquidity coverage ratio; (ii) a monthly rolling average liquidity
buffer; (iii) a daily minimum liquidity buffer; and (iv) required cash
collateral. With respect to the liquidity coverage ratio, the Framework
would explain how the liquidity coverage ratio is determined for each
of the clearing services that LCH SA offers in a Cover 2 scenario,
i.e., the liquidity risk arising from the default of at least two
clearing group members to which LCH SA has the largest exposures during
the 5 days following default. Finally, the Framework would describe how
these metrics are calculated for each day over a maximum 5 day
liquidity period and how the liquidity coverage ratio, monthly rolling
average liquidity buffer, and daily minimum liquidity buffer would be
reported to LCH SA senior management daily.
    The Commission believes that the metrics provided by the Framework
would enhance LCH SA's ability to measure, monitor, and manage the
liquidity risk that arises in or is borne by LCH SA. The Commission
believes that, for example, by reviewing its liquidity coverage ratio,
monthly rolling average liquidity buffer, and daily minimum liquidity
buffer on a daily basis, LCH SA would be able to anticipate future
liquidity needs and potential shortfalls. Moreover, because the
liquidity coverage ratio considers the provision of liquidity to
facilitate settlement, including fails as delays in posting securities
by members, the Commission believes that review of the ratio would
improve LCH SA's ability to manage the liquidity needs arising from the
settlement of transactions. The Commission therefore believes that the
Framework would facilitate LCH SA's ability to measure, monitor, and
manage the liquidity risk that arises in or is borne by LCH SA,
including measuring, monitoring, and managing its settlement and
funding flows on an ongoing and

timely basis, and its use of intraday liquidity.
    Moreover, by using the liquidity ratio to determine in advance the
liquidity needs of LCH SA arising from the default of at least two
clearing group members to which LCH SA has the largest exposures during
the 5 days following default, the Commission believes the Framework
would enhance LCH SA's ability to determine whether it has sufficient
resources to meet its liquidity needs should such a default occur. The
Commission believes that this would, in turn, enable LCH SA to avoid
any potential disruptions to its operations caused by such liquidity
needs arising from such a default. The Commission therefore believes
that the Framework would enable LCH SA to maintain sufficient liquid
resources to effect settlement of its payment obligations under a wide
range of foreseeable stress scenarios, including the default of the
participant family that would generate the largest aggregate payment
obligation for LCH SA in extreme but plausible market conditions.
    Therefore, for the above reasons the Commission finds that the
proposed rule change is consistent with Rule 17Ad-22(e)(7)(i).\36\
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    \36\ 17 CFR 240.17Ad-22(e)(7)(i).
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C. Consistency With Rule 17Ad-22(e)(7)(vi) of the Act

    Rule 17Ad-22(e)(7)(vi) requires that LCH SA establish, implement,
maintain and enforce written policies and procedures reasonably
designed to effectively measure, monitor, and manage the liquidity risk
that arises in or is borne by LCH SA, including measuring, monitoring,
and managing its settlement and funding flows on an ongoing and timely
basis, and its use of intraday liquidity by determining the amount and
regularly testing the sufficiency of the liquid resources held for
purposes of meeting the minimum liquid resource requirement under Rule
17Ad-22(e)(7)(i) \37\ by, among other things, conducting stress testing
of its liquidity resources at least once each day using standard and
predetermined parameters and assumptions.\38\
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    \37\ 17 CFR 240.17Ad-22(e)(7)(i).
    \38\ 17 CFR 240.17Ad-22(e)(7)(vi).
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    As discussed above, the Framework would describe the metrics LCH SA
would use to quantify its liquidity needs, and the tests and reports
LCH SA would use to confirm that its sources of liquidity can satisfy
those liquidity needs. These metrics would include: (i) The liquidity
coverage ratio; (ii) a monthly rolling average liquidity buffer; (iii)
a daily minimum liquidity buffer; and (iv) required cash collateral.
The Framework would describe how these metrics would be calculated for
each day over a maximum of a 5 day liquidity period and how the
liquidity coverage ratio, monthly rolling average liquidity buffer, and
daily minimum liquidity buffer would be reported to LCH SA senior
management daily.
    The Commission believes that the metrics provided by the Framework
would help LCH SA determine the amount and regularly test the
sufficiency of LCH SA's liquid resources. The Commission believes that
the liquidity coverage ratio, for example, would provide LCH SA senior
management a view to LCH SA's liquidity needs in stressed conditions
arising from a default of at least two clearing group members to which
LCH SA has the largest exposures. As discussed above, the Framework
would require the calculation and reporting of the liquidity coverage
ratio daily. The Commission believes the other metrics described above
would similarly test, and provide LCH SA senior management insight
regarding, the sufficiency of LCH SA's liquid resources.
    For the above reasons, the Commission therefore finds that the
proposed rule change is consistent with Rule 17Ad-22(e)(7)(vi).\39\
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    \39\ 17 CFR 240.17Ad-22(e)(7)(vi).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, Section 17A(b)(3)(F) of the Act \40\ and Rules 17Ad-
22(e)(7)(i) and (vi) thereunder.\41\
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    \40\ 15 U.S.C. 78q-1(b)(3)(F).
    \41\ 17 CFR 240.17Ad-22(e)(7)(i), (vi).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act
that the proposed rule change (SR-LCH SA-2018-003) be, and hereby is,
approved.\42\
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    \42\ In approving the proposed rule change, the Commission
considered the proposal's impacts on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16168 Filed 7-27-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 243 (Monday, December 19, 2011)]
[Notices]
[Pages 78706-78708]
[FR Doc No: 2011-32343]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65938; File No. SR-C2-2011-039]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Related to a Complex Order Auction Feature

December 12, 2011.
    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 December 6, 2011, the C2 Options Exchange, Incorporated
(``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (the ``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 the 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) thereunder.\4\ 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to amend its electronic complex order
rules. The text of the proposed rule change is available on the
Exchange's Web site

(http://www.c2exchange.com/Legal/RuleFilings.aspx), at the Exchange's
Office of the Secretary and at the Commission.

