[Federal Register Volume 82, Number 5 (Monday, January 9, 2017)]
[Notices]
[Pages 2428-2433]
[FR Doc No: 2017-00096]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79718; File No. SR-BatsEDGX-2016-41]

Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified by Amendment No. 1, Related to the
Exchange's Equity Options Platform To Adopt a Price Improvement
Auction, the Bats Auction Mechanism

January 3, 2017.

I. Introduction

    On September 16, 2016, Bats EDGX Exchange, Inc. (the ``Exchange''
or ``EDGX'') 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 for the Exchange's equity options platform (``EDGX
Options'') to adopt a price improvement auction, the Bats Auction
Mechanism. The proposed rule change was published for comment in the
Federal Register on October 5, 2016.\3\ The Commission received no
comments regarding the proposal. On November 17, 2016, the Commission
extended the time period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\4\ On
December 15, 2016, EDGX filed Amendment No. 1 to the proposal.\5\ The
Commission is publishing this notice to solicit comment on Amendment
No. 1 from interested persons and is approving the proposed rule
change, as modified by Amendment No. 1, on an accelerated basis, with
certain provisions subject to a pilot period scheduled to expire on
January 18, 2017.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 78988 (September 29,
2016), 81 FR 69172.
    \4\ See Securities Exchange Act Release No. 79339, 81 FR 84625
(November 23, 2016).
    \5\ In Amendment No. 1, EDGX provided additional details to its
proposal and made certain changes to original aspects of the
proposal. Specifically, the proposal as revised would: (i) Restrict
an Auction from commencing with a stop price equal to a same side
resting order unless the resting order is not a Priority Customer
order, the Exchange's ``Customer Overlay'' is in effect, and the
incoming Agency Order is a Priority Customer order; (ii) prohibit an
Initiating Order from being a solicited order for the account of an
Options Market Maker assigned in the affected series on the
Exchange; (iii) describe a survey conducted by the Exchange
regarding the ability of participants to respond to an Auction
lasting no less than one hundred milliseconds and no more than one
second; (iv) provide additional explanation and justification of
certain aspects of the proposal, including additional examples
describing Auction processing and order allocation in various
scenarios and details regarding the handling of overlapping Auctions
for 50 contracts or more; and (v) make other minor structural,
technical, and clarifying amendments to the proposal and the
proposed rule text that EDGX believes does not result in any
material differences over its original proposal. Amendment No. 1
amends and replaces the original filing in its entirety. To promote
transparency of its proposed amendment, when EDGX filed Amendment
No. 1 with the Commission, it also submitted a comment letter to the
file with a brief description of Amendment No. 1, which the
Commission posted on its Web site and placed in the public comment
file for SR-BatsEDGX-2016-41. The Exchange also posted a copy of its
Amendment No. 1 on its Web site when it filed the amendment with the
Commission.
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II. Description of the Proposal, as Amended

    EDGX proposes to establish a price-improvement auction, the Bats
Auction Mechanism (``BAM,'' ``BAM Auction,'' or ``Auction'') on the
Exchange's equity options platform, in which an Exchange Member (an
``Initiating Member'') may electronically submit for execution a two-
sided paired order, where one side is an order it represents as agent
on behalf of a Priority Customer,\6\ broker-dealer, or any other person
or entity (``Agency Order'') and the other side is principal interest
or any other order it represents as agent (an ``Initiating Order'')
provided that the Member first exposes the Agency Order in the BAM
Auction pursuant to the proposed Rule.
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    \6\ A ``Priority Customer'' means any person or entity that is
not: (A) A broker or dealer in securities; or (B) a Professional.
The term ``Priority Customer Order'' means an order for the account
of a Priority Customer. See EDGX Rule 16.1(a)(45). A
``Professional'' is any person or entity that: (A) Is not a broker
or dealer in securities; and (B) places more than 390 orders in
listed options per day on average during a calendar month for its
own beneficial account(s). All Professional orders shall be
appropriately marked by Options Members. See EDGX Rule 16.1(a)(46).
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A. Auction Eligibility Requirements

    All options traded on the Exchange are eligible for BAM.\7\ To
initiate a BAM Auction, an Initiating Member first must ``stop'' the
Agency Order such that: (A) If the Agency Order is for less than 50
option contracts and the difference between the National Best Bid and
Offer (``NBBO'') is $0.01, the Initiating Member must stop the entire
Agency Order at one minimum price improvement increment better than the
NBBO; or (B) for any other Agency Order, the Initiating Member must
stop the entire Agency Order at the better of the NBBO or the Agency
Order's limit price. In addition, if the EDGX BBO on the same side of
the market as the Agency Order represents a Priority Customer order on
the book, the stop price must be at least $0.01 better than the booked
order's limit price. If the EDGX BBO on the same side of the market as
the Agency Order represents a quote or order that is not a Priority
Customer order on the book, the stop price must be at least $0.01
better than the booked order's limit price unless the Agency Order is a
Priority Customer order and the Customer Overlay set forth in Rule
21.8(d)(1) is in effect.\8\ In addition, Auctions in the same series of
Agency Orders for less than 50 contracts may not queue or overlap in
any manner; however, Auctions of Agency Orders for 50 contracts or more
will be allowed to occur at the same time as other Auctions (of any
size Agency Order) in the same series.\9\ Finally, an

Agency Order may not be a solicited order for the account of any
Options Market Maker assigned in the affected series.\10\ Agency Orders
that do not comply with the aforementioned auction eligibility
requirements will be rejected. In addition, Agency Orders submitted at
or before the opening of trading or when the NBBO is crossed are not
eligible to initiate an Auction and will be rejected.
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    \7\ See proposed EDGX Rule 21.19(a).
    \8\ According to the Exchange, this condition is consistent with
the operation of the Exchange generally, where Priority Customer
orders receive a priority advantage over all other orders. See
Amendment No. 1, supra note 5. See also EDGX Rule 21.8(d)(1), which
specifies that when the Customer Overlay is in effect, Priority
Customer Orders shall have priority over orders on behalf of all
other types of participants (``non-Customers'') at the same price.
The Exchange noted that the Customer Overlay is currently in effect
with respect to all options traded on the Exchange. See Amendment
No. 1, supra note 5.
    \9\ In its proposal, the Exchange notes that although it is
possible for one or more Auctions for 50 contracts or more to
overlap, each Auction will be started in a sequence and will have a
distinct conclusion at which time the Auction will be allocated.
Therefore, when the first Auction concludes, unrelated orders that
then exist will be considered for participation in that Auction. If
there is remaining unrelated order interest after the first Auction
has been allocated, then such unrelated order interest will be
considered for allocation when the subsequent Auction is processed.
If there are multiple Auctions underway that are each terminated
early pursuant to proposed EDGX Rule 21.19(b)(2)(B) or (C), the
Auctions will be processed sequentially based on the order in which
they commenced. See Notice, supra note 3, at 69178-79 and Amendment
No. 1, supra note 5. See also proposed EDGX Rule 21.19(b)(3) and
proposed Interpretation and Policy .04 to EDGX Rule 21.19. In
addition, each BAM response must specifically identify the Auction
for which it is targeted and will only be considered in the
specified Auction. See Notice, supra note 3, at 69179 and Amendment
No. 1, supra note 5. See also proposed EDGX Rule 21.19(b)(1)(E).
    \10\ See proposed EDGX Rule 21.19(a)(6). The Exchange stated
that this prohibition is based on a prohibition contained in other
options exchanges' auction mechanisms. See Amendment No. 1, supra
note 5. See also Chapter VI, Section 9(i)(F) of the NASDAQ BX, Inc.
(``BX'') Rules.
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B. Auction Process

