81 FR 46147 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Automated Removal of Orders and Quotes

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 136 (July 15, 2016)

Page Range		46147-46151
FR Document		2016-16724
Federal Register, Volume 81 Issue 136 (Friday, July 15, 2016)
[Federal Register Volume 81, Number 136 (Friday, July 15, 2016)]
[Notices]
[Pages 46147-46151]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16724]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78285; File No. SR-NASDAQ-2016-087]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Automated Removal of Orders and Quotes

July 11, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 30, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the rules of the NASDAQ Options 
Market LLC (``NOM'') at Chapter VII, Section 6(f), entitled ``Automated 
Removal of Orders and Quotes.''
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend a NOM Rule at Chapter VII, Section 
6(f), entitled ``Automated Removal of Orders and Quotes'' to modify the 
minimum Specified Percentage (as described below). A NOM Market Maker 
\3\ sets the Specified Percentage to enhance its risk management for an 
underlying security as market conditions warrant, based on its own risk 
tolerance level and quoting behavior. The Exchange proposes to permit 
the NOM Market Maker to set the Specified Percentage more broadly, no 
less than 1% with this rule change. The Exchange also proposes to 
replace the term ``disseminated size'' \4\ with a quantitative 
description to add transparency with respect to the calculation of 
Series Percentage.
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    \3\ The term ``Nasdaq Options Market Maker'' or ``Options Market 
Maker'' (herein ``NOM Market Maker'') means an Options Participant 
registered with the Exchange for the purpose of making markets in 
options contracts traded on the Exchange and that is vested with the 
rights and responsibilities specified in Chapter VII of these Rules. 
See NOM Rules at Chapter I, Section 1(a)(26).
    \4\ See Securities Exchange Act Release No 76316 (October 30, 
2015), 80 FR 68595 at 68597 (November 5, 2015) (SR-NASDAQ-2015-122). 
The Exchange defined disseminated size in this rule change in 
footnote 13, as the original size quoted by the Participant.
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Background
    Today, Chapter VII, Section 6(f) permits NOM Market Makers to 
monitor risk arising from multiple executions across multiple options 
series of a single underlying security. A NOM Market Maker may provide 
a specified time period and a specified percentage by which the 
Exchange's System will automatically remove a NOM Market Maker's quotes 
and orders in all series of an underlying security submitted through 
designated NOM protocols, as specified by the Exchange, during a 
specified time period not to exceed 15 seconds (``Percentage-Based 
Specified Time Period.'').\5\
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    \5\ A specified time period commences for an option when a 
transaction occurs in any series in such option.
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    For each series in an option, the System determines: (i) The 
percentage that the number of contracts executed in that series 
represents relative to the NOM Market Maker's disseminated size of each 
side in that series (``Series Percentage''); and (ii) the sum of the 
Series Percentage in the option issue (``Issue Percentage''). The 
Exchange proposes herein to replace the term ``disseminated size'' with 
the more precise phrase ``number of contracts available at the time of 
execution plus the number of contracts executed in unexpired prior 
executions.''
    The System tracks and calculates the net impact of positions in the 
same option issue during the Percentage-Based Specified Time Period. 
Specifically, the System tracks transactions, i.e., the sum of buy-side 
put percentages, the sum of sell-side put percentages, the sum of buy-
side call percentages, and the sum of sell-side call percentages. The 
System then calculates the absolute value of the difference between the 
buy-side puts and the sell-side puts plus the absolute value of the 
difference between the buy-side calls and the sell-side calls. If the 
Issue Percentage, rounded to the nearest integer, equals or exceeds a 
percentage established by the NOM Market Maker, not less than 100% 
(``Specified Percentage''), the System automatically removes a NOM 
Market Maker's quotes and orders in all series of an underlying 
security submitted through designated NOM protocols, as specified by 
the Exchange, during the Percentage-Based Specified Time.
    The Percentage-Based Specified Time Period commences for an option 
every time an execution occurs in any series in such option and 
continues until the System removes quotes and orders as described in 
Chapter VII, Section 6(f)(iv) or (v) or the Percentage-Based Specified 
Time Period expires. The Percentage-Based Specified Time Period 
operates on a rolling basis among all series in an option in that there 
may be multiple Percentage-Based Specified Time Periods occurring 
simultaneously and such Percentage-Based Specified Time periods may 
overlap.
Proposal
    The Exchange proposes to lower the minimum Specified Percentage, 
which is set by the NOM Market Maker, from 100% to 1%. The proposal 
would

[[Page 46148]]

