| Page Range | 9967-10254 | |
| FR Document |
| Page and Subject | |
|---|---|
| 82 FR 10026 - Sunshine Act Meetings | |
| 82 FR 10099 - Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of Proposed Rule Change Regarding Fraudulent Acts | |
| 82 FR 10123 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change To Add New MSRB Rule G-49, on Transactions Below the Minimum Denomination of an Issue, to the Rules of the MSRB, and To Rescind Paragraph (f), on Minimum Denominations, From MSRB Rule G-15 | |
| 82 FR 10024 - National Institute of Allergy and Infectious Diseases; Notice of Closed Meeting | |
| 82 FR 9987 - Agenda and Notice of Public Meeting of the Oregon Advisory Committee; Correction | |
| 82 FR 9974 - Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Onshore Oil and Gas Order Number 1, Approval of Operations | |
| 82 FR 9986 - Notice of Public Meeting of the Georgia Advisory Committee for a Meeting To Discuss Potential Civil Rights Topics of Study | |
| 82 FR 10030 - Information Collection: “Licenses and Radiation Safety Requirements for Well Logging” | |
| 82 FR 9994 - 36(b)(1) Arms Sales Notification | |
| 82 FR 10174 - Notice of Determinations; Culturally Significant Objects Imported for Exhibition Determinations: “A World Full of Emotions: Ancient Greece, 700 BC-200 AD” Exhibition | |
| 82 FR 10177 - Watco Holdings, Inc.-Continuance in Control Exemption-Jacksonville Port Terminal Railroad, L.L.C. | |
| 82 FR 9996 - 36(b)(1) Arms Sales Notification | |
| 82 FR 10175 - Jacksonville Port Terminal Railroad-Operation Exemption-The Jacksonville Port Authority | |
| 82 FR 9978 - Safety Zones; Ice Covered Waterways in the Fifth Coast Guard District | |
| 82 FR 10176 - The Indiana Rail Road Company-Trackage Rights Exemption-CSX Transportation, Inc. | |
| 82 FR 9993 - Judicial Proceedings Since Fiscal Year 2012 Amendments Panel (Judicial Proceedings Panel); Notice of Federal Advisory Committee Meeting | |
| 82 FR 10185 - Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as Required by Section 6039G | |
| 82 FR 10184 - Proposed Collection; Comment Request for Regulation Project | |
| 82 FR 10217 - Proposed Collection: Comment Request for Regulation Project | |
| 82 FR 9986 - Agenda and Notice of Public Meeting of the Wyoming Advisory Committee | |
| 82 FR 9985 - Agenda and Notice of Public Meetings of the West Virginia Advisory Committee | |
| 82 FR 9985 - Notice of Public Meeting of the Virginia Advisory Committee To Discuss Potential Projects of Study | |
| 82 FR 10219 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Multiple IRS Information Collection Requests | |
| 82 FR 9983 - Submission for OMB Review; Comment Request | |
| 82 FR 9984 - Submission for OMB Review; Comment Request | |
| 82 FR 10218 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Multiple IRS Information Collection Requests | |
| 82 FR 10018 - National Vaccine Injury Compensation Program; List of Petitions Received | |
| 82 FR 10222 - Migratory Bird Hunting; Proposed Frameworks for Migratory Bird Hunting Regulations | |
| 82 FR 9972 - Safety Zone; Operational Equipment Test; Bellingham Bay; Bellingham, WA | |
| 82 FR 10177 - Projects Rescinded for Consumptive Uses of Water | |
| 82 FR 10177 - Projects Approved for Consumptive Uses of Water | |
| 82 FR 10031 - Source Materials License No. SUC-1593, Amendment 2, Davy Crockett Depleted Uranium at Various United States Army Installations | |
| 82 FR 10027 - In the Matter of Curtis Thompson | |
| 82 FR 10033 - New Postal Products | |
| 82 FR 10026 - Carbon and Alloy Steel Cut-to-Length Plate From China; Supplemental Schedule for the Subject Investigations | |
| 82 FR 10022 - Government-Owned Inventions; Availability for Licensing | |
| 82 FR 10025 - Prospective Grant of Exclusive Patent License: Inhibition of Plasmodial Surface Anion Channels for the Treatment or Prevention of Malaria | |