    To initiate the Auction, the Initiating Member must mark the Agency
Order for Auction processing, and specify either: (A) A single price at
which it seeks to execute the Agency Order (a ``single-price
submission''); (B) that it is willing to automatically match as
principal or as agent on behalf of an Initiating Order the price and
size of all BAM Auction Notification responses (``BAM responses'') and
other trading interest (``auto-match'') as follows: (i) Stopping the
entire order at a single stop price and auto-matching BAM responses and
other trading interest at all prices that improve the stop price to a
specified price; or (ii) stopping the entire order at a single stop
price and auto-matching all BAM responses and other trading interest at
all prices that improve the stop price. Once the Initiating Member has
submitted an Agency Order for exposure in the Auction, such Agency
Order may not be modified or cancelled.
    Under no circumstances will the Initiating Member receive an
allocation percentage, at the final price point, of more than 50% of
the initial Agency Order in the event there is one competing quote,
order, or BAM response or 40% of the initial Agency Order in the event
there are multiple competing quotes, orders, or BAM responses.\11\
However, when starting an Auction, the Initiating Member may submit the
Agency Order with a designation of ``last priority'' to other BAM
participants (``Last Priority''), which will result in the Initiating
Member forfeiting priority and trade allocation privileges. If Last
Priority is specified, the Initiating Order would trade only if there
were not enough interest available to fully execute the Agency Order at
prices which are equal to or improve upon the stop price.\12\ Last
Priority information would not be available to other market
participants and may not be modified after the order is submitted to
the Auction.
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    \11\ See proposed EDGX Rule 21.19(b)(1)(A).
    \12\ Last Priority will not be permitted if both the Initiating
Order and Agency Order are Priority Customer Orders. See proposed
EDGX Rule 21.19(b)(1)(B)(ii). In addition, Last Priority is only
compatible with single-price submissions and cannot be designated on
an Agency Order specified as auto-match. See proposed EDGX Rule
21.19(b)(1)(B)(iii).
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    When the Exchange receives an Agency Order for Auction processing,
an auction notification message detailing the side, size, price, and
options series of the Agency Order would be sent over the Exchange's
Multicast PITCH Feed and Auction Feed. BAM Auctions would be for a
specified duration of no less than one hundred milliseconds and no more
than one second, as determined by the Exchange and announced on the
Exchange's Web site.\13\ Any person or entity other than the Initiating
Member may submit a response to the Auction, provided such response is
properly marked specifying price, size, side of the market, and
information identifying the Auction to which the response is targeted.
BAM responses would not be visible to Auction participants, and would
not be disseminated to OPRA. The minimum price increment for BAM
responses and for an Initiating Member's submission would be $0.01,
regardless if the class trades in another increment.\14\
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    \13\ The Exchange states that, in September 2016, it conducted a
survey of active EDGX market maker firms and other active liquidity
providers inquiring as to the timeframe within which these market
participants can respond to an auction with a duration time ranging
from less than fifty (50) milliseconds to more than one (1) second.
Of the ten (10) active EDGX market maker firms that were surveyed,
eight (8) responded to the survey. In addition, the Exchange
included six (6) additional liquidity providers that are not active
EDGX market makers but are active participants on EDGX Options. Of
the survey respondents, 93% indicated that that their firm could
respond to auctions with a duration time of at least 50
milliseconds, and 100% indicated that that their firm could respond
to auctions with a duration time of at least 100 milliseconds. Based
on the results of the survey, the Exchange believes that allowing
for an auction period of no less than one hundred (100) milliseconds
and no more than one (1) second would provide a meaningful
opportunity for Members to respond to the BAM Auction while at the
same time facilitating the prompt execution of orders. The Exchange
believes that 100 milliseconds will continue to provide all market
participants with sufficient time to respond, compete, and provide
price improvement for orders and will provide investors and other
market participants with more timely executions, thereby reducing
their market risk. See Amendment No. 1, supra note 5.
    \14\ See proposed EDGX Rule 21.19(b)(1)(G). See also Amendment
No. 1, supra note 5.
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    A BAM response with a size greater than the size of the Agency
Order will be capped at the size of the Agency Order (i.e., the excess
size will be ignored when processing the Auction). BAM responses may be
modified or cancelled during the Auction. BAM responses on the same
side of the market as the Agency Order or with a Time in Force of IOC
or FOK are considered invalid and will be immediately cancelled.\15\
Finally, multiple BAM responses from the same User may be submitted
during the Auction. However, multiple orders at a particular price
point submitted by a User in response to an Auction or resting on the
EDGX Options Book will be aggregated together and will be capped at the
size of the Agency Order (i.e., the excess size will be ignored when
processing the Auction).\16\ BAM responses cannot cross the price of
the Initial NBBO but will be executed, if possible, at the most
aggressive permissible price within such Initial NBBO.
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    \15\ See proposed EDGX Rule 21.19(b)(1)(K). See also Amendment
No. 1, supra note 5.
    \16\ See proposed EDGX Rule 21.19(b)(1)(I).
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C. Conclusion of an Auction and Order Allocation

    The BAM Auction would conclude at the earlier of: (i) The end of
the Auction period; (ii) upon receipt by the Exchange of a Priority
Customer order on the same side of the market and at the stop price of
the Agency Order that is to be posted to the EDGX Options Book; (iii)
upon receipt by the Exchange of an unrelated order or quote that is not
a Priority Customer order that is on the same side of the market as the
Agency Order that would cause the Agency Order's stop price to be
outside of the EDGX BBO; (iv) at the close of trading; or (v) any time
there is a trading halt on the Exchange in the affected series.\17\
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    \17\ See proposed EDGX Rule 21.19(b)(2). In Amendment No. 1, the
Exchange stated that the proposed difference between scenario (ii),
where an unrelated, same-side Priority Customer order will cause
early termination of an Auction when it arrives on the Exchange at
the stop price, and scenario (iii), where an unrelated, same-side
order or quote from a non-Priority Customer will cause early
termination of an Auction only when it would be better than the stop
price, is consistent with the Exchange's belief that a Priority
Customer order received and placed on the Exchange's order book
should have certainty that it will be the first order executed at
that price in response to contra-side liquidity. See Amendment No.
1, supra note 5.
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    If the BAM Auction concludes earlier than the end of the prescribed
Auction period for any of the reasons described

above other than a trading halt, the Auction will be processed pursuant
to the order allocation process set forth in proposed EDGX Rule
21.19(b)(4).\18\ In the event of a trading halt on the Exchange in the
affected series, the Auction will be cancelled without execution.\19\
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    \18\ See proposed EDGX Rule 21.19(b)(2)(A)-(D).
    \19\ See proposed EDGX Rule 21.19(b)(2)(E).
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    Any unexecuted BAM responses will be cancelled.\20\ An unrelated
market or marketable limit order (against the EDGX BBO) on the opposite
side of the market from the Agency Order received during the Auction
will not cause the Auction to end early and will execute against
interest outside of the Auction.\21\ If contracts remain from such
unrelated order at the time the auction ends, they will be considered
for participation in the order allocation process. All unrelated orders
submitted to the Exchange with contracts remaining at the time the
Auction ends, including orders marked as Post Only Orders pursuant to
EDGX Rule 21.1(d)(8),\22\ will be considered for participation in the
order allocation process. If an Auction is initiated for an Agency
Order designated as an ``Intermarket Sweep Order'' or ``ISO''
Order,\23\ responses and executions will be permitted at a price
inferior to the Initial NBBO.\24\
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    \20\ See proposed EDGX Rule 21.19(b)(5).
    \21\ See proposed EDGX Rule 21.19(b)(3).
    \22\ The Exchange noted that Post Only Orders would participate
in an Auction in the same manner as any other unrelated order even
if the Post Only Order would be considered to be removing liquidity
from the Auction. See Amendment No. 1, supra note 5.
    \23\ ``Intermarket Sweep Orders'' or ``ISO'' Orders are limit
orders that are designated as ISOs in the manner prescribed by EDGX
and are executed within the System at one or multiple price levels
without regard to Protected Quotations of other Eligible Exchanges
as defined in EDGX Rule 27.1. ISOs are not eligible for routing
pursuant to EDGX Rule 21.9. In Amendment No. 1, the Exchange
described in greater detail how a BAM ISO would be handled if any
better priced interest arrived on the Exchange's order book after
the BAM ISO was sent but before the corresponding Auction commenced.
See Amendment No. 1, supra note 5 (stating that in this
circumstance, any better priced interest in the order book at the
time of such BAM Auction would be executed pursuant to the proposed
Auction functionality).
    \24\ See proposed EDGX Rule 21.19(b)(6).
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    At the conclusion of the Auction, the Agency Order will be
allocated at the best price(s), pursuant to the priority set forth in
proposed EDGX Rule 21.19(b)(4).\25\ First, Priority Customer orders
would have time priority at each price level. Next, the Initiating
Member would receive an allocation after Priority Customer orders.\26\
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    \25\ See Notice, supra note 3, at 69176-78 and Amendment No. 1,
supra note 5, for examples illustrating trade allocations under
various auction scenarios.
    \26\ The Initiating Participant shall receive additional
allocation only if contracts remain after any allocation pursuant to
proposed EDGX Rule 21.19(b)(4).
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    If the Initiating Member selected the single-price submission
option, BAM executions will occur first at prices that improve the stop
price, and then at the stop price with up to 40% of the remaining
contracts after Priority Customer interest is satisfied being allocated
to the Initiating Member at the stop price. However, if only one other
quote, order, or BAM response matches the stop price, the Initiating
Member may be allocated up to 50% of the contracts executed at such
price.
    If the Initiating Member selected the auto-match option, the
Initiating Member would be allocated a number of contracts equal to the
aggregate size of all other quotes, orders, and BAM responses at each
price point until a price point is reached where the balance of the
order can be fully executed, except that the Initiating Member would be
entitled to receive up to 40% (if there are multiple competing quotes,
orders, or BAM responses) or 50% (if there is only one competing quote,
order, or BAM response) of the initial Agency Order at the final price
point (including situations where the stop price is the final price),
after Priority Customer interest has been satisfied but before
remaining interest receives an allocation.
    After Public Customers and the Initiating Participant receive their
allocations, and for classes designated by the Exchange as eligible for
``Priority Order'' status, Users with resting quotes and orders that
were at a price that is equal to the Initial NBBO on the opposite side
of the market from the Agency Order (``Priority Orders'') would have
priority up to their size in the Initial NBBO at each price level at or
better than such Initial NBBO. Priority Orders and BAM responses
submitted by Users with Priority Order Status will be allocated
pursuant to the algorithm set forth in EDGX Rule 21.8(c).\27\
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    \27\ See proposed EDGX Rule 21.19(b)(4)(B)(iii). Priority Order
status is only valid for the duration of the particular Auction.
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    Finally, after Priority Customers, the Initiating Member, and Users
with Priority Orders, if applicable, have received allocations, all
other interest will be allocated pursuant to Rule 21.8(c).\28\ Any
remaining contracts will be allocated to the Initiating Member.
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    \28\ See proposed EDGX Rule 21.19(b)(4)(B)(iv).
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D. Crossing Agency Orders