amend the rule text to state, if the Issue Percentage, rounded to the 
nearest integer, equals or exceeds a percentage established by the NOM 
Market Maker, not less than 1% (``Specified Percentage''), the System 
automatically removes a NOM Market Maker's quotes and orders in all 
series of an underlying security submitted through designated NOM 
protocols, as specified by the Exchange, during the Percentage-Based 
Specified Time. This proposal would allow a NOM Market Maker to 
establish a Specified Percentage at any percentage level greater than 
or equal to 1% for an option in which the NOM Market Maker is 
appointed. Today, the Specified Percentage would be set by the NOM 
Market Maker at greater than or equal to 100%. This amendment will 
allow NOM Market Makers to better manage their risk and assist them to 
avoid trading a number of contracts that exceeds the NOM Marker Maker's 
risk tolerance level across multiple series of a single underlying when 
such series are executed in rapid succession.
    NOM Market Makers will be able to more precisely customize their 
risk settings within the System. NOM Market Makers will be able to 
consider factors such as present and anticipated market conditions, 
news in an option, and a sudden change in volatility of an option. NOM 
Market Makers are required to utilize either the Percentage Based 
Threshold or the Volume Based Threshold. NOM Market Makers that select 
to utilize the Percentage-Based Threshold will be able to adopt more 
precise controls with this proposal based on the NOM Market Maker's 
risk tolerance level.
    NOM Market Makers must utilize either the Percentage-Based \6\ or 
Volume-Based risk controls. NOM Market Makers may contact Market 
Operations to set their percentage, which is 1% or greater with this 
proposal, and specified time period.
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    \6\ NOM Market Makers selecting the Percentage-Based risk 
control in Chapter VII, Section 6(f)(i) are required to provide a 
specified time period, up to 15 seconds, and a specified percentage 
with a number of 1% or greater, as proposed herein, to the NOM 
Market Operations staff to select this risk control. If a NOM Market 
Maker does not desire to utilize the Percentage-Based risk control 
the NOM Market Maker must utilize the Volume-Based risk control 
which is similarly set-up by contacting Market Operations and 
providing certain settings.
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    By way of example, if a NOM Market Maker has set the percentage 
setting to 50% and a Specified Time Period of 15 seconds and the Order 
Book reflects:
    MM1 has a displayed quote of 1.10 (100) x 1.20 (100) for IBM May 
20, 2016 70 puts and MM1 is the only displayed size on NOM and an order 
is submitted to buy 75 IBM May 20, 2016 70 Puts for 1.20.
    Chapter VII, Section 6(f) would cause the following:
    (1) Provide MM1 with an execution--Sold 75 @ 1.20; and
    (2) Trigger the Percentage-Based Threshold and remove MM1's quotes 
in IBM.
    Another example is with multiple executions. Presume the following:
    MM1 has set the percentage to 80% by 5 seconds and MM1 has a 
displayed quote of 2.00 (100) x 2.25 (100) for IBM May 20, 2016 70 puts 
and he is the only displayed size on the NOM. Also, presume an order 
comes in to buy 50 IBM May 20, 2016 70 puts for 2.25.
    Chapter VII, Section 6(f) would cause the following:
    (1) Provide MM1 with an execution--Sold 50 @ 2.25;
    (2) Update MMI [sic] quote to 2.00 (100) x 2.25 (50);
    (3) Within 1 second an order comes in to buy 45 IBM May 20, 2016 70 
puts for 2.25;
    (4) Provide MM1 with an execution--Sold 45 @ 2.25; and
    (5) Trigger the Percentage-Based Threshold and remove MM1's quotes 
in IBM.
    The Exchange also proposes to replace the term ``disseminated 
size'' with a quantitative description to add transparency with respect 
to the calculation of Series Percentage. The language proposed amends 
the original definition of disseminated size. With respect to the 
disseminated size, the Exchange previously defined disseminated size as 
``. . . the original size quoted by the Participant.'' \7\
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    \7\ See note 4 above.
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    The Exchange proposes to amend the definition as follows: ``For 
each series in an option, the System will determine: (i) The percentage 
that the number of contracts executed in that series represents 
relative to the number of contracts available at the time of execution 
plus the number of contracts executed in unexpired prior executions of 
each side in that series (``Series Percentage''); and (ii) the sum of 
the Series Percentage in the option issue (``Issue Percentage'').'' The 
Exchange counts Specialized Quote Feed (``SQF'') \8\ quotes and OUCH To 
Trade Options (``OTTO'') \9\ orders only in determining the number of 
contracts traded and removed by the System. OTTO orders are single 
sided and may be submitted at multiple price levels for each series, 
whereas SQF permits a two-sided quote for each NOM Market Maker. The 
calculation considers the different price levels.
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    \8\ SQF permits the receipt of quotes. SQF Auction Responses and 
market sweeps are also not included.
    \9\ OTTO provides a method for subscribers to send orders and 
receive status updates on those orders. OTTO accepts limit orders 
from System subscribers, and if there is a matching order, the 
orders will execute. Non-matching orders are added to the limit 
order book. All NOM Participants have the ability to utilize OTTO. 
OTTO immediate or cancel orders will not be included.
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    By way of example, with the proposed definition, if a NOM Market 
Maker with a Percentage-Based Specified Time Period of 10 seconds and a 
Specified Percentage of 100% submits a quote over SQF of 1.00(100) x 
1.10(100) and a buy order executes 75, the remaining size would be 
1.00(100) x 1.10(25). Thereafter a new Percentage-Based Specified Time 
Period begins and current Series Percentage executed is 75 and three 
seconds pass and the NOM Market Maker re-quotes 1.00(100) x 1.10 (100), 
an incoming buy order of 43 would cause the Issue Percentage to meet 
the Percentage-Based Threshold. This is due to a counted size of 175 
(the executed 75 plus the newly quoted 100) and rounding (0.75 + 43/175 
= 0.9957 rounds up to 100%). If the former definition applied, the size 
would have been 100 and an execution of only 25 contracts on the same 
side would have caused the Issue Percentage to meet the Percentage-
Based Threshold, which is not the case. In other words, the current SQF 
quote and all OTTO orders on that side for that series (for that NOM 
Market Maker) in addition to all the executions that have occurred on 
that side for that series (for that NOM Market Maker) within the 
Percentage-Based Specified Time Period would comprise the size.
    This new definition accurately represents the manner in which the 
Issue Percentage is calculated. Also, the more precise language within 
the rule text will provide NOM Market Makers with a more accurate 
description of the operation of this risk mechanism. The Exchange has 
always calculated the NOM Market Maker's size in this fashion. The 
definition, as described in the prior rule change, was not accurate and 
the Exchange seeks to amend the definition with this proposal and 
memorialize the definition within the rule.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
promote just and equitable principles of

[[Page 46149]]