| 82 FR 10010 - Notice of Termination of the Receivership of 10299, WestBridge Bank and Trust Company, Chesterfield, Missouri | |
| 82 FR 10002 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated Authority | |
| 82 FR 10004 - Information Collection Being Reviewed by the Federal Communications Commission | |
| 82 FR 10000 - Information Collection Being Reviewed by the Federal Communications Commission | |
| 82 FR 10003 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated Authority | |
| 82 FR 10000 - Information Collections Being Reviewed by the Federal Communications Commission | |
| 82 FR 10179 - Notice of Funding Availability for the Small Business Transportation Resource Center (SBTRC) Program | |
| 82 FR 10012 - Privacy Act of 1974; System of Records | |
| 82 FR 10010 - iSpring Water Systems, LLC; Analysis of Proposed Consent Order To Aid Public Comment | |
| 82 FR 9991 - Renewal of Currently Approved Information Collection; Comment Request; Limited Access Death Master File Systems Safeguards Attestation Forms | |
| 82 FR 9969 - International Affairs; Antarctic Marine Living Resources Convention Act | |
| 82 FR 9967 - Civil Monetary Penalties Inflation Adjustments | |
| 82 FR 9999 - Natural Gas Pipeline Company of America LLC; Notice of Request Under Blanket Authorization | |
| 82 FR 9998 - ANR Pipeline Company; Notice of Schedule for Environmental Review of the Wisconsin South Expansion Project | |
| 82 FR 9999 - Notice of Public Comment Session Schedule Change for the Draft Environmental Impact Statement for the Proposed Atlantic Coast Pipeline, Supply Header Project, and Capacity Lease Proposal | |
| 82 FR 10086 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading Shares of the Bitcoin Investment Trust under NYSE Arca Equities Rule 8.201 | |
| 82 FR 10034 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Relating to the Consolidated Audit Trail | |
| 82 FR 10117 - Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To (1) Implement the Margin Proxy, (2) Modify the Calculation of the Coverage Charge in Circumstances Where the Margin Proxy Applies, and (3) Make Certain Technical Corrections | |
| 82 FR 10105 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Adopt Chapter 9 | |
| 82 FR 10101 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats BYX Exchange, Inc. | |
| 82 FR 10147 - Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change to Adopt Chapter 9 | |
| 82 FR 10059 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of the Proposed Rule Change To Amend Rule 4512 (Customer Account Information) and Adopt FINRA Rule 2165 (Financial Exploitation of Specified Adults), as Modified by Partial Amendment No. 1 | |
| 82 FR 10130 - Self-Regulatory Organizations; ISE Mercury, LLC; Notice of Filing of Proposed Rule Change To Adopt Chapter 9 | |
| 82 FR 10047 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt Rules 4.5 Through 4.16 To Implement the Compliance Rule Regarding the National Market System Plan Governing the Consolidated Audit Trail | |
| 82 FR 10073 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt the FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule) | |
| 82 FR 10159 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing of Proposed Rule Change To Adopt Rules Regarding the CAT NMS Plan | |
| 82 FR 10143 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”), and Exchange Rule 519B, Risk Protection Monitor for Orders Entered via the MEO Interface (“RPM-MEO”) | |
| 82 FR 10070 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Type of Logical Port Known as a Purge Port | |
| 82 FR 10102 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Type of Logical Port Known as a Purge Port | |
| 82 FR 10008 - Agency Information Collection Activities: Submission for OMB Review; Comment Request (3064-0112, -0125, -0127 & -0175) | |