    The Exchange also proposes, in lieu of the BAM Auction procedures
set forth in proposed paragraphs (a)-(b) to EDGX Rule 21.19, to allow
an Initiating Member to enter an Agency Order for the account of a
Priority Customer paired with an order for the account of another
Priority Customer, and such paired orders will be automatically
executed without an Auction. In its proposal, the Exchange notes that
it would be a violation of EDGX Rule 22.12 for an Options Member to
circumvent EDGX Rule 22.12 by providing an opportunity for (i) a
Priority Customer affiliated with the Options Member, or (ii) a
Priority Customer with whom the Options Member has an arrangement that
allows the Options Member to realize similar economic benefits from the
transaction as the Options Member would achieve by executing agency
orders as principal, to regularly execute against agency orders handled
by the firm immediately upon their entry as BAM Priority Customer-to-
Priority Customer immediate crosses.\29\
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    \29\ See Notice, supra note 3, at 69176. See also Amendment No.
1, supra note 5 and proposed Interpretation and Policy .03 to EDGX
Rule 21.19.
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E. Pilot Program Information to the Commission

    Subject to a pilot program expiring January 18, 2017,\30\ there
will be no minimum size requirement for orders to be eligible for the
Auction. During this pilot period, the Exchange represents that it
periodically will submit certain data, as requested by the Commission
staff, to provide supporting evidence that, among other things, there
is meaningful competition in BAM Auctions for all size orders and that
there is an active and liquid market functioning on the Exchange
outside of the Auction mechanism.\31\ The Exchange further noted that
it would seek to request confidential treatment for any raw data that
it submits to the Commission.\32\
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    \30\ See proposed Interpretation and Policy .05 to EDGX Rule
21.19.
    \31\ See Notice, supra note 3, at 69176. See also Amendment No.
1, supra note 5.
    \32\ See Notice, supra note 3, at 69176; Amendment No. 1, supra
note 5. See also proposed Interpretation and Policy .05 to EDGX Rule
21.19.
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    The Exchange represented that it will provide the following
additional information on a monthly basis:
    (i) The number of contracts (of orders of 50 contracts or greater)
entered into BAM Auctions;
    (ii) The number of contracts (of orders of fewer than 50 contracts)
entered into BAM Auctions;

    (iii) The number of orders of 50 contracts or greater entered into
BAM Auctions; and
    (iv) The number of orders of fewer than 50 contracts entered into
BAM Auctions.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
and, in particular, with Section 6(b) of the Act.\33\ In particular,
the Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\34\ which requires, among other things,
that the rules of a national securities exchange be 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 regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect customers, issuers, brokers and dealers. The Commission
believes that the Exchange's proposal to establish the BAM may increase
competition among those options exchanges that offer similar price
improvement mechanisms. The Commission further believes that allowing
EDGX Members to enter orders into the BAM will provide additional
opportunities for such orders to receive price improvement over the
NBBO and, in some instances, will result in such orders receiving price
improvement over the NBBO.
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    \33\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \34\ 15 U.S.C. 78f(b)(5).
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    In particular, the Commission notes that, in order to initiate an
Auction, the Initiating Member must stop the entire Agency Order as
principal or with a solicited order at a price in an increment of $0.01
such that if the Agency Order is for less than 50 option contracts and
the difference between the NBB and NBO is $0.01, the Initiating Member
must stop the entire Agency Order at one minimum price improvement
increment better than the NBBO, which increment shall be determined by
the Exchange but may not be smaller than $0.01. The Commission believes
that guaranteed price improvement for Agency Orders of fewer than 50
contracts when the difference between the NBB and NBO is $0.01 will
benefit such Agency Orders. The Commission notes further that, for any
other Agency Order, the Initiating Member must stop the entire Agency
Order at the better of the NBBO or the Agency Order's limit price (if
the order is a limit order). Accordingly, the proposed rule change will
provide customers with an opportunity for price improvement over the
NBBO in those instances.
    If the EDGX BBO on the same side of the market as the Agency Order
represents a Priority Customer order on the book, the stop price must
be at least $0.01 better than the booked order's limit price. If the
EDGX BBO on the same side of the market as the Agency Order represents
a quote or order that is not a Priority Customer order on the book, the
stop price must be at least $0.01 better than the booked order's limit
price unless the Agency Order is a Priority Customer order and the
Customer Overlay set forth in Exchange Rule 21.8(d)(1) is in effect.
The Commission notes that the Exchange has represented that this
condition is consistent with the operation of the Exchange generally,
where the Customer Overlay is currently in effect with respect to all
options traded on the Exchange, and Priority Customer Orders have first
priority over other orders at the same price.
    With respect to Agency Orders for less than 50 contracts, only one
BAM Auction may be ongoing at any given time in a series and Auctions
in the same series may not queue or overlap in any manner. However, BAM
Auctions for Agency Orders of 50 contracts or more will be allowed to
occur at the same time as other Auctions in the same series. The
Commission notes that the BAM rules regarding the processing of
overlapping BAM Auctions for Agency Orders of 50 contracts or more have
been made transparent in the proposed rule change and are reasonable,
given that the electronic nature of BAM makes the sequence of auction
start times readily discernable.\35\ In particular, the Commission
notes that a BAM response will only be considered for its specified
Auction. Each BAM response must specifically identify the BAM Auction
for which it is targeted, and if not fully executed, the BAM response
will be cancelled back at the conclusion of the auction.
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    \35\ See proposed Interpretation and Policy .04 to EDGX Rule
21.19.
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    All BAM Auctions will last for a period of no less than 100
milliseconds and no more than one second, as determined by the Exchange
and announced on the Exchange's Web site. As the Exchange discussed in
its proposal, the Exchange conducted a survey of active EDGX market
maker firms and other active liquidity providers inquiring as to the
timeframe within which these market participants respond to an auction
with a duration time ranging from less than fifty (50) milliseconds to
more than one (1) second. According to the Exchange, a majority of the
market maker firms and active liquidity providers on EDGX Options that
responded to the survey indicated that they were capable of responding
to auctions with a duration time of at least 50 milliseconds.\36\ Based
on the Exchange's statements, the Commission believes that the proposed
duration of the BAM Auction could facilitate the prompt execution of
orders in the BAM, while providing market participants with an
opportunity to compete for exposed bids and offers. The Commission
notes that other exchanges' price improvement auctions provide for
auction response periods within the range of the response duration
proposed by EDGX.\37\
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    \36\ Of the ten (10) active EDGX market maker firms that were
surveyed, eight (8) of these market makers responded to the survey.
In addition, because EDGX is a relatively new options exchange and
is still encouraging market makers to register and participate on
the Exchange as such, and to increase the sample size, the Exchange
included six (6) additional liquidity providers that are not active
EDGX market makers but are active participants on EDGX Options.
Thirteen (13) of the fourteen (14) respondents, or 93% indicated
that that their firm could respond to auctions with a duration time
of at least 50 milliseconds, though one of these firms indicated a
preference of auctions with a duration of 100 milliseconds. The
remaining firm indicated that it could respond to auctions with a
duration of at least 100 milliseconds. This survey was conducted in
September of 2016.
    \37\ See Chapter VI, Section 9(ii)(A)(3) of the BX Rules
(auction period between 100 milliseconds and 1 section),
International Securities Exchange, LLC (``ISE'') Rule 723(c)(5)
(auction period of 500 milliseconds), CBOE Rule 6.74A(b)(1)(C)
(auction period of 1 second), and BOX Options Exchange LLC (``BOX'')
Rule 7150(f)(1) (auction period of 100 milliseconds).
---------------------------------------------------------------------------

    The Commission believes that the Exchange's proposed matching
algorithm is sufficiently clear regarding how orders are to be
allocated in the BAM Auction and is designed in a manner that should
facilitate a competitive auction process. The Commission further
believes that permitting Priority Orders to have enhanced priority may
encourage EDGX Users to quote aggressively with additional size outside
of the BAM Auction and, therefore, may enhance competition and
liquidity on the EDGX market.
    Under the proposal, the BAM Auction would be available for orders
of fewer

than 50 contracts. There would be no minimum size requirement for
orders entered into the BAM Auction for a pilot period expiring on
January 18, 2017. The Exchange has represented its commitment to submit
certain data on BAM Auctions at the request of Commission staff. The
Commission expects such data to be used, by both the Exchange and the
Commission staff, to assess the performance of the BAM Auction,
including, among other things, to study whether there is meaningful
competition for all size orders with the BAM, the degree of price
improvement for all orders executed through the BAM, and whether there
is an active and liquid market functioning on the Exchange outside of
the BAM. The data provided will enable the Commission, as well as the
Exchange itself, to evaluate the BAM Auction to determine its
performance and possible impact on EDGX and options market structure in
general and the degree to which it is beneficial to customers and to
the options market as a whole.