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 those 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
    On a class-by-class basis, the Exchange may determine to activate
the electronic complex order RFR auction (``COA''), which is a process
by which eligible complex orders \5\ are given an opportunity for price
improvement before being booked in the electronic complex order book
(``COB''). Paragraph (c) of Rule 6.13 describes the COA process.
Interpretation and Policy .02 of the Rule also provides that, with
respect to the initiation of a COA, Participants routing complex orders
directly to COB may request that the complex orders be processed by COA
on a class-by-class basis.
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    \5\ An eligible complex order, referred to in Rule 6.13 as a
``COA-eligible order,'' means a complex order that, as determined by
the Exchange on a class-by-class basis, is eligible for a COA
considering the order's marketability (defined as a number of ticks
away from the current market), size, complex order type and complex
order origin type (i.e., non-broker-dealer public customer, broker-
dealers that are not Market-Makers or specialists on an options
exchange, and/or Market-Makers or specialists on an options
exchange). All determinations by the Exchange on COA-eligible orders
parameters are announced to via Regulatory Circular. See Rule
6.13(c)(1)(B) and Interpretation and Policy .01 to Rule 6.13.
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    The Exchange is proposing to amend the rule to describe a COA
feature for complex orders resting in COB (referred to herein as the
``re-COA'' feature), which is currently in use but not expressly
covered in the rules. In particular, the Exchange is proposing to
provide that, for each class where COA is activated, the Exchange may
also determine to activate the re-COA feature for complex orders
resting in COB. For such classes, any order resting in COB (regardless
of whether it was subject to COA before it was booked in COB) \6\ will
be automatically subject to the re-COA feature if the order is within a
number of ticks away from the current market (calculated based on the
derived net price of the individual series legs). The Exchange notes
that this re-COA feature for resting orders is only applicable to
resting non-marketable orders that move close to the current market
price calculated based on the individual series legs. This feature is
not applicable to resting orders that become marketable. The Exchange
may also determine on a class-by-class and strategy basis to limit the
frequency of re-COA auctions initiated for complex orders resting in
COB. For example, the Exchange might determine to limit the frequency
of re-COA auctions to once every ``X'' seconds (the ``interval timer'')
for a total of ``Y'' intervals. Once this cycle is complete, the
Exchange may determine to wait for a period of time ``Z'' (the ``sleep
timer'') and then reactivate the re-COA feature.\7\ All timers will be
reset if a new complex order improves the top of the COB (i.e.,
improves the best net price bid or offer of the complex orders resting
in COB). These limitations on the frequency of COA auctions due to the
re-COA feature are intended to address system efficiency and
effectiveness considerations, such as limiting repeated initiations of
COA auctions (and related messaging) when there are flickering quotes.
Once the re-COA feature is initiated for a resting order, all other
aspects of the COA process described in Rule 6.13 will apply unchanged.
The Exchange believes this re-COA feature facilitates the orderly
execution of complex orders by providing an automated opportunity for
price improvement to (and execution of) resting orders priced near the
current market, similar to what a broker-dealer might seek to do if the
broker-dealer were representing a complex order in open outcry on an
exchange floor (or just entering an order initially into COB).
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    \6\ In this regard, the Exchange notes that, currently, all of
its Trading Permit Holders have elected to have their COA-eligible
orders processed by COA. In addition, the Exchange notes that other
markets have programs in place that provide for the automatic
auctioning of complex orders. See, e.g., NASDAQ OMX PHLX LLC
(``Phlx'') Rule 1080(e)(i)(A) which, among other things, provides
that a complex order live auction (``COLA'') will initiate if the
Phlx system receives a complex order that improves the Phlx complex
order best debit or credit price respecting the specific complex
order strategy that is the subject of the complex order. During a
COLA, Phlx market participants may bid and offer against the COLA-
eligible order pursuant to the Phlx Rule.
    \7\ Determinations by the Exchange regarding the classes where
the re-COA feature is activated and related tick distance and
frequency parameters will be announced to Trading Permit Holders via
Regulatory Circular.
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    The following example illustrates the operation of this re-COA
feature: Assume the feature is activated for complex orders resting in
COB that are within 2 ticks of the current market ($0.02 in a class
where complex orders trade in $0.01 net price increments). Assume the
frequency is limited to once every 15 seconds (the interval timer) for
1 interval. Under this setting, a total of 2 re-COA auctions could be
triggered--the original re-COA auction and a second re-COA auction
after the expiration of the 15-second interval timer. Assume the sleep
timer is set at 60 minutes. Assume the current market calculated based
on the derived net price of the individual series legs in the C2
electronic book for a given strategy is at a net price of $0.80-$1.01.
If a complex order resting in the COB to buy the strategy is priced at
a net debit price of $0.98, the complex order is not marketable (as the
order is away from the current market by $0.03 (or 3 ticks)). If
subsequently the individual series legs prices are updated such that
the current market for the strategy moves to a net price of $0.80-
$1.00, the resting complex order to buy at $0.98 would trigger the re-
COA feature and initiate the re-COA auction process (as the order is
within $0.02 (or 2 ticks) of the current market). If there are no
responses, the order would be placed back in COB. The resting order
would not initiate the re-COA feature again until the 15-second
interval timer has expired. When the 15-second interval timer expires,
the order would be eligible to initiate the re-COA feature again if the
current market moves after the expiration of the timer and the order
meets the tick distance parameter (the order would not automatically
initiate the re-COA feature at the end of the interval timer; instead,
there must be an update to the current market after the expiration of
the interval timer and the order must meet the tick distance parameter
for the system to re-COA again). For example, if after the end of the
15-second interval timer the current market moves to $0.80-$0.99 (or,
for example, if the current market moves back to $0.80-$1.01 and then,
after the end of the 15-second interval timer, moves back again to
$0.80-$1.00), then the resting complex order would again initiate the
re-COA feature. If there are no responses, the order would be placed
back in COB. The cycle is complete. Now that the resting order has been
subject to COA 2 times since it was booked in COB, the 60 minute sleep