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, by offering NOM Market Makers the 
ability to better manage their own risk with this risk feature.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    NOM Market Makers are obligated to submit continuous two-sided 
quotations in a certain number of series in their appointed option 
classes for a certain percentage of each trading session.\12\ This 
obligation renders them vulnerable to risk from unusual market 
condition, volatility in specific options, and other market events that 
may cause them to receive multiple, extremely rapid automatic 
executions before they can adjust their quotations and overall risk 
exposure in the market. Without adequate risk management tools in place 
on the Exchange, the incentive for NOM Market Makers to quote 
aggressively, respecting both price and size could be diminished. Such 
a result may undermine the quality of the markets, which are enhanced 
by the depth and liquidity such NOM Market Makers provide in the 
marketplace.
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    \12\ Pursuant to NOM Rules at Chapter VII, Section 5, entitled 
``Obligations of Market Makers'', in registering as a market maker, 
an Options Participant commits himself to various obligations. 
Transactions of a NOM Market Maker must constitute a course of 
dealings reasonably calculated to contribute to the maintenance of a 
fair and orderly market, and Market Makers should not make bids or 
offers or enter into transactions that are inconsistent with such 
course of dealings. Further, all Market Makers are designated as 
specialists on NOM for all purposes under the Act or rules 
thereunder. See Chapter VII, Section 5.
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    By allowing the Specified Percentage provided by the NOM Market 
Maker to be reduced from 100% to 1%, the Exchange provides its NOM 
Market Makers the desired flexibility to take into account such factors 
as present and anticipated market conditions, news in an option or 
sudden change in volatility of an option without any limitation 
regarding the Specified Percentage. This should encourage NOM Market 
Makers to provide additional depth and liquidity to the Exchange's 
markets, thereby removing impediments to and perfecting the mechanisms 
of a free and open market and a national market system and, in general, 
protecting investors and the public interest.
    The proposal is consistent with the Act because the reduction of 
the Specified Percentage to not less than 1% provides more alternatives 
to NOM Market Makers in setting their percentage without impacting 
their firm quote obligations. The System operates consistently with the 
firm quote obligations of a broker-dealer pursuant to Rule 602 of 
Regulation NMS. Specifically, with respect to NOM Market Makers, their 
obligation to provide continuous two-sided quotes on a daily basis is 
not diminished by the removal of such quotes and orders by the 
Percentage-Based Threshold. NOM Market Makers are required to provide 
continuous two-sided quotes on a daily basis.\13\ NOM Market Makers 
that utilize the Percentage-Based Threshold will not be relieved of the 
obligation to provide continuous two-sided quotes on a daily basis, nor 
will the change prohibit the Exchange from taking disciplinary action 
against a NOM Market Maker for failing to meet the continuous quoting 
obligation each trading day. All quotes entered into the System are 
considered firm. Quotes will only be removed from the System once the 
Percentage-Based Threshold has been met if the quote was not otherwise 
executed by an incoming order.
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    \13\ Id.
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    This risk feature will continue to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and protect investors and the public interest by allowing NOM 
Market Makers to remove their quotes and orders in the event that 
market conditions warrant, based on their own risk tolerance level. NOM 
Market Makers provide liquidity to the market place and have 
obligations unlike other market participants.\14\ This risk feature is 
important because it will enable NOM Market Makers to manage their 
exposure at the Exchange. Further, permitting NOM Market Makers to 
enter a broader setting would continue to allow NOM Market Makers to 
have flexibility in setting their risk exposure to prevent unintended 
triggers of the Percentage-Based Threshold. This proposal continues to 
allow NOM Market Makers to select a Percentage-Based Specified Time 
Period. Each NOM Market Maker has different levels of sensitivity and 
its own system safeguards as well. The proposed setting would permit 
each NOM Market Maker to select a setting that is appropriate to 
capture the needs of that NOM Market Maker.
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    \14\ Id.
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    Further, it is important to note that any interest that is 
executable against a NOM Market Maker's quotes and orders that are 
received \15\ by the Exchange prior to the trigger of the Percentage-
Based Threshold, which is processed by the System, automatically 
executes at a price up to the NOM Market Maker's size. The system-
generated Purge Notification Message is accepted by the System in the 
order of receipt in the queue and is processed in that order so that 
interest that is already accepted into the System is processed prior to 
the message. Incoming orders received prior to the Purge Notification 
Message would not be cancelled, rather they be [sic] executed at a 
price up to the NOM Market Maker's size.
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    \15\ The time of receipt for an order or quote is the time such 
message is processed by the Exchange book.
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    The Exchange notes that Miami International Securities Exchange, 
LLC (``MIAX'') implemented a rule that changed its Allowable Engagement 
Percentage from a minimum of 100% to any percentage established by the 
Market Maker.\16\ The NOM rule is similar to MIAX's in that a member is 
required to have a setting, although MIAX has a default setting in 
place in the instance that no percentage is provided. NOM Market Makers 
that select the Percentage-Based risk tool must provide the Exchange 
with a Percentage-Based Specified Time Period greater than or equal to 
1%. [sic] Amending the definition of disseminated size will provide 
market participants with greater information on the manner in which the 
Exchange computes the Issue Percentage. The Exchange believes that the 
manner in which the Exchange calculates the number of contracts, which 
are counted for the Issue Percentage, is consistent with the Act. The 
counting method permits the Exchange to update the reference number to 
include the executed contracts. While this method differs from the 
method previously described, the Exchange believes that there is no 
industry standard for counting and its method permits market 
participants to achieve the desire [sic] risk protection. With the 
proposed definition, each execution uses the Percentage-Based Specified 
Time Period that existed at the time of the execution. NOM Market 
Makers can change the Percentage-Based Specified Time Period at any 
time. If a NOM Market Maker is using a Percentage-Based Specified Time 
Period of 15 seconds when an execution happens, then changes the 
Percentage-Based Specified Time Period to half a second, that first 
execution will not expire until 15 seconds have passed. The selected 
Percentage-Based Specified Time Period will persist for 15 seconds and 
the number of executed contracts will be included in the denominator of 
subsequent executions for a full 15 seconds.
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    \16\ See Securities Exchange Act Release No. 77817 (May 12, 
2016), 81 FR 31286 (May 18, 2016) (SR-MIAX-2016-10).