IV. Section 11(a) of the Act

    Section 11(a)(1) of the Act \38\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises investment discretion
(collectively, ``covered accounts'') unless an exception applies. Rule
11a2-2(T) under the Act,\39\ known as the ``effect versus execute''
rule, provides exchange members with an exemption from the Section
11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange member,
subject to certain conditions, to effect transactions for covered
accounts by arranging for an unaffiliated member to execute
transactions on the exchange. To comply with Rule 11a2-2(T)'s
conditions, a member: (i) must transmit the order from off the exchange
floor; (ii) may not participate in the execution of the transaction
once it has been transmitted to the member performing the execution;
\40\ (iii) may not be affiliated with the executing member; and (iv)
with respect to an account over which the member or an associated
person has investment discretion, neither the member nor its associated
person may retain any compensation in connection with effecting the
transaction except as provided in the Rule. For the reasons set forth
below, the Commission believes that Exchange members entering orders
into the BAM Auction would satisfy the requirements of Rule 11a2-2(T).
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78k(a)(1).
    \39\ 17 CFR 240.11a2-2(T).
    \40\ This prohibition also applies to associated persons. The
member may, however, participate in clearing and settling the
transaction.
---------------------------------------------------------------------------

    The Rule's first condition is that orders for covered accounts be
transmitted from off the exchange floor. In the context of automated
trading systems, the Commission has found that the off-floor
transmission requirement is met if a covered account order is
transmitted from a remote location directly to an exchange's floor by
electronic means.\41\ EDGX represents that the EDGX trading system and
the proposed BAM Auction receive all orders electronically through
remote terminals or computer-to-computer interfaces.\42\ The Exchange
also represents that orders for covered accounts from Members will be
transmitted from a remote location directly to the proposed BAM
mechanism by electronic means. Because no Exchange members may submit
orders into the BAM Auction from on the floor of the Exchange, the
Commission believes that the BAM Auction satisfies the off-floor
transmission requirement.
---------------------------------------------------------------------------

    \41\ See, e.g., Securities Exchange Act Release Nos. 61419
(January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-031)
(approving BATS options trading); 59154 (December 23, 2008), 73 FR
80468 (December 31, 2008) (SR-BSE-2008-48) (approving equity
securities listing and trading on BSE); 57478 (March 12, 2008), 73
FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-
080) (approving NOM options trading); 53128 (January 13, 2006), 71
FR 3550 (January 23, 2006) (File No. 10-131) (approving The Nasdaq
Stock Market LLC); 44983 (October 25, 2001), 66 FR 55225 (November
1, 2001) (SR-PCX-00-25) (approving Archipelago Exchange); 29237 (May
24, 1991), 56 FR 24853 (May 31, 1991) (SR-NYSE-90-52 and SR-NYSE-90-
53) (approving NYSE's Off-Hours Trading Facility); and 15533
(January 29, 1979), 44 FR 6084 (January 31, 1979) (``1979
Release'').
    \42\ See Notice, supra note 3, at 69179-80. See also Amendment
No. 1, supra note 5.
---------------------------------------------------------------------------

    Second, the Rule requires that the member and any associated person
not participate in the execution of its order after the order has been
transmitted. The Exchange represents that at no time following the
submission of an order is a Member able to acquire control or influence
over the result or timing of the order's execution.\43\ According to
the Exchange, the execution of an order sent to the BAM mechanism is
determined by what other orders are present and the priority of those
orders.\44\ Accordingly, the Commission believes that a member does not
participate in the execution of an order submitted to the BAM
mechanism.
---------------------------------------------------------------------------

    \43\ See Notice, supra note 3, at 69180. See also Amendment No.
1, supra note 5 (also representing, among other things, that: 1) no
Member, including the Initiating Member, will see a BAM response
submitted into BAM and therefore will not be able to influence or
guide the execution of their Agency Orders, 2) the Last Priority
feature will not permit a Member to have any control over an order,
and the election to Last Priority an order is available prior to the
submission of the order, will not be broadcast and further, the Last
Priority option may not be modified by the Initiating Member during
the auction).
    \44\ See Notice, supra note 3, at 69180. See also Amendment No.
1, supra note 5. The Exchange notes that a Member may not cancel or
modify an order after it has been submitted into BAM.
---------------------------------------------------------------------------

    Third, Rule 11a2-2(T) requires that the order be executed by an
exchange member who is unaffiliated with the member initiating the
order. The Commission has stated that this requirement is satisfied
when automated exchange facilities, such as the BAM mechanism, are
used, as long as the design of these systems ensures that members do
not possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange.\45\ EDGX represents
that the BAM Auction is designed so that no Member has any special or
unique trading advantage in the handling of its orders after
transmitting its orders to the mechanism.\46\ Based on the Exchange's
representation, the Commission believes that the BAM mechanism
satisfies this requirement.
---------------------------------------------------------------------------

    \45\ In considering the operation of automated execution systems
operated by an exchange, the Commission noted that, while there is
not an independent executing exchange member, the execution of an
order is automatic once it has been transmitted into the system.
Because the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange, the Commission has
stated that executions obtained through these systems satisfy the
independent execution requirement of Rule 11a2-2(T). See 1979
Release, supra note 41.
    \46\ See Notice, supra note 3, at 69180. See also Amendment No.
1, supra note 5.
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T) thereunder.\47\ EDGX

represents that Members relying on Rule 11a2-2(T) for transactions
effected through the BAM Auction must comply with this condition of the
Rule and that the Exchange will enforce this requirement pursuant to
its obligations under Section 6(b)(1) of the Act to enforce compliance
with federal securities laws.\48\
---------------------------------------------------------------------------

    \47\ In addition, Rule 11a2-2(T)(d) requires a member or
associated person authorized by written contract to retain
compensation, in connection with effecting transactions for covered
accounts over which such member or associated persons thereof
exercises investment discretion, to furnish at least annually to the
person authorized to transact business for the account a statement
setting forth the total amount of compensation retained by the
member or any associated person thereof in connection with effecting
transactions for the account during the period covered by the
statement. See 17 CFR 240.11a2-2(T)(d). See also Securities Exchange
Act Release No. 14563 (March 14, 1978), 43 FR 11542 (March 17, 1978)
(stating ``[t]he contractual and disclosure requirements are
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such
arrangements are suitable to their interests'').
    \48\ See Notice, supra note 3, at 69180. See also Amendment No.
1, supra note 5.
---------------------------------------------------------------------------

V. Accelerated Approval of Proposal, as Modified by Amendment No. 1

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Exchange Act, to approve the proposal, as modified by Amendment No.
1, prior to the 30th day after publication of Amendment No. 1 in the
Federal Register. In Amendment No. 1, EDGX revised the original
proposal to make the changes discussed in detail above. Notably, in
Amendment No. 1, EDGX revises its proposal to restrict an Auction from
commencing with a stop price equal to a same side resting order except
in limited circumstances, as described above, and prohibit an
Initiating Order from being a solicited order for the account of an
Options Market Maker assigned in the affected series on the Exchange.
EDGX also made changes to clarify and add detail to its proposal and
the proposed rule text. The Commission believes that Amendment No. 1
does not raise any novel regulatory issues and instead better aligns
EDGX's proposed Auction functionality with existing functionality on
the Exchange and with that of similar auction mechanisms operated by
other options exchanges, and provides additional clarity in the rule
text, which is consistent with EDGX's original proposal and supports
EDGX's analysis of how its proposal is consistent with the Act, thus
facilitating the Commission's ability to make the findings set forth
above to approve the proposal. Accordingly, the Commission finds that
good cause exists to approve the proposal, as modified by Amendment No.
1, on an accelerated basis.

VI. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
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-BatsEDGX-2016-41 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BatsEDGX-2016-41. 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 20549-1090, on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsEDGX-2016-41 and should
be submitted on or before January 30, 2017.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\49\ that the proposed rule change (SR-BatsEDGX-2016-41), as
modified by Amendment No. 1, be and hereby is approved on an
accelerated basis, except that there shall be no minimum size
requirement for orders to be eligible for the Auction for a pilot
period expiring on January 18, 2017.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
---------------------------------------------------------------------------

    \50\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-00096 Filed 1-6-17; 8:45 am]
 BILLING CODE 8011-01-P


This entry includes files pertaining to the Environmental Justice Ozone Exposure Analysis for the Proposed Federal Implementation Plan Addressing Regional Ozone Transport for the 2015 Ozone National Ambient Air Quality Standard.
This media is not available in Regulations.gov. Please contact the EPA Docket Center, Public Reading Room to view or receive a copy of this document. Requests for copies may be made as follows:
In person/writing:
Environmental Protection Agency, Docket Center 1301 Constitution Ave NW, 2822T,
Room 3334, Washington, DC. 20004
Telephone:<PHONE_NUMBER>;
Fax: 202-566- 9744;
Email<EMAIL_ADDRESS>


Minutes of the

United States Environmental Protection Agency (EPA)

Human Studies Review Board (HSRB)

August 15, 2014 Public Teleconference/Webinar Meeting

Docket Number: EPA–HQ–ORD–2014-0564

HSRB Website:   HYPERLINK "http://www.epa.gov/osa/hsrb"
http://www.epa.gov/osa/hsrb

Committee Members:	(See EPA HSRB Members list—Attachment A)

Date and Time:	Friday, August 15, 2014, 2:00 p.m. – 3:30 p.m. EDT

(See Federal Register Notice—Attachment B)

Location: 	Via Teleconference and Webinar

Purpose: 	The EPA Human Studies Review Board provides advice,
information and recommendations on issues related to the scientific and
ethical aspects of human subjects research.