timer will begin and the resting order will not be eligible for the re-
COA feature again until the sleep timer expires and there is a quote
update after that timer expires that is within the tick distance
parameter. All timers would be reset anytime there is a price change at
the top of the COB. For example, if five minutes into the sleep
interval a second complex order is entered to rest in COB at a price of
$0.99 ($0.01 better than the original resting order priced at $0.98),
the original resting order would no longer be at the top of the COB and
subject to the re-COA feature. The timers would reset and the second
complex order (which now represents the top of the COB) would be
subject to the re-COA process. If, for example, the second order
subsequently trades (constituting a price change at the top of the
COB), the original order would be at the top of the COB again and could
become subject to the re-COA feature again.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act
\8\ in general and furthers the objectives of Section 6(b)(5) of the
Act \9\ in particular in that it should promote just and equitable
principles of trade, serve to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
protect investors and the public interest. The Exchange believes that
the proposed rule change facilitates the orderly execution of complex
orders by providing an automated opportunity for price improvement to
(and execution of) resting orders priced near the current market.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

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

    The Exchange neither solicited nor received comments on the
proposal.

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

    Because the foregoing rule 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 if consistent with the protection of investors
and the public interest, provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change at least five business days prior to the date of
filing of the proposed rule change or such shorter time as designated
by the Commission, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\ At any time within 60 days of the filing of such
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.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-C2-2011-039 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-C2-2011-039. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of the filing also will be available for inspection and
copying at the principal office of the Exchange. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.
    All submissions should refer to File Number SR-C2-2011-039 and
should be submitted on or before January 9, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32343 Filed 12-16-11; 8:45 am]
BILLING CODE 8011-01-P


              OFFICE OF CHEMICAL SAFETY
AND POLLUTION PREVENTION
                 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                            WASHINGTON, D.C.  20460

MEMORANDUM

DATE:		October 3, 2012

SUBJECT:	Science Review in Support of PCC 38-DD, Containing 100% Powdered Corn Cobs (37% Cellulose) As Its Active Ingredient.

            Decision Number: 						447146
            DP Number: 							402045
            EPA File Symbol Number: 				84889-R
            Chemical Class: 							Biochemical
            PC Code: 								100154
            CAS Number:							9004-34-6 (cellulose)
            Active Ingredient Tolerance Exemptions: 		Nonfood-use
            MRID Numbers: 						48433401-48433405, 48433507-48433516, 48534101-48534110, 48924801*there is no DP Number for these MRIDs.

FROM:		Angela L. Gonzales, Biologist
            Biochemical Pesticides Branch
            Biopesticides & Pollution Prevention Division (7511P)

TO:			Leonard Cole, Senior Regulatory Specialist
            Biochemical Pesticides Branch
            Biopesticides & Pollution Prevention Division (7511P)

ACTION REQUESTED

On behalf of Rode-Trol, LLC, E[x]ponent, Inc. requests registration of PCC 38-DD, a manufacturing-use product (MP) containing powdered corn cobs (37% cellulose). The chemical is a new biochemical active ingredient. The proposed MP is intended for use in the formulation of end-use products (EPs) that will be used as rodenticides in commercial and residential indoor settings. This product is related to the proposed end-use product, Rode-Trol (EPA File Symbol No.: 84889-E). In support of the proposed MP, the registrant submitted a proposed product label, Confidential Statement of Formulas (CSFs) dated 7/12/11, product chemistry data and information in MRIDs 48433401-48433402, 48534109, and 48924801 mammalian toxicology data and information in MRIDs 48433403, 48433405 and 48534101-48534108, and nontarget organism toxicology data and information in MRIDs 48433404 and 48534110. Companion animal/nontarget organism studies were

provided in MRIDs 48433507-48433516. Additional information was submitted in cover letter and attachments dated 5/11/12.

RECOMMENDATIONS AND CONCLUSIONS

1. The product chemistry submission is ACCEPTABLE pending resolution of the deficiencies discussed below.
	MRID 48433401-UPGRADEABLE					MRID 48433402-UPGRADEABLE
	MRID 48534109-UPGRADEABLE					MRID 48924801-ACCEPTABLE

a. Refer to the Confidential Appendix (CA) below.

b. The active ingredient statement must be revised on the label as follows:
		ACTIVE INGREDIENT:
		Powdered Corn Cobs*...............................100%
			*Contains 37% w/w Cellulose

c. Refer to the CA below.

d. The applicant must rectify the discrepancy regarding the flash point data provided in MRID 48433402 and the data provided in box 9., "Flash Point/Flame Extension" on the CSF.

e. The rationale provided to satisfy the storage stability (OCSPP 830.6317) and corrosion characteristics (OCSPP 830.6320) is inadequate. Additional scientifically-sound rationale supported by references must be submitted or studies must be conducted.