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[[Page 46150]]

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Percentage-Based Threshold 
is intended to protect NOM Market Makers from exposure to excessive 
risk. The Exchange believes this proposal will foster competition by 
providing NOM Market Makers with the ability to enhance and customize 
their percentage in order to compete for executions and order flow. 
Specifically, the proposal does not impose a burden on intra-market or 
inter-market competition; rather, it provides NOM Market Makers with 
the opportunity to avail themselves of similar risk tools, which are 
currently available on other exchanges.\17\ NOM Market Makers quote 
across many series in an option creating the possibility of ``rapid 
fire'' executions that can create large, unintended principal positions 
that expose NOM Market Makers. The Percentage-Based Threshold permits 
NOM Market Makers to monitor risk arising from multiple executions 
across multiple options series of a single underlying security.
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    \17\ See Section 8 of the 19b4.
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    The Exchange is proposing this rule change to continue to permit 
NOM Market Makers to reduce their risk in the event the NOM Market 
Maker is suffering from a system issue or due to the occurrence of 
unusual or unexpected market activity. Reducing such risk will enable 
NOM Market Makers to enter quotations without any fear of inadvertent 
exposure to excessive risk, which in turn will benefit investors 
through increased liquidity for the execution of their orders. Reducing 
risk by utilizing the proposed risk protections enables NOM Market 
Makers, specifically, to enter quotations with larger size, which in 
turn will benefit investors through increased liquidity for the 
execution of their orders. Such increased liquidity benefits investors 
because they receive better prices and because it lowers volatility in 
the options market.
    The Exchange believes that amending the definition of disseminated 
size does not create an undue burden on competition because the 
Exchange will uniformly calculate the Percentage-Based Threshold in a 
uniform manner for all NOM Market Makers. The Exchange is memorializing 
the definition within the Rule.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\ The Exchange has requested that the Commission 
waive the thirty-day operative delay so that the proposal may become 
operative immediately. The Commission believes that waiving the thirty-
day operative delay is consistent with the protection of investors and 
the public interest. The Exchange proposes to change a setting in an 
existing risk protection feature to enhance market makers' ability to 
protect against excessive risk arising from multiple executions across 
multiple options series of a single underlying security. The Commission 
notes that another options exchange currently has a similar setting for 
a like risk protection feature for market makers. Moreover, the 
Commission notes that the proposal to replace the term ``disseminated 
size'' with an accurate and more precise description would add 
transparency with respect to the operation of the risk protection 
feature. Therefore, the Commission hereby waives the thirty-day 
operative delay and designates the proposal operative upon filing.\20\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the 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. The Exchange has satisfied this requirement.
    \20\ For purposes of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2016-087 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-NASDAQ-2016-087. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2016-087 and should 
be submitted on or before August 5, 2016.


[[Page 46151]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16724 Filed 7-14-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 136 / Friday, July 15, 2016 / Notices 46147