Attendees: 	Chair: 			Rebecca Parkin, Ph.D., M.P.H.

Board Members: 	Liza Dawson, Ph.D.

George C.J. Fernandez, Ph.D.

Kyle L. Galbraith, Ph.D.

Edward Gbur, Jr., Ph.D.

Sidney Green, Jr., Ph.D., Fellow, ATS

John C. Kissel, Ph.D.

Randy Maddalena, Ph.D.

William J. Popendorf, Ph.D.

Kenneth Ramos, M.D., Ph.D., Pharm.B.

Leonard Ritter, Ph.D., ATS

Linda J. Young, Ph.D.

Meeting Summary:	Meeting discussions generally followed the issues and
general timing as presented in the meeting Agenda (Attachment C), unless
noted otherwise in these minutes.

COMMENCEMENT OF PUBLIC MEETING and Identification of Board Members

Mr. Jim Downing, Designated Federal Officer (DFO) of the HSRB, commenced
the teleconference/webinar meeting and welcomed Board members on behalf
of EPA. He noted that the Agency appreciates the Board members’ time
and diligence in preparing for the meeting and during the deliberations.
He also welcomed EPA colleagues and members of the public. The purpose
of this teleconference/webinar meeting is to review the decisions made
by the Board at the June 11, 2014 HSRB meeting and to finalize the
Board’s report from that meeting.

Mr. Downing called roll to determine which members were present on the
call; a quorum of members was present. The members introduced themselves
with their names and affiliations.

Meeting Administrative Procedures

As DFO, Mr. Downing, serves as the liaison between the HSRB and EPA and
ensures that Federal Advisory Committee Act (FACA) provisions are met
with regard to the operations of the HSRB. He also works with the
appropriate officials to ensure that all applicable ethics regulations
are satisfied. Each Board member has been briefed on the provisions of
the federal conflict of interest laws and has filed a standard
government financial disclosure form that has been reviewed to ensure
that all ethics disclosure requirements have been met.

At the teleconference/webinar meeting, the Board will review the draft
final report from the June 2014 HSRB meeting and will finalize the
report for submission to EPA’s Science Advisor. Mr. Downing reminded
participants that meeting times listed on the agenda would be
approximate, and that participants should state their names before
speaking to ensure proper attribution. Copies of the meeting materials,
supporting documents and public comments will be available at
HYPERLINK "http://www.regulations.gov "  http://www.regulations.gov
under docket number EPA-HQ-ORD-2014-0564, and most are available on the
HSRB website at   HYPERLINK "http://www.epa.gov/osa/hsrb"
http://www.epa.gov/osa/hsrb . At the appropriate time, members of the
public may provide public comments; these must be limited to 5 minutes.
No individuals preregistered to provide public comments. The draft final
report will be displayed, reviewed and modified on the website at
HYPERLINK "https://epa.connectsolutions.com/hsrbtele"
https://epa.connectsolutions.com/hsrbtele  during the
teleconference/webinar. Mr. Downing encouraged the participants to log
in to the webinar, which will enable the Board to follow along as
revisions to the draft document are made in real time during the
deliberations.

According to FACA requirements, meeting minutes will be prepared,
including descriptions of the topics discussed and conclusions reached
by the Board. These minutes will be reviewed and certified by the Chair
within 30 days of the meeting and posted at   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  and on the
HSRB website. Mr. Downing expressed appreciation to the Board members
for their participation and eagerness to finalize the report from the
June 2014 meeting. Mr. Downing turned the meeting over to the HSRB
Chair, Dr. Rebecca Parkin.

Meeting Process

Dr. Parkin, HSRB Chair, thanked all of the Board members for their
diligent work at the June 2014 meeting and their efforts in developing
the draft meeting report and preparing for the teleconference/webinar.
She reiterated Mr. Downing’s request for the Board members to log in
to the webinar. Dr. Parkin explained that Mr. Downing will edit the
document in real time in response to Board members’ comments.

She expressed confidence that the Board would finalize the report and
expedite its progress toward public access. Dr. Parkin described the
meeting process, explaining that she would lead the discussion
sequentially through each section of the report to ensure that all
issues are covered. After Dr. Parkin announces a section, the Board
members will have an opportunity to offer comments about that particular
section. The Board will address the draft cover letter at the end of the
discussion.

Public Comments

Mr. Downing noted that there were no preregistered public comments, and
no public participants had identified themselves on the teleconference
line. He invited participants to comment publicly on the draft June 2014
HSRB meeting report. No public comments were presented to the Board.

Board Discussion AND DECISION ON THE FINAL REPORT

Dr. Parkin directed the participants to the draft report Introduction.
She asked the Board members to contribute any concerns or suggested
revisions. In response to a question, Dr. Parkin confirmed that the
version under review by the Board is labeled August 13, 2014, with
Dr. Sidney Green’s revision incorporated. Hearing no comments on the
Introduction, Dr. Parkin moved sequentially through the Review Process
paragraphs to solicit comments. Hearing no comments on the Review
Process section, Dr. Parkin directed the Board members to the Paul et
al. report.

A published report by Paul et al. (1988) of an intentional exposure
human study measuring the effects of small increases of dietary iodine
on thyroid function

Moving on to the Paul et al. report, Dr. Parkin asked if there were any
Board member concerns about the Overview of the Study as written. Dr.
Randy Maddalena noted that the units specifying the dosages of the
sodium iodide were incorrect as written in the Board’s report. The
Board members discussed the correct way to represent the sodium iodide
doses. After referring to the original article and debating the
appropriate language, the Board members decided to rephrase the
sentences about the sodium iodide doses as follows:

“While maintaining their usual diets over a 14-day period, the female
participants took sodium iodide dissolved in water at one of three
dosages (250, 500 or 1,500 µg per day) along with 5 mg/day ascorbic
acid. In the same manner the male participants received only the 1,500
µg per day dose.”

All of the Board members were in agreement with regard to the revised
sentences, and they all approved of Dr. Green’s revision.

Dr. Parkin called for comments within the Science section, including the
Charge to the Board and Board Response to the Charge. She noted that the
HSRB Recommendation points capture the Board decisions during the June
2014 meeting. The HSRB Detailed Recommendations and Rationale were built
on the contributions from the lead discussants, with minor formatting
modifications. Dr. Parkin noted that the recommendations now address the
issue that reliable data do not necessarily generate reliable
conclusions. She solicited additional comments for the Science section.

A participant suggested modifying the quoted phrase in item 1 to read,
“some of the women were studied at two dose levels at least one year
apart” to ensure that the phrase was captured verbatim from the Paul
et al. report.

An HSRB member referenced the question regarding the Paul et al.
study’s inclusion of data from repeat study participants in item 1 in
response to the question, “Is this study scientifically sound,
providing reliable data?” The issue is that 36 observations were
recorded from 32 participants, and the origin of the additional four
measurements is unclear to the Board members. Dr. Parkin asked how the
paragraph should be reworded to address the Board members’ concern.
Drs. Linda Young, George Fernandez, William Popendorf and Edward Gbur
discussed how to capture the Board’s concern within the report. Dr.
Parkin noted that the treatment issue is separate from the confusion
about Table 1 in the Paul et al. report. Several Board members expressed
reluctance to include the Board’s assumptions about the data within
the HSRB report. To lend clarity to the HSRB Detailed Recommendations
and Rationale section, a participant suggested removing the sentence
beginning with “Furthermore…” from point 1. Dr. Young suggested
language to insert after the first sentence in point 2 that would read,
“For example, it is unclear how the total sample size of 32 can be
reconciled with the values in column N of Table 1.” The participants
also agreed to modify point 2 to read, “(1) the duplicate assay values
used in the study were treated as subsamples (not as true
replications).”

Dr. Parkin called for comments or suggested revisions within the Ethics
section of the HSRB report. No comments were offered in the Charge to
the Board, Board Response to the Charge, HSRB Recommendation, and
HSRB’s Detailed Recommendation and Rationale sections. Dr. Parkin
concluded that the Board was in agreement with the Ethics section of the
Paul et al. review within the HSRB report.

A published report by Gardner et al. (1988) of an intentional exposure
human study measuring the effects of low dose oral iodide
supplementation on thyroid function

Dr. Parkin solicited comments for the Overview of the Study section for
the Gardner et al. review. Hearing none, she read the HSRB
Recommendations for the Science section aloud:

The Board concurred that the study is scientifically sound, providing
reliable data. However, the lack of details in the analytic methods and
less than robust statistical analysis weakened the HSRB’s ability to
evaluate all aspects of the study’s scientific soundness. Thus, the
Board did not find clear and convincing evidence that this study’s
data are not reliable.

The HSRB concluded that this study is relevant for quantitative use in
support of an assessment of the oral risk of exposure to iodine.
However, the hormone levels and changes in T4 observed in this study
should be viewed as qualitative in nature. In contrast, the changes in
thyroid function are sufficiently reliable to be used in a
weight-of-evidence analysis.