| 82 FR 10004 - Agency Information Collection Activities: Proposed Collection Renewals; Comment Request (3064-0019, -0061, -0087 & -0143) | |
| 82 FR 10007 - Update to Notice of Financial Institutions for Which the Federal Deposit Insurance Corporation Has Been Appointed Either Receiver, Liquidator, or Manager | |
| 82 FR 10008 - Notice to All Interested Parties of Intent To Terminate the Receivership of 10393, Creekside Bank, Woodstock, Georgia | |
| 82 FR 10007 - Notice of Termination of the Receivership of 10372 Mountain Heritage Bank, Clayton, Georgia | |
| 82 FR 10007 - Notice of Termination of the Receivership of 10197 Old Southern Bank, Orlando, Florida | |
| 82 FR 10007 - Notice of Termination of the Receivership of 10272, Coastal Community Bank, Panama City Beach, Florida | |
| 82 FR 10007 - Notice of Termination of the Receivership of 10484, First Community Bank of Southwest Florida, Fort Myers, Florida | |
| 82 FR 10008 - Notice of Termination of the Receivership of 10206, Key West Bank, Key West, Florida | |
| 82 FR 9987 - International Affairs; U.S. Fishing Opportunities in the Northwest Atlantic Fisheries Organization Regulatory Area | |
| 82 FR 9973 - Roadless Area Conservation; National Forest System Lands in Colorado; Delay of Effective Date | |
| 82 FR 10014 - Notice of Meetings | |
| 82 FR 10015 - Patient Safety Organizations: Voluntary Relinquishment From the Fresenius Medical Care PSO, LLC | |
| 82 FR 10015 - Scientific Information Request on Treatment-Resistant Depression: A Narrative and Systematic Review of Definitions and Methods in Clinical Research Studies | |
| 82 FR 10021 - National Cancer Institute; Notice of Closed Meetings | |
| 82 FR 10023 - National Institute of Allergy and Infectious Diseases; Notice of Closed Meeting | |
| 82 FR 10024 - Center for Scientific Review; Notice of Closed Meeting | |
| 82 FR 10020 - Center for Scientific Review; Notice of Closed Meetings | |
| 82 FR 10024 - National Eye Institute; Notice of Closed Meeting | |
| 82 FR 10024 - National Institute on Minority Health and Health Disparities; Notice of Closed Meeting | |
| 82 FR 10023 - National Cancer Institute; Notice of Closed Meetings | |
| 82 FR 10021 - National Institute on Minority Health and Health Disparities; Notice of Closed Meeting | |
| 82 FR 10020 - National Institute on Minority Health and Health Disparities; Notice of Closed Meeting | |
| 82 FR 10178 - Award Management Requirements-Final Circular; Buy America Handbook-Conducting Pre-Award and Post Delivery Audits for Rolling Stock Procurements; Delay of Effective Dates for Guidance Documents | |
| 82 FR 9975 - Fisheries of the Exclusive Economic Zone Off Alaska; Reallocation of Pollock in the Bering Sea and Aleutian Islands | |
| 82 FR 10025 - Notice of an Open Meeting of the Advisory Committee on Water Information | |
| 82 FR 9975 - Endangered and Threatened Wildlife and Plants; Final Rule To List Two Guitarfishes as Threatened Under the Endangered Species Act | |
| 82 FR 9967 - National Organic Program (NOP); Organic Livestock and Poultry Practices | |
| 82 FR 9970 - Drawbridge Operation Regulation; Youngs Bay, Astoria, OR | |
| 82 FR 10174 - Notice of Public Meeting | |
| 82 FR 10175 - Notice of Public Meeting | |
| 82 FR 10173 - California Disaster #CA-00257 |
Agricultural Marketing Service
Forest Service
National Oceanic and Atmospheric Administration
National Technical Information Service
Federal Energy Regulatory Commission
Agency for Healthcare Research and Quality
Health Resources and Services Administration
National Institutes of Health
Coast Guard
Fish and Wildlife Service
Geological Survey
Land Management Bureau
Federal Transit Administration
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.
Agricultural Marketing Service, USDA.
Final rule; delay of effective date.