2. The mammalian toxicology submission is ACCEPTABLE.
	MRID 48433403-UNACCEPTABLE					MRID 48433405-SUPPLEMENTAL
	MRID 48433507-SUPPLEMENTAL					MRID 48433508-SUPPLEMENTAL
	MRID 48433509-SUPPLEMENTAL					MRID 48433510-SUPPLEMENTAL
	MRID 48433511-SUPPLEMENTAL					MRID 48433512-SUPPLEMENTAL
	MRID 48433513-SUPPLEMENTAL					MRID 48433514-SUPPLEMENTAL
	MRID 48433515-SUPPLEMENTAL					MRID 48433516-SUPPLEMENTAL
	MRID 48534101-ACCEPTABLE 					MRID 48534102-ACCEPTABLE
	MRID 48534103-ACCEPTABLE 					MRID 48534104-ACCEPTABLE
	MRID 48534105-ACCEPTABLE 					MRID 48534106-ACCEPTABLE
	MRID 48534107-ACCEPTABLE 					MRID 48534108-ACCEPTABLE

3. The nontarget organism toxicology submission is ACCEPTABLE.
	MRID 48433404-UNACCEPTABLE					MRID 48534110-SUPPLEMENTAL

NOTE TO RAL:

1. In the "Ingredients" row on the data matrix dated 7/12/11, the applicant listed the active ingredient as mono- and di- potassium salts of phosphorous acid, which must be revised.

2. Since the product may be applied in open trays, the applicant should include language on the label to preclude exposure to nontarget organisms/pets, such as cats and dogs.

PRODUCT CHEMISTRY ASSESSMENT AND STUDY SUMMARIES

I.	Active Ingredient Characterization

Powdered corn cobs are shelled corn cobs that have been dried and ground. Cellulose, which is the actual pesticidal component in the cobs, comprises approximately 37% of the powdered corn cobs. The mode of action of cellulose as a rodenticide is posited to be interference with osmoregulation in the intestines of rats and mice which results in dehydration, malnutrition and consequently, death. A second theory regarding the mode of action of the active ingredient is that because cellulose is indigestible by non-ruminant mammals, consumption of excessive amounts of the material may result in intestinal dysfunction.

Cellulose, a polysaccharide, is one of the most abundant organic compounds on Earth. It is the main constituent of plant cell walls and is also produced by some algae, fungi and bacteria. It is consumed in its natural state (as a component of plants) by humans and animals and is used in a variety of products, such as paper, textiles and building materials. (French, 2003) Various derivatives of cellulose, including powdered cellulose and microcrystalline cellulose are approved by the FDA for use in food and pharmaceutical products (21 CFR). Under the Federal Food, Drug and Cosmetic Act (FFDCA), EPA has exempted the compound from the requirement of a tolerance as a minimum risk active and/or inert ingredient in food-use pesticide products (40 CFR 180.950(e)). The Agency has also approved cellulose as a nonfood-use inert ingredient in pesticide products. In 2007, cellulose from powdered corn cobs was approved for use as a rodenticide in Canada by the Pest Management Regulatory Agency (PMRA).

A.	Product Chemistry (MRIDs 48433401-48433402, 48534109 and 48924801)

All data requirements have been satisfied with the exception of storage stability and corrosion characteristics. Data submitted to support the product chemistry data requirements are summarized in Table 1 below.  Physical and chemical properties data are summarized in Table 2 below. Data Evaluation Records (DERs) were not created for MRIDs 48433401-48433402, 48534109 and 48924801. Refer to the CA below for more information.

TABLE 1. Product Chemistry Data Requirements for Powdered Corn Cobs (Cellulose) (40 CFR § 158.2030)
                             OSCPP Guideline No.
                                     Study
                                   Results
                                     MRID
                                   830.1550
                                      to
                                   830.1670
Product identity;
Manufacturing process;
Discussion of formation of unintentional ingredients
Submitted data satisfy the requirements for product identity, manufacturing process, and discussion of formation of impurities
48433401
48534109
                                   830.1700
Analysis of samples
Submitted data satisfy the requirements for analysis of samples.
48924801
                                   830.1750
Certification of limits
Limits listed in the CSF are acceptable.
48433401
48534109
                                   830.1800
Analytical method
Acceptable.
48433401

TABLE 2. Physical and Chemical Properties of Powdered Corn Cobs (Cellulose) (40 CFR § 158.2030)
                               OCSPP Guideline
                                   Property
                             Description of Result
                                   (PC 38-DD)
                                     MRID
830.6302
Color
Yellow-brown
                                   48433402
830.6303
Physical State
Solid
                                   48433402
830.6304
Odor
Faintly sweet
                                   48433402
830.6313
Stability to Normal and Elevated Temperatures, Metals and Metal Ions
Stable
                                   48433402
830.6315
Flammability
Flash point: 388ºF (open cup); 396 ºF (closed cup)
                                   48433402
830.6317
Storage Stability
Rationale is inadequate
                                   48433402
830.6319
Miscibility
N/A: product is not an emulsifiable liquid that will be diluted with petroleum solvents
                                   48433402
830.6320
Corrosion Characteristics
Rationale is inadequate
                                   48433402
830.7000
pH
N/A: TGAI/MP is not soluble or dispersible in water
                                   48433402
830.7050
UV/Visible Light
Absorption
Data are not necessary to inform the risk assessment
                                   48433402
830.7100
Viscosity
N/A: product is a solid
                                   48433402
830.7200
Melting Point/Range
Not expected to melt
                                   48433402
830.7220
Boiling Point/Range
N/A: TGAI is a solid
                                   48433402
830.7300
Bulk Density
 28.0 lb/ft[3]
                                   48433402
830.7520
Particle Size, Fiber Length and Diameter Distribution
Coarse dust index: 0.89
Coarse dust: 9.78 X 10[-5] %
Crude fiber: 36.9%
                                   48433402
830.7550
830.7560
830.7570
Partition Coefficient (n-
Octanol/Water)
Data are not necessary to inform the risk assessment
                                   48433402
830.7840
Water Solubility
6.3% in water
                                   48433402
830.7950
Vapor Pressure
N/A: TGAI/MP is a solid
                                   48433402