Dr. Leonard Ritter suggested removing the word “thus” from the first
bullet point of the recommendations. Dr. Gbur commented that the lack of
details about the analytic methods might be an issue. Dr. Parkin
reminded the participants that the HSRB report reflects the decisions
voted by the Board at the June 2014 meeting. Dr. Young suggested
changing the wording of the last sentence in the first bullet to read:
“The Board did not find clear and convincing evidence that the
conclusions drawn from this study are not reliable” to assuage the
members’ concern about the reliability of the data versus the
reliability of the conclusions. Several Board members expressed
reluctance to use a double negative in the sentence, but Mr. Downing
noted that such language has been used in previous reports.

A HSRB member questioned the meaning of the phrase “this study is
relevant for quantitative use” in the second bullet. He expressed
caution in endorsing wording that is unclear. Dr. Young explained that
EPA uses data for qualitative and quantitative purposes in a
weight-of-evidence approach. Dr. Fernandez asked for clarification of
the term “weight-of-evidence.” Dr. Parkin clarified that
weight-of-evidence is an approach used by EPA. It is not a statistical
term. The term is used in the HSRB report for consistency with EPA’s
charge question. A participant elaborated that EPA uses the term
“weight-of-evidence approach” interchangeably with
“weight-of-evidence analysis” and “weight-of-evidence
evaluation.” According to draft EPA guidance, “a weight-of-evidence
evaluation is a process where potentially relevant studies are judged in
a professional manner for quality.” Even when data are not
quantitatively useful, they might provide qualitative information on the
nature of toxicity or exposure.

Dr. Parkin proceeded through the HSRB Detailed Recommendations and
Rationale within the Science section. Hearing no comments, Dr. Parkin
concluded that the Board was satisfied with the Gardner et al. Science
section of the HSRB report with the proposed changes. The Board members
also approved of the Gardner et al. Ethics section of the HSRB report
with no changes.

A published report by Lemar et al. (1995) of an intentional exposure
human study measuring the effects of chronic tetraglycine hydroperiodide
water purification tablet use on thyroid function

Dr. Parkin directed the Board members to the Lemar et al. article. There
were no comments offered on the Overview of the Study. Dr. Parkin read
the three HSRB Recommendations:

Subject to the limitations noted below, the Board concluded that:

The study is scientifically sound and provides reliable data.

This study would be relevant in a weight-of-evidence approach for
establishing the reversibility of high dose iodine exposure.

This study would be relevant in a weight-of-evidence approach for
establishing that there are no sustained adverse effects from high dose
iodine exposure.

Dr. Parkin asked for any comments or revisions to the recommendations,
and none were offered. She then proceeded through the HSRB Detailed
Recommendations and Rationale. A participant suggested that the quoted
phrase be modified to include hyphens: “Student-Newman-Keuls.” There
were no further edits suggested within the Science section. Mr. Downing
affirmed that he would check pagination when he prepares the final
version of the HSRB report.

Dr. Parkin proceeded through the Ethics section of the HSRB report. Dr.
Kyle Galbraith noticed a discrepancy in the spelling of the Fitzsimons
Army Medical Center, and the text was corrected.

Dr. Liza Dawson noted that the U.S. Department of Defense (DoD) version
of the Common Rule has a different regulatory citation. Drs. Dawson and
Galbraith affirmed that the correct citation for DoD’s Common Rule is
“Title 32 part 219.” Dr. Parkin suggested that the citation follow
the year that the rule was adopted by the DoD to increase clarity. The
changes were made within the HSRB report. Board members offered no
additional comments within the Ethics section.

HSRB Work Group on Return of Individual Research Results Report

Dr. Parkin directed the Board members to review the Overview, Discussion
and Board Consensus on the HSRB Work Group on Return of Individual
Research Results Report section. In response to a question, she
clarified that “Appendix A” refers to the appendix of the Work Group
Report, which is available on the HSRB website. Hearing no further
comments, Dr. Parkin concluded that the Board approved the consensus
statement as written.

References and Cover Letter

Dr. Parkin proceeded to the HSRB report references. A participant noted
inconsistencies in the journal titles within the reference list. Dr.
Parkin asserted that the references would be reviewed for consistency
with EPA’s traditional format.

Dr. Parkin solicited any revisions or clarifications to the cover
letter. She explained that any changes made to the recommendations
during the HSRB’s deliberations would be reflected in the cover
letter. Several Board members noted that their contact information was
incorrect in the HSRB report. Mr. Downing asserted that all contact
information would be corrected in the final draft. Hearing no additional
comments or revision requests to the HSRB report, Dr. Parkin turned the
meeting to Mr. Downing.

Summary and Next Steps

Mr. Downing announced that the next HSRB meeting is scheduled for
November 5, 2014. The meeting will be conducted virtually, and further
details will be provided in the coming months.

Mr. Downing announced that this is the final meeting for HSRB Chair, Dr.
Parkin. He acknowledged her stellar service on the HSRB as a member,
Vice Chair and Chair. Mr. Downing said that the Agency is indebted to
Dr. Parkin for her service, which started in October 2007.
Dr. Parkin’s steady guidance of the Board and dutiful service will
always be remembered. Mr. Downing also acknowledged the final meeting
of Dr. Young. He thanked her for her contributions to the HSRB, noting
the particular strength of statistical expertise that she brought to the
Board. Mr. Downing explained that EPA staff have commented about the
much-improved statistical power of current studies, which is
attributable to Dr. Young’s input.

Mr. Downing described the new compensation system for the HSRB members.
He requested that all members submit their time sheets every 2 weeks to
Ms. Lu-Ann Kleibacker (EPA). In response to a question, Mr. Downing
agreed to distribute a calendar of time sheet deadlines through the end
of the year.

Adjournment

Dr. Parkin thanked the Board members for their participation. The
teleconference/ webinar meeting was adjourned by Mr. Downing at 3:30
p.m.

Respectfully submitted:

Jim Downing

Designated Federal Officer

Human Studies Review Board

United States Environmental Protection Agency

Certified to be true by:

Rebecca Parkin, Ph.D., M.P.H.

Chair

Human Studies Review Board

United States Environmental Protection Agency

NOTE AND DISCLAIMER: The minutes of this public teleconference/webinar
meeting reflect diverse ideas and suggestions offered by Board members
during the course of deliberations within the meeting. Such ideas,
suggestions and deliberations do not necessarily reflect definitive
consensus advice from the Board members. The reader is cautioned to not
rely on the minutes to represent final, approved, consensus advice and
recommendations offered to the Agency. Such advice and recommendations
may be found in the final report prepared and transmitted to the EPA
Science Advisor following the public meeting.

Attachments

Attachment A 		HSRB Members

Attachment B 		Federal Register Notice Announcing Meeting

Attachment C 		Meeting Agenda

Attachment A

EPA HUMAN STUDIES REVIEW BOARD MEMBERS

Chair

Rebecca Parkin, Ph.D., M.P.H.

Professorial Lecturer, EOH and Epidemiology and Biostatistics

Milken Institute School of Public Health

The George Washington University

Washington, D.C.

Vice Chair

Jewell H. Halanych, M.D., M.Sc.

Assistant Professor

Internal Medicine Residency Program

University of Alabama at Birmingham

Montgomery, AL

Members

Liza Dawson, Ph.D.

Research Ethics Team Leader

Division of AIDS, National Institutes of Health

National Institute of Allergy and Infectious Diseases

Bethesda, MD

George C.J. Fernandez, Ph.D.

Statistical Training Specialist

SAS Institute, Statistical Training and Technical Services

Sparks, NV

Kyle L. Galbraith, Ph.D.

Human Subjects Protection

Carle Foundation Hospital

Urbana, IL

Members (continued)

Edward Gbur, Jr., Ph.D.

Professor

Agricultural Statistics Laboratory

University of Arkansas

Fayetteville, AR

Sidney Green, Jr., Ph.D., Fellow, ATS

Retired

Department of Pharmacology

Howard University College of Medicine

Silver Spring, MD

Elizabeth Heitman, Ph.D.

Associate Professor of Medical Ethics

Center for Biomedical Bioethics and Society

Vanderbilt University Medical Center

Nashville, TN

John C. Kissel, Ph.D.

Department of Environmental

	and Occupational Health Sciences

School of Public Health

University of Washington

Seattle, WA

Randy Maddalena, Ph.D.

Physical Research Scientist

Indoor Environment

Lawrence Berkeley National Laboratory

Berkeley, CA

William J. Popendorf, Ph.D.

Professor Emeritus

Department of Biology

Utah State University

Logan, UT

Members (continued)

Kenneth Ramos, M.D., Ph.D., Pharm.B.

Associate Vice President

Precision Health Sciences

Professor of Medicine

Arizona Health Sciences Center

Tucson, AZ

Leonard Ritter, Ph.D., ATS

Professor Emeritus (Toxicology)

School of Environmental Sciences

University of Guelph

Guelph, ON, Canada

Linda J. Young, Ph.D.

Chief Mathematical Statistician and Director

USDA National Agricultural Statistics Service

Research and Development Division

Fairfax, VA

Attachment B

FEDERAL REGISTER NOTICE ANNOUNCING MEETING

[Federal Register Volume 79, Number 148 (Friday, August 1, 2014)]

[Notices]

[Pages 44769-44771]

From the Federal Register Online via the Government Printing Office [
HYPERLINK "http://www.gpo.gov"  www.gpo.gov ]

[FR Doc No: 2014–18221]

=======================================================================

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

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-ORD-2014–0564; FRL-9914–72– ORD]

Human Studies Review Board; Notification of a Public
Webinar/Teleconference

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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

SUMMARY: The Environmental Protection Agency (EPA) Office of the Science
Advisor announces a public Webinar/ teleconference of the Human Studies
Review Board (HSRB) to discuss its draft report on the HSRB meeting held
August 15, 2014.