Consistent with the Memorandum of January 20, 2017, from the Assistant to the President and Chief of Staff, entitled, “Regulatory Freeze Pending Review,” this action delays the effective date for 60 days for the rule, Organic Livestock and Poultry Practices. This rule, published in the
The effective date of the final rule published on January 19, 2017 (82 FR 7042) is delayed from March 20, 2017, to a new effective date of May 19, 2017.
Paul Lewis, Ph.D., Director, Standards Division. Telephone: (202) 720-3252; Fax: (202) 260-9151.
AMS is taking this action based on the Memorandum of January 20, 2017, from the Assistant to the President and Chief of Staff, entitled, “Regulatory Freeze Pending Review.” This memorandum directs agencies to extend the effective dates of regulations which have been published in the
To the extent that 5 U.S.C. 553(b)(A) applies to this action, it is exempt from notice and comment for good cause and the reasons cited above. AMS finds that notice and solicitation of comment regarding the brief extension of the effective date for the final regulation are impracticable, unnecessary, or contrary to the public interest pursuant to 5 U.S.C. 553(b)(B). AMS also believes that affected entities need to be informed as soon as possible of the extension and its length in order to plan and adjust their implementation process accordingly.
Small Business Administration.
Interim final rule.
The Small Business Administration (SBA) is amending its regulations to adjust for inflation the amount of certain civil monetary penalties that are within the jurisdiction of the agency. These adjustments comply with the requirement in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, to make annual adjustments to the penalties.
You may submit comments, identified by RIN 3245-AG83 by any of the following methods:
•
•
SBA will post all comments on
Arlene Embrey, 202-205-6976, or at
On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Inflation Adjustment Improvements Act), Public Law 114-74, 129 Stat. 584. This act amended the Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 104 Stat 890 (the 1990 Inflation Adjustment Act), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The 2015 Inflation Adjustment Improvements Act requires agencies to issue an interim final rule (IFR) to: (1) Adjust the level of civil monetary penalties with an initial “catch-up” adjustment; and (2) make subsequent annual adjustments for inflation no later than January 15 of each subsequent year. The 2015 Inflation Adjustment Improvements Act also authorizes agencies to implement the annual adjustments without regard to the requirements for public notice and comment or delayed effective date under the Administrative Procedures Act, 5 U.S.C. 553(b)(B) and (d)(3), respectively.
In addition, based on the definition of a “civil monetary penalty” in the 1990 Inflation Adjustment Act, agencies are to make adjustments only to the civil penalties that (i) are for a specific monetary amount as provided by federal
On May 19, 2016, SBA complied with the first requirement by publishing an IFR with the initial adjustments to the civil penalties SBA is responsible for assessing or enforcing. 81 FR 31489. These initial adjustments to the penalties became effective on August 1, 2016. In this rule SBA complies with the second requirement by making the first annual inflation adjustment to these penalties.
Consistent with the 2015 Inflation Adjustment Improvements Act, as well as the guidance issued by the Office of Management and Budget in M-17-11, Implementation of the 2017 annual adjustment pursuant to the Federal Civil Penalties Inflation Act Improvements Act, (December 16, 2016), the formula for calculating the annual adjustments is based on the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October preceding the adjustment. Specifically, the change between the October CPI-U preceding the date of adjustment and the prior year's CPI-U, which for the adjustments in this rule is the percentage change between October 2016 CPI-U (241.729) and October 2015 CPI-U (237.838) or 1.01636. Therefore, the annual adjustments identified in this rule were obtained by applying this multiplier to the most recent penalty amounts established in the IFR published in May 2016.
This rule makes adjustments to civil monetary penalties authorized by the Small Business Act, the Small Business Investment Act of 1958 (SBIAct), the Program Fraud Civil Remedies Act and the Byrd Amendment to the Federal Regulation of Lobbying Act. These penalties and the implementing regulations are discussed below.