Amendment No. 1 on an accelerated II. Self-Regulatory Organization’s specified time period not to exceed 15
basis. Statement of the Purpose of, and seconds (‘‘Percentage-Based Specified
Statutory Basis for, the Proposed Rule Time Period.’’).5
VI. Conclusion For each series in an option, the
Change
IT IS THEREFORE ORDERED, In its filing with the Commission, the System determines: (i) The percentage
pursuant to Section 19(b)(2) of the Exchange included statements that the number of contracts executed in
Exchange Act,32 that the proposed rule concerning the purpose of and basis for that series represents relative to the
change (SR–NYSEMKT–2016–42), as the proposed rule change and discussed NOM Market Maker’s disseminated size
modified by Amendment No. 1 thereto, any comments it received on the of each side in that series (‘‘Series
be, and it hereby is, approved on an proposed rule change. The text of these Percentage’’); and (ii) the sum of the
accelerated basis. statements may be examined at the Series Percentage in the option issue
For the Commission, by the Division of places specified in Item IV below. The (‘‘Issue Percentage’’). The Exchange
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set proposes herein to replace the term
authority.33 forth in sections A, B, and C below, of ‘‘disseminated size’’ with the more
Robert W. Errett, the most significant aspects of such precise phrase ‘‘number of contracts
Deputy Secretary. statements. available at the time of execution plus
the number of contracts executed in
[FR Doc. 2016–16723 Filed 7–14–16; 8:45 am] A. Self-Regulatory Organization’s unexpired prior executions.’’
BILLING CODE 8011–01–P Statement of the Purpose of, and The System tracks and calculates the
Statutory Basis for, the Proposed Rule net impact of positions in the same
Change option issue during the Percentage-
SECURITIES AND EXCHANGE
1. Purpose Based Specified Time Period.
COMMISSION
Specifically, the System tracks
The Exchange proposes to amend a transactions, i.e., the sum of buy-side
[Release No. 34–78285; File No. SR– NOM Rule at Chapter VII, Section 6(f), put percentages, the sum of sell-side put
NASDAQ–2016–087] entitled ‘‘Automated Removal of Orders
percentages, the sum of buy-side call
and Quotes’’ to modify the minimum
percentages, and the sum of sell-side
Self-Regulatory Organizations; The Specified Percentage (as described
call percentages. The System then
NASDAQ Stock Market LLC; Notice of below). A NOM Market Maker 3 sets the
calculates the absolute value of the
Filing and Immediate Effectiveness of Specified Percentage to enhance its risk
difference between the buy-side puts
Proposed Rule Change Relating to management for an underlying security
and the sell-side puts plus the absolute
Automated Removal of Orders and as market conditions warrant, based on
value of the difference between the buy-
Quotes its own risk tolerance level and quoting
side calls and the sell-side calls. If the
behavior. The Exchange proposes to
July 11, 2016. Issue Percentage, rounded to the nearest
permit the NOM Market Maker to set the
Pursuant to Section 19(b)(1) of the Specified Percentage more broadly, no integer, equals or exceeds a percentage
Securities Exchange Act of 1934 less than 1% with this rule change. The established by the NOM Market Maker,
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange also proposes to replace the not less than 100% (‘‘Specified
notice is hereby given that on June 30, term ‘‘disseminated size’’ 4 with a Percentage’’), the System automatically
2016, The NASDAQ Stock Market LLC quantitative description to add removes a NOM Market Maker’s quotes
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the transparency with respect to the and orders in all series of an underlying
Securities and Exchange Commission calculation of Series Percentage. security submitted through designated
(‘‘SEC’’ or ‘‘Commission’’) the proposed NOM protocols, as specified by the
Background Exchange, during the Percentage-Based
rule change as described in Items I and
II below, which Items have been Today, Chapter VII, Section 6(f) Specified Time.
prepared by the Exchange. The permits NOM Market Makers to monitor The Percentage-Based Specified Time
Commission is publishing this notice to risk arising from multiple executions Period commences for an option every
solicit comments on the proposed rule across multiple options series of a single time an execution occurs in any series
change from interested persons. underlying security. A NOM Market in such option and continues until the
Maker may provide a specified time System removes quotes and orders as
I. Self-Regulatory Organization’s period and a specified percentage by described in Chapter VII, Section 6(f)(iv)
Statement of the Terms of Substance of which the Exchange’s System will or (v) or the Percentage-Based Specified
the Proposed Rule Change automatically remove a NOM Market Time Period expires. The Percentage-
The Exchange proposes to amend the Maker’s quotes and orders in all series Based Specified Time Period operates
rules of the NASDAQ Options Market of an underlying security submitted on a rolling basis among all series in an
LLC (‘‘NOM’’) at Chapter VII, Section through designated NOM protocols, as option in that there may be multiple
6(f), entitled ‘‘Automated Removal of specified by the Exchange, during a Percentage-Based Specified Time
Orders and Quotes.’’ Periods occurring simultaneously and
3 The term ‘‘Nasdaq Options Market Maker’’ or such Percentage-Based Specified Time
The text of the proposed rule change ‘‘Options Market Maker’’ (herein ‘‘NOM Market periods may overlap.
is available on the Exchange’s Web site Maker’’) means an Options Participant registered
at http://nasdaq.cchwallstreet.com, at with the Exchange for the purpose of making Proposal
markets in options contracts traded on the
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the principal office of the Exchange, and Exchange and that is vested with the rights and The Exchange proposes to lower the
at the Commission’s Public Reference responsibilities specified in Chapter VII of these minimum Specified Percentage, which
Room. Rules. See NOM Rules at Chapter I, Section 1(a)(26). is set by the NOM Market Maker, from
4 See Securities Exchange Act Release No 76316

(October 30, 2015), 80 FR 68595 at 68597
100% to 1%. The proposal would
32 15 U.S.C. 78s(b)(2). (November 5, 2015) (SR–NASDAQ–2015–122). The
33 17 CFR 200.30–3(a)(12). 5 A specified time period commences for an
Exchange defined disseminated size in this rule
1 15 U.S.C. 78s(b)(1).
change in footnote 13, as the original size quoted option when a transaction occurs in any series in
2 17 CFR 240.19b–4. by the Participant. such option.

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Federal Register / Vol. 81, No. 136 / Friday, July 15, 2016 / Notices 46149