DATES: The Webinar/teleconference will be held on Friday, August 15,
2014,

from approximately 2:00 p.m. to approximately 3:30 p.m. Eastern Time.
Comments may be submitted on or before Friday, August 8, 2014.
Information regarding the HSRB final meeting report will be found at
HYPERLINK "http://www.epa.gov/osa/hsrb"  http://www.epa.gov/osa/hsrb
and   HYPERLINK "http://www.regulations.gov"  http://www.regulations.gov
 or from the persons listed under FOR FURTHER INFORMATION CONTACT.

	Webcast: This meeting may be webcast. Please refer to the HSRB Web site
  HYPERLINK "http://www.epa.gov/osa/hsrb"  http://www.epa.gov/osa/hsrb
for information on how to access the webcast. If difficulties arise
resulting in webcasting outages, the meeting will continue as planned.

ADDRESSES: Submit your written comments, identified by Docket ID No.
EPA–HQ–ORD–2014–0564, by one of the following methods:

	Internet:   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov : Follow the Web site instructions for
submitting comments.

	Email:   HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

	Mail: Environmental Protection Agency, EPA Docket Center EPA/DC, ORD
Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW., Washington, DC
20460.

	Hand Delivery: The EPA/DC Public Reading Room is located in the EPA
Headquarters Library, Room Number 3334 in the EPA West Building, located
at 1301 Constitution Avenue NW., Washington, DC 20460. The Reading
Room’s hours of operation are 8:30 a.m. to 4:30 p.m. Eastern Time,
Monday through Friday, excluding Federal holidays. Please call (202)
566–1744 or email the ORD Docket at   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>for instructions.
Updates to Public Reading Room access are available online at
HYPERLINK "http://www.epa.gov/epahome/dockets.htm"
http://www.epa.gov/epahome/dockets.htm .

	Instructions: Direct your comments to Docket ID No.
EPA–HQ–ORD–2014–0564. The Agency’s policy is that all comments
received will be included in the public docket without change and may be
made available online at   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov , including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information or other information the disclosure of
which is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  or email. The
 HYPERLINK "http://www.regulations.gov"  http://www.regulations.gov  Web
site is an “anonymous access” system, which means the EPA will not
know your identity or contact information unless you provide it in the
body of your comment. If you send an email comment directly to the EPA
without going through   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov , your email address will be automatically
captured and included as part of the comment that is placed in the
public docket and made available on the Internet. If you submit an
electronic comment, the EPA recommends that you include your name and
other contact information in the body of your comments and with any disk
or CD–ROM you submit. If the EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, the EPA
may not be able to consider your comment.

Electronic files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses.

FOR FURTHER INFORMATION CONTACT: Any members of the public who wish to
receive further information about this Webinar/Teleconference should
contact Jim Downing at telephone number (202) 564–2468; fax (202)
564–2070; email address   HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>; mailing address Environmental Protection Agency,
Office of the Science Advisor, Mail Code 8105R, 1200 Pennsylvania Avenue
NW., Washington, DC 20460. General information concerning the HSRB can
be found on the EPA Web site at   HYPERLINK
"http://www.epa.gov/osa/hsrb"  http://www.epa.gov/osa/hsrb .

SUPPLEMENTARY INFORMATION:

	Location: The meeting will take place via the Internet and telephone
only. Access information can be found on the HSRB Web site:   HYPERLINK
"http://www.epa.gov/osa/hsrb/"  http://www.epa.gov/osa/hsrb/  or by
contacting the persons listed under the FOR FURTHER INFORMATION CONTACT
section of this Notice.

	Meeting access: For detailed information on access or services for
individuals with disabilities, please contact Jim Downing at least ten
business days prior to the meeting using the information under FOR
FURTHER INFORMATION CONTACT, so that appropriate arrangements can be
made.

	Procedures for providing public input: Interested members of the public
may submit relevant written or oral comments for the HSRB to consider
during the advisory process. Additional information concerning
submission of relevant written or oral comments is provided in Section
I, “Public Meeting,” under subsection D, “How may I participate in
this meeting?” of this notice.

I. Public Meeting

A. Does this action apply to me?

	This action is directed to the public in general. This action may,
however, be of particular interest to persons who conduct or assess
human studies, especially studies on substances regulated by the EPA, or
to persons who are, or may be required to conduct testing of chemical
substances under the Federal Food, Drug, and Cosmetic Act or the Federal
Insecticide, Fungicide, and Rodenticide Act. Since other entities may
also be interested, the EPA has not attempted to describe all the
specific entities that may be affected by this action. If you have any
questions regarding the applicability of this action to a particular
entity, consult Jim Downing listed under FOR FURTHER INFORMATION
CONTACT.B. How can I access electronic copies of this document and
other related information?

	You may use   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov , or you may access this Federal Register
document via the EPA’s internet site under the Federal Register
listings at   HYPERLINK "http://www.epa.gov/fedrgstr"
http://www.epa.gov/fedrgstr .

	Docket: All documents in the docket are listed in the   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  index.
Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, will
be publicly available only in hard copy. Publicly available docket
materials are available either electronically at   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  or in hard
copy at the ORD Docket, EPA/DC Public Reading Room. The EPA/DC Public
Reading Room is located in the EPA Headquarters Library, Room Number
3334 in the EPA West Building, located at 1301 Constitution Avenue NW.,
Washington, DC 20460; its hours of operation are 8:30 a.m. to 4:30 p.m.
Eastern Time, Monday through Friday, excluding federal holidays. Please
call (202) 566–1744, or email the ORD Docket at   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>for instructions.
Updates regarding the Public Reading Room access are available at
HYPERLINK "http://www.epa.gov/epahome/dockets.htm"
http://www.epa.gov/epahome/dockets.htm .

C. What should I consider as I prepare my comments for EPA?

You may find the following suggestions helpful for preparing your
comments:

	1.	Explain your views as clearly as possible.

	2.	Describe any assumptions that you used.

	3.	Provide copies of any technical information and/or data used that
support your views.

[[44771]]

	4.	Provide specific examples to illustrate your concerns and suggest
alternatives.

	5.	To ensure proper receipt by the EPA, be sure to identify the docket
ID number assigned to this action in the subject line on the first page
of your response. You may also provide the name, date and Federal
Register citation.

D. How may I participate in this meeting?

	You may participate by providing comments in this meeting by following
the instructions in this section. To ensure proper receipt of your
comments by the EPA, it is imperative that you identify Docket ID No.
EPA–HQ–ORD– 2014–0564 in the subject line on the first page of
your request.

	1. Oral comments. Requests to present oral comments will be accepted up
to and including Friday, August 8, 2014. To the extent that time
permits, interested persons who have not preregistered may be permitted
by the Chair of the HSRB to present oral comments during the meeting.
Each individual or group wishing to make brief oral comments to the HSRB
is strongly advised to submit their request (preferably via email) to
Jim Downing under FOR FURTHER INFORMATION CONTACT no later than noon,
Eastern Time, Friday, August 8, 2014, in order to be included on the
meeting agenda and to provide sufficient time for the HSRB Chair and
HSRB Designated Federal Official to review the meeting agenda to provide
an appropriate public comment period. The request should identify the
name of the individual making the presentation and the organization (if
any) the individual will represent. Oral comments before the HSRB are
generally limited to five minutes per individual or organization. Please
note that this includes all individuals appearing either as part of, or
on behalf of, an organization. While it is our intent to hear a full
range of oral comments on the science and ethics issues under
discussion, it is not our intent to permit organizations to expand the
time limitations by having numerous individuals sign up separately to
speak on their behalf. If additional time is available, further public
comments may be possible.

	2. Written comments. Please submit written comments prior to the
meeting. For the HSRB to have the best opportunity to review and
consider your comments as it deliberates on its report, you should
submit your comments at least five business days prior to the beginning
of this teleconference. If you submit comments after this date, those
comments will be provided to the Board members, but you should recognize
that the Board members may not have adequate time to consider those
comments prior to making a decision. Thus, if you plan to submit written
comments, the Agency strongly encourages you to submit such comments no
later than noon, Eastern Time, Friday, August 8, 2014. You should submit
your comments using the instructions in Section I, under subsection C,
“What should I consider as I prepare my comments for the EPA?” In
addition, the EPA also requests that persons submitting comments
directly to the docket also provide a copy of their comments to Jim
Downing listed under FOR FURTHER INFORMATION CONTACT. There is no limit
on the length of written comments for consideration by the HSRB.

E. Background

	The HSRB is a Federal advisory committee operating in accordance with
the Federal Advisory Committee Act 5 U.S.C. App. 2 Section 9. The HSRB
provides advice, information, and recommendations to the EPA on issues
related to scientific and ethical aspects of human subjects research.
The major objectives of the HSRB are to provide advice and
recommendations on: (1) Research proposals and protocols; (2) reports of
completed research with human subjects; and (3) how to strengthen the
EPA’s programs for protection of human subjects of research. The HSRB
reports to the EPA Administrator through the EPA Science Advisor.