II.	Human Health Assessment

A.	Toxicology (MRIDs 48433403, 48433405, 48534101-48534108 and 48433507-48433516)

To satisfy the toxicology data requirements, data were provided from the open scientific literature.
Reviews and analyses of these data by the World Health Organization (WHO) and PMRA were also submitted. For all data requirements (where applicable), adequate data on surrogate chemicals such as microcrystalline cellulose or refined-alpha cellulose were submitted. These chemicals are derivatives of cellulose. Instead of submitting data on the toxicity of powdered corn cobs, data were submitted on cellulose because the compound is considered to be the pesticidal component of the powdered corn cobs. The data submitted are acceptable to qualitatively assess the toxicity of the active ingredient.

All toxicology data requirements have been satisfied per 40 CFR 158.2050.  The data presented in Table 3 below are a summary of the toxicity data for powdered corn cobs (cellulose).  DERs were not created for the submitted MRIDs; however, the relevant data and information from these MRIDs are summarized in Table 3 and in the subsequent sections.

Table 3. Mammalian Toxicology Data for Powdered Corn Cobs (Cellulose)  (40 CFR § 158.2050)
                           Study/OCSPP Guideline No.
                                    Results
                         Toxicity Category/Description
                                     MRID
Acute oral toxicity (rat)
(870.1100)
                      LD50 > 3160 mg/kg[1][,3] (males)
                LD50 > 5000 mg/kg[2][,3] (females and males)
                                      IV
                                   48433405
                                   48534101
Acute dermal toxicity (rat)
(870.1200)
                LD50 > 2000 mg/kg[2][,3] (females and males)
                                      III
                                   48433405
                                   48534102
Acute inhalation toxicity	 (rat)
(870.1300)
                  LC50 > 5.35 mg/L2,3 (females and males)
                                      IV
                                   48433405
                                   48534103
Primary eye irritation (rabbit)
(870.2400)
                            Minimally irritating[2]
                                      IV
                                   48433405
                                   48534104
Primary dermal irritation (rabbit)
(870.2500)
                               Nonirritating[2]
                                      IV
                                   48433405

Dermal sensitization (guinea pig)
(870.2600)
                              Not a sensitizer[2]
                                      N/A
                                   48433405
                                   48534105
90-Day oral toxicity
(870.3100)
The proposed EP is nonfood-use. Uses are not anticipated to result in repeat oral exposure to humans.

Based on the review of available toxicity studies, the World Health Organization (WHO) has concluded that there is no evidence to indicate that consumption of microcrystalline cellulose in foods (when foods are produced according to good manufacturing processes) will result in toxic effects in humans. Humans are already naturally exposed to cellulose through consumption of plants and other foods.

                                   48433405
                                   48534106

90-Day dermal toxicity
(870.3250)
Purposeful application and prolonged exposure to the human skin is not anticipated based on the use pattern (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents). Additionally, humans are already exposed to cellulose and cellulose derivatives in paper products, textiles, pharmaceuticals, foods and plants.

90-Day inhalation toxicity
(870.3465)
Significant repeat inhalation exposure to the active ingredient as a gas, vapor or aerosol is unlikely based on the physical properties of the active ingredient. Powdered corn cobs (cellulose) are a solid material and the proposed EP is formulated as a pellet which is not inhalable. Although dust may be generated during the life-cycle of the product, significant exposure is not anticipated and the active ingredient is of low inhalation toxicity. The use pattern also precludes exposure (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents).

Mutagenicity-in vitro studies
(870.5100)
Significant human exposure is unlikely based on use pattern (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents). The proposed EP is for nonfood-uses only.

Various mutagenicity assays with microcrystalline cellulose in Salmonella typhimurium and Escherichia coli were reviewed by the WHO. All results were negative for genotoxicity.

                                   48433405
                                   48534108

Mutagenicity-in vivo micronucleus assay (870.5395)
Significant human exposure is unlikely based on use pattern (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents). The proposed EP is for nonfood-uses only.

In vivo mouse erythrocyte micronucleus mutagenicity assays using microcrystalline cellulose were reviewed by the WHO. All results were negative for genotoxicity.

                                   48433405
                                   48534108

Developmental toxicity
 (870.3700)
Significant female human exposure is unlikely based on use pattern (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents). The proposed EP is for nonfood-uses only.

No developmental toxicity effects were observed in studies with microcrystalline cellulose reviewed by the WHO.

                                   48433405
                                   48534107

[1]Test substance was refined alpha-cellulose.
[2]Test substance was 85% microcrystalline cellulose.
[3]Highest dose tested.

1. Acute Toxicity

All data submitted to support the acute toxicology data requirements were submitted from the open scientific literature and were obtained from studies conducted on acceptable surrogate chemicals for cellulose, such as microcrystalline cellulose. Microcrystalline cellulose is purified, partially depolymerized cellulose (MRID 48433405, p. 95 of 110). Based on the available data and information, the Agency has classified cellulose as having low acute oral, acute dermal and acute inhalation toxicity.  It is minimally irritating to the eye, is not a dermal irritant and is not a dermal sensitizer.