SBA licenses, regulates and provides financial assistance to financial entities called small business investment companies (SBICs). Pursuant to section 315 of the SBIAct, 15 U.S.C. 687g, SBA may impose a penalty on any SBIC that fails to comply with SBA's regulations or directives governing the filing of regular or special reports. The penalty for non-compliance is incorporated in § 107.665 of the SBIC program regulations.
The current civil penalty amount for violation of this requirement, as adjusted in May 2016, is $250. This amount was multiplied by the multiplier of 1.01636 to reach a product of $254, rounded to the nearest dollar. Thus, the new civil penalty amount is $254 for each and every day an SBIC fails to file a required report.
According to the regulations at § 120.465, any small business lending company (SBLC) that violates a regulation or written directive issued by the SBA Administrator regarding the filing of any regular or special report is subject to the civil penalty amount stated in § 120.465(b) for each day the company fails to file the report, unless the small business lending company can show that there is reasonable cause for its failure to file. This penalty, which is authorized by section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1), was adjusted in the May 2016 IFR from $5,000 to $6,229. However, due to a typographical error, the amount was published incorrectly in the May 2016 IFR as $6,299. The amount should have been stated as $6,229, the product of the then $5,000 penalty multiplied by 1.24588, the multiplier established under the 2015 Inflation Adjustment Improvements Act.
In light of this correction, this rule amends § 120.465(b) to adjust this civil penalty by multiplying $6,229, the correct product under the guidelines for the May 2016 IFR, by the multiplier of 1.01636 to reach a product of $6,331, rounded to the nearest dollar. Thus, the new civil penalty amount is not more than $6,331 for each and every day an SBLC fails to file the respective report.
SBA has promulgated regulations at 13 CFR part 142 to implement the civil penalties authorized by the Program Fraud Civil Remedies Act of 1986 (PFCRA), 31 U.S.C. 3801-3812. Under the current regulation at § 142.1(b), a person who submits, or causes to be submitted, a false claim or a false statement to SBA is subject to a civil penalty of not more than $10,781, for each statement or claim.
This rule amends § 142.1(b) to adjust the current civil penalty to $10,957 per statement or claim. The adjusted civil penalty amount was calculated by multiplying the current civil penalty of $10,781 by the multiplier of 1.01636 to reach a product of $10,957, rounded to the nearest dollar.
SBA's regulations at 13 CFR part 146 govern lobbying activities by recipients of federal financial assistance. These regulations implement the authority in 31 U.S.C. 1352, which was established in 1989 and impose penalties on any recipient that fails to comply with certain requirements in the part. Specifically, under § 146.400(a) and (b), penalties may be imposed on those who make prohibited expenditures or fail to file the required disclosure forms or to amend such forms, if necessary. The regulations at § 146.400(a) and (b) were amended by the May 2016 IFR to adjust the penalty amounts of “not less than $10,000 and no more than $100,000” to “not less $18,936 and no more than $189,361” for each prohibited expenditure or failure to file or amend the disclosure forms. The May 2016 IFR also amended § 146.400(e) to (1) adjust the civil penalty that may be imposed for a first time violation of § 146.400(a) and (b), to a maximum of $18,936, absent aggravating circumstances, and (2) adjust the civil penalty that may be imposed for second and subsequent offenses to not less $18,936 and no more than $189,361.
This rule amends § 146.400(a) and (b), to adjust the current civil penalty amounts to “not less than $19,246 and not more than $192,459.” The current civil penalty amounts of $18,936 and $189,361 were multiplied by the multiplier of 1.01636 to reach a product of $19,246 and $192,459, respectively, rounded to the nearest dollar.
This rule also amends § 146.400(e) to adjust the civil penalty that may be imposed for a first time violation of § 146.400(a) and (b) to a maximum of $19,246 and to adjust the civil penalty that may be imposed for second and subsequent offenses to not less than $19,246 and not more than $192,459. The current civil penalty amounts of $18,936 and $189,361 were multiplied by the multiplier of 1.01636 to reach a product of $19,246 and $192,459, respectively, rounded to the nearest dollar.