trade, to remove impediments to and to Rule 602 of Regulation NMS. size. The system-generated Purge
perfect the mechanism of a free and Specifically, with respect to NOM Notification Message is accepted by the
open market and a national market Market Makers, their obligation to System in the order of receipt in the
system, and, in general to protect provide continuous two-sided quotes on queue and is processed in that order so
investors and the public interest, by a daily basis is not diminished by the that interest that is already accepted
offering NOM Market Makers the ability removal of such quotes and orders by into the System is processed prior to the
to better manage their own risk with this the Percentage-Based Threshold. NOM message. Incoming orders received prior
risk feature. Market Makers are required to provide to the Purge Notification Message would
NOM Market Makers are obligated to continuous two-sided quotes on a daily not be cancelled, rather they be [sic]
submit continuous two-sided quotations basis.13 NOM Market Makers that utilize executed at a price up to the NOM
in a certain number of series in their the Percentage-Based Threshold will not Market Maker’s size.
appointed option classes for a certain be relieved of the obligation to provide
percentage of each trading session.12 The Exchange notes that Miami
continuous two-sided quotes on a daily International Securities Exchange, LLC
This obligation renders them vulnerable basis, nor will the change prohibit the
to risk from unusual market condition, (‘‘MIAX’’) implemented a rule that
Exchange from taking disciplinary changed its Allowable Engagement
volatility in specific options, and other action against a NOM Market Maker for
market events that may cause them to Percentage from a minimum of 100% to
failing to meet the continuous quoting
receive multiple, extremely rapid any percentage established by the
obligation each trading day. All quotes
automatic executions before they can Market Maker.16 The NOM rule is
entered into the System are considered
adjust their quotations and overall risk similar to MIAX’s in that a member is
firm. Quotes will only be removed from
exposure in the market. Without required to have a setting, although
the System once the Percentage-Based
adequate risk management tools in place MIAX has a default setting in place in
Threshold has been met if the quote was
on the Exchange, the incentive for NOM the instance that no percentage is
not otherwise executed by an incoming
Market Makers to quote aggressively, provided. NOM Market Makers that
order.
respecting both price and size could be This risk feature will continue to select the Percentage-Based risk tool
diminished. Such a result may remove impediments to and perfect the must provide the Exchange with a
undermine the quality of the markets, mechanism of a free and open market Percentage-Based Specified Time Period
which are enhanced by the depth and and a national market system and greater than or equal to 1%. [sic]
liquidity such NOM Market Makers protect investors and the public interest Amending the definition of
provide in the marketplace. by allowing NOM Market Makers to disseminated size will provide market
By allowing the Specified Percentage remove their quotes and orders in the participants with greater information on
provided by the NOM Market Maker to event that market conditions warrant, the manner in which the Exchange
be reduced from 100% to 1%, the based on their own risk tolerance level. computes the Issue Percentage. The
Exchange provides its NOM Market NOM Market Makers provide liquidity Exchange believes that the manner in
Makers the desired flexibility to take to the market place and have obligations which the Exchange calculates the
into account such factors as present and unlike other market participants.14 This number of contracts, which are counted
anticipated market conditions, news in risk feature is important because it will for the Issue Percentage, is consistent
an option or sudden change in volatility enable NOM Market Makers to manage with the Act. The counting method
of an option without any limitation their exposure at the Exchange. Further, permits the Exchange to update the
regarding the Specified Percentage. This permitting NOM Market Makers to enter reference number to include the
should encourage NOM Market Makers a broader setting would continue to executed contracts. While this method
to provide additional depth and allow NOM Market Makers to have differs from the method previously
liquidity to the Exchange’s markets, flexibility in setting their risk exposure described, the Exchange believes that
thereby removing impediments to and to prevent unintended triggers of the there is no industry standard for
perfecting the mechanisms of a free and Percentage-Based Threshold. This counting and its method permits market
open market and a national market proposal continues to allow NOM participants to achieve the desire [sic]
system and, in general, protecting Market Makers to select a Percentage- risk protection. With the proposed
investors and the public interest. Based Specified Time Period. Each definition, each execution uses the
The proposal is consistent with the NOM Market Maker has different levels Percentage-Based Specified Time Period
Act because the reduction of the of sensitivity and its own system that existed at the time of the execution.
Specified Percentage to not less than 1% safeguards as well. The proposed setting NOM Market Makers can change the
provides more alternatives to NOM would permit each NOM Market Maker Percentage-Based Specified Time Period
Market Makers in setting their to select a setting that is appropriate to at any time. If a NOM Market Maker is
percentage without impacting their firm capture the needs of that NOM Market using a Percentage-Based Specified
quote obligations. The System operates Maker. Time Period of 15 seconds when an
consistently with the firm quote Further, it is important to note that execution happens, then changes the
obligations of a broker-dealer pursuant any interest that is executable against a Percentage-Based Specified Time Period
NOM Market Maker’s quotes and orders to half a second, that first execution will
12 Pursuant to NOM Rules at Chapter VII, Section
that are received 15 by the Exchange not expire until 15 seconds have passed.
5, entitled ‘‘Obligations of Market Makers’’, in
prior to the trigger of the Percentage- The selected Percentage-Based Specified
registering as a market maker, an Options Time Period will persist for 15 seconds
Participant commits himself to various obligations. Based Threshold, which is processed by
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Transactions of a NOM Market Maker must the System, automatically executes at a and the number of executed contracts
constitute a course of dealings reasonably price up to the NOM Market Maker’s will be included in the denominator of
calculated to contribute to the maintenance of a fair subsequent executions for a full 15
and orderly market, and Market Makers should not seconds.
13 Id.
make bids or offers or enter into transactions that
14 Id.
are inconsistent with such course of dealings.
Further, all Market Makers are designated as 15 The time of receipt for an order or quote is the 16 See Securities Exchange Act Release No. 77817

specialists on NOM for all purposes under the Act time such message is processed by the Exchange (May 12, 2016), 81 FR 31286 (May 18, 2016) (SR–
or rules thereunder. See Chapter VII, Section 5. book. MIAX–2016–10).

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46150 Federal Register / Vol. 81, No. 136 / Friday, July 15, 2016 / Notices