All of the acute toxicity data referenced above were also reviewed by the World Health Organization (WHO) and Canada's Pest Management Regulatory Agency (PMRA) and found to be acceptable.

2. Subchronic Toxicity

90-Day Oral

The 90-day oral data requirement is conditionally required for nonfood uses that are likely to result in repeat oral exposure to humans.  The proposed product is intended for use to formulate end-use products (EPs) which will be used as rodenticides in indoor settings. Repeat human oral exposure is not expected based on the proposed use pattern of the product containing the active ingredient. The proposed product containing the active ingredient is for nonfood-use and the product will be placed in bait stations and/or trays and left alone to attract rodents.  Label instructions will include precautionary statements to mitigate exposure to applicators and children. Any oral exposure is likely to be accidental; repeated oral exposure is not anticipated. In the case that accidental exposure should occur, hazard data indicate that ingestion of cellulose is not likely to result in toxic effects. Several subchronic and chronic oral toxicity studies were cited (actual studies were not provided) in MRID 48534106 for derivatives of cellulose. Most of the studies were conducted using microcrystalline cellulose. In their safety evaluation of microcrystalline cellulose, the WHO reviewed these studies and

concluded that there is no evidence to indicate that consumption of microcrystalline cellulose in foods (when foods are produced according to good manufacturing processes) will result in toxic effects in humans (MRID 48433405, p. 25 of 100). Moreover, humans are already naturally exposed via the oral route to cellulose through consumption of plants and other foods.

90-Day Dermal

The 90-day dermal data requirement is conditionally required to support uses involving purposeful application to the human skin or uses that would result in prolonged dermal exposure and if data from a 90-day oral study are not required or the active ingredient is known or expected to be metabolized differently by the dermal route of exposure than by the oral route and the metabolite is of toxicological concern. Purposeful application and prolonged exposure to the human skin is not anticipated based on the use pattern of the proposed product (the product will be placed in bait stations and/or trays and left alone to attract rodents). Label instructions will include precautionary statements to mitigate exposure to children. Additionally, humans are already exposed via the dermal route to cellulose in paper products, textiles, foods and plants.

90-Day Inhalation

The 90-day inhalation data requirement is conditionally required if there is a likelihood of significant levels of repeated inhalation exposure to the pesticide as a gas, vapor or aerosol. For the proposed uses of powdered corn cobs (cellulose) as a pesticide, repeated inhalation exposure is unlikely based on the physical properties of the active ingredient, which is a solid. The proposed EP is formulated as a pellet which is not inhalable. Although dust may be generated from the product containing the active ingredient during shipping and/or handling, significant exposure is not anticipated and the active ingredient is of low inhalation toxicity.  The use pattern also precludes exposure (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents).

3. Developmental Toxicity

Developmental toxicity data are conditionally required if significant exposure to female humans is expected from the proposed product's use under widespread and commonly recognized practice.  Significant exposure to females is unlikely based on the proposed use pattern of the product containing the active ingredient (the product will be placed in bait stations and/or trays and left alone to attract rodents). If used according to label instructions, significant oral, dermal and inhalation exposure to the  active ingredient is not anticipated. Moreover, no developmental toxicity effects were observed in studies with microcrystalline cellulose reviewed by the WHO (MRID 48433405, p. 21 of 110).

4. Mutagenicity

Mutagenicity data are conditionally required to support nonfood uses if the use is likely to result in significant human exposure or if the active ingredient or its metabolites are structurally related to a known mutagen or belong to any chemical class of compounds containing a known mutagen.  Significant human exposure is unlikely based on the use pattern (the proposed EP will be placed in bait stations or in trays and left alone to attract rodents). Additionally, the proposed EP is for nonfood-uses only. Moreover, in studies reviewed by the WHO, microcrystalline cellulose was not mutagenic in various in vitro mutagenicity assays in Salmonella

typhimurium and Escherichia coli and it was not mutagenic in in vivo mouse erythrocyte micronucleus mutagenicity assays.

5. Companion Animal/Nontarget Animal Toxicity and Risk Characterization
In order to assess the potential for hazardous effects to various species, including pets, which may encounter the product containing the active ingredient during use, several non-guideline toxicity studies were conducted and submitted to the Agency (MRIDs 48433507-48433516). The species tested were: brushtail possum (Trichosurus vulpecula), rabbit (Oryctolagus cuniculus cuniculus), guinea pig (Cavia porcellus), cat (Felis catus), dog (Canis familiaris), ferret (Mustela furo), chicken (Gallus gallus), duck (Anas platyrhynchos) and goldfish (Carassius auratus). In each study, test species were deprived of their normal diet for 24 hours and then presented with the product containing the active ingredient and a half-ration of their normal food. The feeding schedule continued for up to 10 days. Animals were observed for daily consumption and changes in body weight and behavior. Animals that consumed at least 5g test substance/kg body weight were euthanized and examined for gross pathological effects. Possums, cats, chickens, dogs and ferrets typically refused the product after sampling small to moderate quantities. Guinea pigs, rabbits and male ducks consumed appreciable amounts of the product over the testing period. No changes in behavior were observed in any of these species during the test period. Gross pathology observations were normal for these species with the exception of observations of possible reduced urine production in possums, guinea pigs and rabbits and dry feces in some ducks. Goldfish mortality occurred between the first day and 19 days post-application (the product was applied to simulate an accidental spillage into a fish tank or pond). It was not determined if mortality occurred due to water contamination from the product or from consumption of the product.
Based on the data provided, the product appears to be unpalatable to possums, cats, chickens, dogs and ferrets. Should accidental consumption occur, the available data indicate that accidental exposure should not result in toxic effects to these species. Although guinea pigs, rabbits and ducks may consume the product, the available data indicate that accidental exposure should not result in toxic effects. Accidental exposure to fish may result in mortality based on the data submitted; however, exposure is not expected based on the use pattern of the product. Risk to all of the above species is expected to be negligible based on minimal toxicity and lack of exposure if label instructions are followed.