	1.	Topics for Discussion. The HSRB will be reviewing its draft report
from the June 11, 2014 HSRB meeting. The HSRB may also discuss planning
for future HSRB meetings. Background on the June 11, 2014 HSRB meeting
can be found at the HSRB Web site:   HYPERLINK
"http://www.epa.gov/osa/hsrb"  http://www.epa.gov/osa/hsrb . The June
11, 2014 meeting draft report is available. You may obtain electronic
copies of this document, and certain other related documents that might
be available electronically, from regulations.gov and the HSRB Web site
at   HYPERLINK "http://www.epa.gov/osa/hsrb"
http://www.epa.gov/osa/hsrb . For questions on document availability or
if you do not have internet access, consult the persons listed under FOR
FURTHER INFORMATION CONTACT.

	2.	Meeting minutes and reports. Minutes of the meeting, summarizing the
matters discussed and recommendations, if any, made by the advisory
committee regarding such matters, will be released within 90 calendar
days of the meeting. Such minutes will be available at   HYPERLINK
"http://www.epa.gov/osa/hsrb/"  http://www.epa.gov/osa/hsrb/  and
HYPERLINK "http://www.regulations.gov"  http://www.regulations.gov . In
addition, information regarding the HSRB final meeting report will be
found at   HYPERLINK "http://www.epa.gov/osa/hsrb"
http://www.epa.gov/osa/hsrb  and   HYPERLINK
"http://www.regulations.gov"  http://www.regulations.gov  or from the
persons listed under FOR FURTHER INFORMATION CONTACT.

	Dated: July 28, 2014.

Robert Kavlock,

Interim Science Advisor.

[FR Doc. 2014–18221 Filed 7–31–14; 8:45 am]

BILLING CODE 6560–50–P

Attachment C

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

HUMAN STUDIES REVIEW BOARD (HSRB)

PUBLIC TELECONFERENCE/WEBINAR

 MEETING AGENDA

Friday, August 15, 2014

2:00 pm - 3:00 pm (Eastern Time)*

HSRB MEETING FOR REVIEW AND APPROVAL OF THE

JUNE 11, 2014 HSRB MEETING FINAL REPORT

HSRB WEB SITE   HYPERLINK "http://www.epa.gov/osa/hsrb/"
http://www.epa.gov/osa/hsrb/

Docket Telephone:<PHONE_NUMBER>

Docket Number: EPA–HQ–ORD–2014-0564

2:00 PM	Convene Meeting and Identification of Board Members – Jim
Downing (Designated Federal Officer, EPA HSRB, OSA)

2:05 PM*	Meeting Administrative Procedures – Jim Downing, DFO

2:10 PM	Meeting Process – Rebecca Parkin, Ph.D., MPH (HSRB Chair)

2:15 PM	Public Comments

2:20 PM	Board Discussion and Decision on Final Report – Rebecca
Parkin, Ph.D., MPH (HSRB Chair)

The Board’s response to EPA charge questions presented at the June 11,
2014 meeting.

A published report by Paul et al. (1988) of an intentional exposure
human study measuring the effects of small increases of dietary iodine
on thyroid function

Charge to the Board – Science

Is this study scientifically sound, providing reliable data?

If so, is this study relevant for quantitative use in support of an
assessment of the oral risk of exposure to iodine?

Charge to the Board – Ethics

Does the study meet the applicable requirements of 40 CFR part 26
subpart Q?

*Note that agenda times are approximate. For further information, please
contact the Designated Federal Officer for this meeting, Jim Downing via
telephone:<PHONE_NUMBER> or email:   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>
A published report by Gardner et al. (1988) of an intentional exposure
human study measuring the effects of low dose oral iodide
supplementation on thyroid function

Charge to the Board – Science

Is this study scientifically sound, providing reliable data?

If so, is this study relevant for quantitative use in support of an
assessment of the oral risk of exposure to iodine?

Charge to the Board – Ethics

Does the study meet the applicable requirements of 40 CFR part 26
subpart Q?

A published report by Lemar et al. (1995) of an intentional exposure
human study measuring the effects of chronic tetraglycine hydroperiodide
water purification tablet use on thyroid function

Charge to the Board – Science

Is this study scientifically sound, providing reliable data?

If so, is this study relevant to establish the reversibility of high
dose iodine exposure?

Also, is this study sufficient to establish that there are no sustained
adverse effects from high dose iodine exposure?

Charge to the Board – Ethics

Does the study meet the applicable requirements of 40 CFR part 26
subpart Q?

2:45 PM*	HSRB Work Group on Return of Individual Research Results Report

2:55 PM*	Summary and Next Steps – Rebecca Parkin, Ph.D., MPH (HSRB
Chair) and

	Jim Downing (DFO)

3:00 PM* 	Adjournment

*Note that agenda times are approximate. For further information, please
contact the Designated Federal Officer for this meeting, Jim Downing via
telephone:<PHONE_NUMBER> or email:   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>
  PAGE   \* MERGEFORMAT  4


[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Notices]
[Pages 86358-86360]
[FR Doc No: 2016-28775]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79385; File No. SR-BatsBZX-2016-77]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Make
Ministerial and Corrective Changes to Exchange Rules 11.13, 11.16,
11.22, and 11.27

November 23, 2016.
    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 November 16, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
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 filed a proposal to make ministerial and corrective
changes to Exchange Rules 11.13(b), 11.16(g)(4), 11.22(f), and
11.27(a)(7)(A)(i)2.
    The text of the proposed rule change is available at the Exchange's
Web site

at 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 Exchange proposes to make ministerial and corrective changes to
Exchange Rules 11.13(b), 11.16(g)(4), 11.22(f), and 11.27(a)(7)(A)(i)2.
First, the Exchange proposed to amend Rule 11.13(b) to correct an
incorrect cross reference. Exchange Rule 11.13(b) states that depending
on the instructions set by the User \5\ when the incoming order was
originally entered, if a market or marketable limit order has not been
executed in its entirety pursuant to Exchange Rule 11.13(a) above, the
order shall be eligible for additional processing under one or more of
the routing options listed under paragraph (a)(3) of Rule 11.13. The
reference to paragraph (a)(3) of Rule 11.13 is incorrect as the routing
options are listing under paragraph (b)(3) of Rule 11.13. Therefore,
the Exchange proposes to replace reference to paragraph (a)(3) with
paragraph (b)(3).
---------------------------------------------------------------------------

    \5\ See Exchange Rule 1.5(cc).
---------------------------------------------------------------------------

    Second, the Exchange proposes to amend Rule 11.16(g)(4) to delete
an unnecessary cross reference. Exchange Rule 11.16(a)(4) states that
``[t]he pass-through of any compensation to a Member in accordance with
this subparagraph (g) is unrelated to any other claims for compensation
that are made in accordance with, and subject to the limits of,
subparagraph (d) of this Rule 11.16.'' The Exchange now proposes to
delete reference to ``11.16'' as a specific reference to the rule is
not integral nor necessary to the meaning or application of Rule 11.16
generally.\6\
---------------------------------------------------------------------------

    \6\ Removal of the rule reference would also harmonize the rule
language with similar rule of the Exchange's affiliates, Bats EDGA
Exchange, Inc. and Bats EDGX Exchange, Inc. SR-Bats-EDGX-2016-65 and
SR-BatsEDGA-2016-28.
---------------------------------------------------------------------------

    Third, the Exchange proposes to amend Rule 11.22(f) to delete a
description of the Latency Monitoring data product, which the Exchange
ceased to offer in May 2015. The Exchange determined that the customer
demand at that time did not warrant the infrastructure and ongoing
maintenance expense required to support the product.
    Lastly, the Exchange proposes to amend Rule 11.27(a)(7)(A)(i)2 to
correct a typographical error by replacing the phrase ``one of more''
with ``one or more''.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Section
6(b)(5) of the Act \8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed changes promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system
because they seek to correct an incorrect cross-reference and
typographical error, harmonize identical rules with the Exchange's
affiliates, as well as eliminate a reference [sic] a market data
product that is no longer provided. The Exchange notes the changes to
Exchange Rules 11.13(b), 11.16(a)(4), and 11.27(a)(7)(A)(i)2 are
ministerial and do not alter the applications of each rule. In
addition, the deletion of references to the Latency Monitoring Data
product removes references to a product the Exchange no longer provides
and that the Exchange is not required by any rule or regulation to
offer. As such, the proposed amendments would foster cooperation and
coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system.

(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. On the contrary, the
proposed rule change will have no impact on competition as it is simply
makes ministerial and corrective changes while not altering the meaning
or application of each rule.

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

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

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

    Because the foregoing proposed rule change does not: (A)
Significantly affect the protection of investors or the public
interest; (B) impose any significant burden on competition; and (C) by
its terms, 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 \9\ and
paragraph (f)(6) of Rule 19b-4 thereunder,\10\ the Exchange has
designated this rule filing as non-controversial. The Exchange has
given the Commission 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 of
the proposed rule change, or such shorter time as designated by the
Commission.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    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: (1)
Necessary or appropriate in the public interest; (2) for the protection
of investors; or (3) otherwise in furtherance of the purposes of the
Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the 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-BatsBZX-2016-77 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BatsBZX-2016-77. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing 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-BatsBZX-2016-77 and should be
submitted on or before December 21, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28775 Filed 11-29-16; 8:45 am]
 BILLING CODE 8011-01-P