B. Self-Regulatory Organization’s C. Self-Regulatory Organization’s the purposes of the Act. If the
Statement on Burden on Competition Statement on Comments on the Commission takes such action, the
Proposed Rule Change Received From Commission shall institute proceedings
The Exchange does not believe that Members, Participants, or Others to determine whether the proposed rule
the proposed rule change will impose change should be approved or
No written comments were either
any burden on competition not disapproved.
solicited or received.
necessary or appropriate in furtherance
of the purposes of the Act. The III. Date of Effectiveness of the IV. Solicitation of Comments
Percentage-Based Threshold is intended Proposed Rule Change and Timing for Interested persons are invited to
to protect NOM Market Makers from Commission Action submit written data, views, and
exposure to excessive risk. The Because the foregoing proposed rule arguments concerning the foregoing,
Exchange believes this proposal will change does not: (i) Significantly affect including whether the proposed rule
foster competition by providing NOM the protection of investors or the public change is consistent with the Act.
Market Makers with the ability to interest; (ii) impose any significant Comments may be submitted by any of
enhance and customize their percentage burden on competition; and (iii) become the following methods:
in order to compete for executions and operative for 30 days from the date on Electronic Comments
order flow. Specifically, the proposal which it was filed, or such shorter time
does not impose a burden on intra- as the Commission may designate, it has • Use the Commission’s Internet
market or inter-market competition; become effective pursuant to Section comment form (http://www.sec.gov/
rather, it provides NOM Market Makers 19(b)(3)(A) of the Act 18 and Rule rules/sro.shtml); or
with the opportunity to avail themselves 19b–4(f)(6) thereunder.19 The Exchange • Send an email to rule-comments@
of similar risk tools, which are currently has requested that the Commission sec.gov. Please include File Number SR–
available on other exchanges.17 NOM waive the thirty-day operative delay so NASDAQ–2016–087 on the subject line.
Market Makers quote across many series that the proposal may become operative Paper Comments
in an option creating the possibility of immediately. The Commission believes
‘‘rapid fire’’ executions that can create that waiving the thirty-day operative • Send paper comments in triplicate
large, unintended principal positions delay is consistent with the protection to Secretary, Securities and Exchange
that expose NOM Market Makers. The of investors and the public interest. The Commission, 100 F Street NE.,
Percentage-Based Threshold permits Exchange proposes to change a setting Washington, DC 20549–1090.
NOM Market Makers to monitor risk in an existing risk protection feature to All submissions should refer to File
arising from multiple executions across enhance market makers’ ability to Number SR–NASDAQ–2016–087. This
multiple options series of a single protect against excessive risk arising file number should be included on the
underlying security. from multiple executions across subject line if email is used. To help the
multiple options series of a single Commission process and review your
The Exchange is proposing this rule underlying security. The Commission comments more efficiently, please use
change to continue to permit NOM notes that another options exchange only one method. The Commission will
Market Makers to reduce their risk in currently has a similar setting for a like post all comments on the Commission’s
the event the NOM Market Maker is risk protection feature for market Internet Web site (http://www.sec.gov/
suffering from a system issue or due to makers. Moreover, the Commission rules/sro.shtml). Copies of the
the occurrence of unusual or notes that the proposal to replace the submission, all subsequent
unexpected market activity. Reducing term ‘‘disseminated size’’ with an amendments, all written statements
such risk will enable NOM Market accurate and more precise description with respect to the proposed rule
Makers to enter quotations without any would add transparency with respect to change that are filed with the
fear of inadvertent exposure to excessive the operation of the risk protection Commission, and all written
risk, which in turn will benefit investors feature. Therefore, the Commission communications relating to the
through increased liquidity for the hereby waives the thirty-day operative proposed rule change between the
execution of their orders. Reducing risk delay and designates the proposal Commission and any person, other than
by utilizing the proposed risk operative upon filing.20 those that may be withheld from the
protections enables NOM Market At any time within 60 days of the public in accordance with the
Makers, specifically, to enter quotations filing of the proposed rule change, the provisions of 5 U.S.C. 552, will be
with larger size, which in turn will Commission summarily may available for Web site viewing and
benefit investors through increased temporarily suspend such rule change if printing in the Commission’s Public
liquidity for the execution of their it appears to the Commission that such Reference Room, 100 F Street NE.,
orders. Such increased liquidity benefits action is necessary or appropriate in the Washington, DC 20549, on official
investors because they receive better public interest, for the protection of business days between the hours of
prices and because it lowers volatility in investors, or otherwise in furtherance of 10:00 a.m. and 3:00 p.m. Copies of the
the options market. filing also will be available for
18 15
U.S.C. 78s(b)(3)(A).
The Exchange believes that amending 19 17
inspection and copying at the principal
CFR 240.19b–4(f)(6). In addition, Rule 19b–
the definition of disseminated size does 4(f)(6) requires a self-regulatory organization to give office of the Exchange. All comments
not create an undue burden on the Commission written notice of its intent to file received will be posted without change;
competition because the Exchange will the proposed rule change, along with a brief the Commission does not edit personal
sradovich on DSK3GMQ082PROD with NOTICES

description and the text of the proposed rule identifying information from
uniformly calculate the Percentage- change, at least five business days prior to the date
Based Threshold in a uniform manner of filing of the proposed rule change, or such submissions. You should submit only
for all NOM Market Makers. The shorter time as designated by the Commission. The information that you wish to make
Exchange is memorializing the Exchange has satisfied this requirement. available publicly. All submissions
20 For purposes of waiving the 30-day operative
definition within the Rule. should refer to File Number SR–
delay, the Commission has considered the proposed
rule’s impact on efficiency, competition, and capital
NASDAQ–2016–087 and should be
17 See Section 8 of the 19b4. formation. See 15 U.S.C. 78c(f). submitted on or before August 5, 2016.

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Federal Register / Vol. 81, No. 136 / Friday, July 15, 2016 / Notices 46151