B.	Dose Response Assessment

No relevant toxicological endpoints were identified; therefore, a dose response assessment is not required.

C.	Drinking Water Exposure and Risk Characterization

Based on the proposed use pattern of powdered corn cobs (cellulose) as a rodenticide, pesticide residues in drinking water are not expected when products are used according to label instructions. Products containing the active ingredient will be used in indoor commercial and residential settings only; therefore, cellulose residues in drinking water are highly unlikely.

D.	Occupational, Residential, School and Day Care Exposure and Risk Characterization

1.  Occupational Exposure and Risk Characterization

An occupational exposure assessment was not conducted for powdered corn cobs (cellulose). Based on the proposed use pattern and toxicity data available to the Agency, anticipated exposure is not likely to result in unreasonable risk to applicators/handlers. Any occupational exposure is likely to be via the dermal route and is expected to be brief in duration. Any inhalation exposure to dust generated during the life-cycle of the product is not expected to be significant and is also expected to be brief in duration. The active ingredient is of low dermal and inhalation toxicity. No relevant toxicological endpoints were identified and significant exposure in an occupational setting is not expected if label instructions are followed. Additionally, humans are already exposed to cellulose in the diet and through use of various products such as paper and textiles.

2.  Residential, School and Day Care Exposure and Risk Characterization

A residential, school and day care exposure assessment was not conducted for powdered corn cobs (cellulose).  Based on the proposed use pattern and toxicity data available to the Agency, anticipated exposure is not likely to result in unreasonable risk to humans.  No relevant toxicological endpoints were identified and significant exposure is not expected if label instructions are followed. Any exposure in residential, school and/or day care settings is likely to be accidental and data available to the Agency indicate that the active ingredient is of low toxicity. Additionally, humans are already exposed to cellulose in the diet and through use of various products such as paper and textiles.

E.	Risk Characterization

Risk to humans from pesticidal use of powdered corn cobs (cellulose) is expected to be negligible due to the low toxicity of the active ingredient and the anticipated lack of exposure based on the use pattern. The proposed product is not used in or on food, and is not directly applied to humans. Appropriate precautionary language requirements on end-use product labels will further mitigate exposure.

The Agency has considered powdered corn cobs (cellulose) in light of the relevant safety factors in FIFRA.  A determination has been made that no unreasonable adverse effects to the U. S. population in general, and to infants and children in particular, will result from the use of this chemical when label instructions are followed.

III. Environmental Assessment

A.	Nontarget Organism Toxicology (MRIDs 48433404, 48433510-48433512 and 48534110)

All nontarget toxicology data requirements have been satisfied per 40 CFR 158.2060.  The information presented in Table 4 below is a summary of the nontarget toxicology data and information for powdered corn cobs (cellulose).  DERs were not created for the submitted MRIDs; however, data and information from these MRIDs are summarized in Table 4 and in the subsequent sections.

TABLE 4.  Nontarget Organism Toxicity Requirements for Powdered Corn Cobs (Cellulose) (40 CFR § 158.2060)
                           Study/OCSPP Guideline No.
                                   /MRID No.
                                    Results
                         Toxicity Category/Description
                                     MRID
Avian acute oral toxicity
Colinus virginianus
(850.2100)

Waived. Avian exposure is not anticipated based on the indoor-use pattern.

Non-guideline toxicity studies were submitted where Mallard ducks and chickens were exposed to the proposed EP in the diet. Mallard ducks consumed the product over 3-10 days; there were no signs of toxicity and gross pathology was normal. The feces of some birds were dry and crumbly on day 6 (avian feces are normally wet). Chickens consumed low to moderate amounts of the product for about 2 days; thereafter, consumption was negligible. There were no signs of toxicity and gross pathology was normal. Feces were normal as well.

                             Practically nontoxic

                                   48433511
                                   48433512
Avian dietary toxicity
Colinus virginianus and Anas platyrhynchos (850.2200)
Waived. Avian dietary exposure is not anticipated based on indoor-use pattern.
                                      N/A

Aquatic invertebrate acute toxicity
(Daphnia magna)
(850.1010)

Waived. Aquatic invertebrate exposure is not anticipated based on indoor-use pattern. There is no direct application to aquatic sites and runoff is not expected based on use limitations to indoor settings.
                                      N/A

Freshwater fish LC50
(Oncorhynchus mykiss)
(850.1075)

Waived. Aquatic vertebrate exposure is not anticipated based on indoor-use pattern. There is no direct application to aquatic sites and runoff is not expected based on use limitations to indoor settings.