For the Commission, by the Division of 16, 2016, unless stayed pending approximately nine rail segments,
Trading and Markets, pursuant to delegated reconsideration. Petitions to stay that do totaling 308.85 miles of rail line from
authority.21 not involve environmental issues and the Norfolk Southern Railway Company.
Robert W. Errett, formal expressions of intent to file an The line segments run (1) between
Deputy Secretary. OFA to subsidize continued rail service mileposts V 382.0 at Maben, W. Va., and
[FR Doc. 2016–16724 Filed 7–14–16; 8:45 am] under 49 CFR 1152.27(c)(2) 1 must be V 435.0 at DB (Deepwater Bridge), W.
BILLING CODE 8011–01–P filed by July 25, 2016.2 Petitions to Va.; (2) between milepost RR 7.0 at
reopen must be filed by August 4, 2016, Refugee, Ohio, and milepost RR 116.5 at
with the Surface Transportation Board, Hobson Yard, Ohio; (3) between
SURFACE TRANSPORTATION BOARD 395 E Street SW., Washington, DC milepost WV 125.6 at Conco, Ohio and
20423–0001. milepost WV 253.4 at Cornelia, W. Va.;
[Docket No. AB 290 (Sub-No. 383X)] A copy of any petition filed with the (4) between milepost VC 0.0 at Vaco
Board should be sent to NSR’s Junction, W. Va., and milepost VC 0.84
Norfolk Southern Railway Company— representative: William A. Mullins, at Deepwater, W. Va. (5) between Hitop
Discontinuance of Service Baker & Miller PLLC, 2401 Pennsylvania RT at milepost TP 0.0 at Charleston, W.
Exemption—In Shenandoah County, Ave. NW., Suite 300, Washington, DC Va., and the end of the track at milepost
VA 20037. TP 1.0; (6) between Jones IT at milepost
If the verified notice contains false or JT 0.0 at Jones, W. Va., and the end of
Norfolk Southern Railway Company misleading information, the exemption
(NSR) has filed a verified notice of the track at milepost JT 1.3; (7) between
is void ab initio. milepost VG 0.0 at Virwest, W. Va., and
exemption under 49 CFR part 1152, Board decisions and notices are milepost VG 12.1 at Bolt, W. Va., (8)
subpart F—Exempt Abandonments and available on our Web site at between milepost MY 0.0 at Milam, W.
Discontinuance of Service to WWW.STB.DOT.GOV. Va., and the end of the track at MY 1.0l;
discontinue service over an
Decided: July 12, 2016. and (9) between milepost PE 0.0 at Putt,
approximately 16.9-mile rail line
By the Board, Rachel D. Campbell, W. Va., and milepost PE 2.3 at Putt End
extending from milepost B 62.0 (at
Director, Office of Proceedings. Branch, W. Va.
Strasburg, VA) to milepost B 78.9 (near The transaction may be consummated
Edinburg, VA) in Shenandoah County, Raina S. Contee,
Clearance Clerk. on or after July 31, 2016, the effective
VA (the Line). The Line traverses United date of the exemption, 30 days after the
States Postal Service Zip Codes 22657, [FR Doc. 2016–16773 Filed 7–14–16; 8:45 am]
supplemental notice of exemption was
22660, 22644, 22664, and 22824. BILLING CODE 4915–01–P
filed.
NSR has certified that: (1) No local Watco currently controls, indirectly,
traffic has moved over the Line for at 33 Class III rail carriers and one Class
least two years; (2) because the Line is SURFACE TRANSPORTATION BOARD
II rail carrier, collectively operating in
not a through route, no overhead traffic [Docket No. FD 36029] 23 states. For a complete list of these
has operated, and, therefore, none needs rail carriers, and the states in which
to be rerouted over other lines; (3) no Watco Holdings, Inc.—Continuance in they operate, see Watco’s notice of
formal complaint filed by a user of rail Control Exemption—Kanawha River exemption filed on July 1, 2016. The
service on the Line (or by a state or local Railroad, LLC notice is available on the Board’s Web
government entity acting on behalf of site at WWW.STB.DOT.GOV.
Watco Holdings, Inc. (Watco), a
such user) regarding cessation of service Watco represents that: (1) The rail
noncarrier, has filed a verified notice of
over the Line is pending either with the lines to be operated by KNWA do not
exemption pursuant to 49 CFR
Surface Transportation Board (Board) or connect with any other railroads
1180.2(d)(2) to continue in control of
with any U.S. District Court or has been operated by the carrier in the Watco’s
Kanawha River Railroad, LLC (KNWA),
decided in favor of complainant within corporate family; (2) the continuance in
upon KNWA’s becoming a Class III rail
the two-year period; and (4) the control is not part of a series of
carrier. Watco owns, indirectly, 100% of
requirements at 49 CFR 1105.12 anticipated transactions that would
the issued and outstanding stock of
(newspaper publication) and 49 CFR connect the rail lines to be operated by
KNWA, a limited liability company.1
1152.50(d)(1) (notice to governmental This transaction is related to a KNWA with any other railroad in
agencies) have been met. concurrently filed verified notice of applicant’s corporate family; and (3) the
As a condition to this exemption, any exemption in Kanawha River Railroad, transaction does not involve a Class I
employee adversely affected by the L.L.C.—Lease Exemption Containing rail carrier. Therefore, the transaction is
discontinuance of service shall be Interchange Commitment—Norfolk exempt from the prior approval
protected under Oregon Short Line Southern Railway Company, Docket No. requirements of 49 U.S.C. 11323. See 49
Railroad—Abandonment Portion FD 36028, wherein KNWA seeks Board CFR 1180.2(d)(2).
Goshen Branch Between Firth & approval to lease and operate Under 49 U.S.C. 10502(g), the Board
Ammon, in Bingham & Bonneville may not use its exemption authority to
Counties, Idaho, 360 I.C.C. 91 (1979). To 1 Each OFA must be accompanied by the filing relieve a rail carrier of its statutory
address whether this condition fee, which is currently set at $1,600. See 49 CFR obligation to protect the interests of its
adequately protects affected employees, 1002.2(f)(25). employees. Section 11326(c), however,
2 Because this is a discontinue proceeding and
a petition for partial revocation under does not provide for labor protection for
not an abandonment, interim trail use/rail banking
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49 U.S.C. 10502(d) must be filed. and public use conditions are not appropriate.
transactions under 11324 and 11325
Provided no formal expression of Because there will be an environmental review that involve only Class III rail carriers.
intent to file an offer of financial during abandonment, this discontinuance does not Accordingly, the Board may not impose
assistance (OFA) to subsidize continued require an environmental review. labor protective conditions here,
1 The notice of exemption was initially filed on
rail service has been received, this because all of the carriers involved are
June 28, 2016. After representative consultation
exemption will be effective on August with the Board, the filing was resubmitted on July Class III carriers.
1, 2016, and therefore that is the official filing date If the notice contains false or
21 17 CFR 200.30–3(a)(12). and the basis for all dates in this notice. misleading information, the exemption

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Document Created: 2016-07-15 02:53:28
Document Modified: 2016-07-15 02:53:28
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 46147