The proposed end-use product was highly toxic to goldfish based on a non-guideline toxicity study conducted where goldfish were exposed to the product in a simulation of accidental spillage into a fish tank or pond. It was not determined if toxicity was due to water contamination from the product or from consumption of the product. Although the product may be toxic to aquatic vertebrates, exposure to these organisms is highly unlikely if label instructions are followed.
                                      N/A
                                   48433510
Nontarget plant studies-seedling emergence
(850.4100)
Data are not required for indoor uses.
                                      N/A

Nontarget plant studies-vegetative vigor
(850.4150)
Data are not required for indoor uses.
                                      N/A

Nontarget insect testing (Apis mellifera)
(880.4350)
Data are not required for indoor uses.
                                      N/A

1.  Toxicity Summaries

Non-guideline toxicity studies were submitted for birds and non-rodent mammals (refer to the Companion Animal/Nontarget Animal Toxicity and Risk Characterization section above for a summary of submitted data). The indoor-use pattern precludes exposure for nontarget species. The proposed product containing the active ingredient will be placed in bait stations or bait trays indoors and left alone to attract rodents. Based on the submitted data and information, the active ingredient is not toxic to birds and mammals. The avian acute oral, avian dietary, aquatic vertebrate, aquatic invertebrate, nontarget plant and nontarget insect toxicity studies were waived due to the lack of anticipated exposure based on the indoor-only use pattern.

B.	Environmental Fate and Groundwater Data

Environmental fate and groundwater data are not required at this time because the results of the nontarget organism toxicity assessment (Tier I data requirements) did not trigger these Tier II data requirements.

C.	Ecological Exposure and Risk Characterization

A risk assessment was not conducted for nontarget organisms due to the unlikelihood of exposure based on the indoor-only use pattern of the active ingredient. Unreasonable effects to nontarget organisms are not anticipated when products are used according to label instructions.

D.	Endangered Species Assessment

The Agency has not conducted a risk assessment that supports a complete endangered species determination.  The ecological risk assessment planned during registration review will allow the Agency to determine whether powdered corn cobs' (cellulose) use has "no effect" or "may effect" federally listed threatened or endangered species (listed species) or their designated critical habitats.  When an assessment concludes that a pesticide's use "may affect" a listed species or its designated critical habitat, the Agency will consult with the U.S. Fish and Wildlife Service and/or National Marine Fisheries Services (the Services) as appropriate.

REFERENCES

French, A. D., Bertoniere, N. R., Brown, R. M., Chanzy, H., Gray, D., Hattori, K. and Glasser, W. 2003.
	Cellulose. Kirk-Othmer Encyclopedia of Chemical Technology. Published Online: October 17, 2003


[Federal Register Volume 82, Number 95 (Thursday, May 18, 2017)]
[Notices]
[Page 22866]
[FR Doc No: 2017-10017]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80670; File No. SR-NYSE-2017-12]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Designation of Longer Period for Commission Action on a
Proposed Rule Change To Amend Section 102.01B of the NYSE Listed
Company Manual To Modify the Requirements That Apply to Companies That
List Without a Prior Exchange Act Registration and That Are Not Listing
in Connection With an Underwritten Initial Public Offering

May 12, 2017.
    On March 13, 2017, the New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Section 102.01B of the Manual to modify
the provisions relating to the qualification of companies listing
without a prior Exchange Act registration and an underwritten offering
to permit the listing of such companies immediately upon effectiveness
of an Exchange Act registration statement without a concurrent public
offering registered under the Securities Act of 1933 provided the
company meets all other listing requirements. The proposal also would
eliminate the requirement to have a private placement market trading
price if there is a valuation from an independent third-party of $250
million in market value of publicly-held shares. The proposed rule
change was published for comment in the Federal Register on March 31,
2017.\3\ The Commission received no comments on the proposed rule
change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 34-80313 (March 27,
2017), 82 FR 16082 (March 31, 2017) (``Notice'').
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \4\ provides that, within 45 days of
the publication of the notice of the filing of a proposed rule change,
or within such longer period up to 90 days as the Commission may
designate if it finds such longer period to be appropriate and
publishes its reasons for so finding or as to which the self-regulatory
organization consents, the Commission shall approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether the proposed rule change should be disapproved.
The Commission is extending this 45-day time period.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission finds that it is appropriate to designate a longer
period within which to take action on the proposed rule change so that
it has sufficient time to consider the proposed rule change.
Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\5\ designates June 29, 2017, as the date by which the Commission
should approve, disapprove, or institute proceedings to determine
whether to disapprove the proposed rule change (File No. SR-NYSE-2017-
12).
---------------------------------------------------------------------------

    \5\ Id.
    \6\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10017 Filed 5-17-17; 8:45 am]
 BILLING CODE 8011-01-P


TSCA Statutory Definitions Document, February 11, 2014
Terms Defined
The terms "Manufacture,"  "processor," "process" and "distribute in commerce" are defined in TSCA section 3. Entities engaged in hydraulic fracturing activities may be considered a manufacturer, processor, distributor in commerce or any combination of these, which would be relevant to those entities for the purposes of reporting.

TSCA §3 (7) "The term ``manufacture'' means to import into the customs territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States), produce, or manufacture."

TSCA §3 (10) "The term "processor" means any person who processes a chemical substance or mixture. "Process" means the preparation of a chemical substance or mixture, after its manufacture, for distribution in commerce-
      (A) in the same form or physical state as, or in a different form or physical state from, that in which it was received by the person so preparing such substance or mixture, or
      (B) as part of an article containing the chemical substance or mixture."

TSCA §3 (4) "The term ``distribute in commerce'' mean to sell, or the sale of, the substance, mixture, or article in commerce; to introduce or deliver for introduction into commerce, or the introduction or delivery for introduction into commerce of, the substance, mixture, or article; or to hold, or the holding of, the substance, mixture, or article after its introduction into commerce."


MEMORANDUM
SUBJECT:	Communication concerning public hearing request for proposed rule
DATE:		August 4, 2011
FROM:		H. Lynn Dail, Environmental Scientist
		US EPA/OAQPS/AQPD/SLPG
TO:		Docket EPA-HQ-OAR-2010-1076
Posted in docket is correspondence received requesting public hearing and later correspondence withdrawing request.