The 2015 Inflation Adjustment Improvements Act specifically authorizes agencies to promulgate rulemaking for the annual adjustment to their civil monetary penalties, “notwithstanding section 553 of title 5, United States Code,” which generally requires agencies to provide the public with an opportunity to comment on the
Section 553(d) requires agencies to publish their rules at least 30 days before their effective dates, except if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest. By expressly exempting this rule from section 553, the 2015 Inflation Adjustment Improvements Act has provided the agency with the good cause justification for this rule to become effective on the date it is published in the
The Office of Management and Budget has determined that this interim final rule is not a significant regulatory action under Executive Order 12866. This is also not a major rule under the Congressional Review Act, 5 U.S.C. 800.
This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.
For the purpose of Executive Order 13132, SBA has determined that the rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, this interim final rule has no federalism implications warranting preparation of a federalism assessment.
SBA has determined that this rule does not impose additional reporting or recordkeeping requirements.
The RFA requires agencies to consider the effect of their regulatory actions on small entities, including small non-profit businesses, and small local governments. Pursuant to the RFA, when an agency issues a rule the agency must prepare an analysis that describes whether the impact of the rule will have a significant economic impact on a substantial number of such small entities. However, the RFA requires such analysis only where notice and comment rulemaking is required. As stated above, SBA has express statutory authority to issue this rule without regard to the notice and comment. Since notice and comment is not required before this rule is issued, SBA is not required to prepare a regulatory analysis.
Investment companies, Loan programs—business, Reporting and recordkeeping requirements, Small businesses.
Loan programs—business, Reporting and recordkeeping requirements, Small businesses.
Administrative practice and procedure, Claims, Fraud, Penalties.
Government contracts, Grant programs, Loan programs, Lobbying, Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, SBA amends 13 CFR parts 107, 120, 142, and 146 as follows:
15 U.S.C. 681, 683, 687(c), 687b, 687d, 687g, 687m.
15 U.S.C. 634(b)(6), (b)(7), (b)(14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3), and 697(a) and (e); Public Law 111-5, 123 Stat. 115, Public Law 111-240, 124 Stat. 2504; Public Law 114-113, 129 Stat. 2242.
15 U.S.C. 634(b); 31 U.S.C. 3803(g)(2).
Section 319, Pub. L. 101-121 (31 U.S.C. 1352); 15 U.S.C. 634(b)(6).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule; delay of effective date.
In accordance with the memorandum of January 20, 2017, from the Assistant to the President and Chief of Staff, entitled “Regulatory Freeze Pending Review,” published in the
Effective February 9, 2017, the effective date of the final rule amending 15 CFR part 902 and 50 CFR part 300, that published on January 19, 2017, at 82 FR 6221, is delayed until March 21, 2017.
Mi Ae Kim, Office of International Affairs
On January 19, 2017, NMFS published this final rule that sets forth changes to the regulations that implement conservation measures adopted by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR or Commission). This final rule streamlines and clarifies the regulations for Antarctic marine living resources, shifts deadlines for advance notice of intended fishing activities, distinguishes between first receivers and dealers of Antarctic marine living resources (AMLR), reduces the time for advance notice of imports of
On January 20, 2017, the White House issued a memo instructing Federal agencies to temporarily postpone the effective date for 60 days after January 20, 2017, of any regulations or guidance documents that have published in the
Reporting and recordkeeping requirements.
Antarctica, Antarctic marine living resources, Catch documentation scheme, Fisheries, Fishing, Intergovernmental relations, Reporting and recordkeeping requirements.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is temporarily changing the operating schedule that governs the Oregon State highway bridge across Youngs Bay foot of Fifth Street (Old Youngs Bay Bridge), mile 2.4, at Astoria, OR. The Oregon Department of Transportation (ODOT) requested to change the operating schedule of the Old Youngs Bay Bridge for several months while work is performed on the north bascule lift. This change will allow ODOT to operate the double bascule draw in single leaf mode, one lift at a time, and reduce the vertical clearance of the non-operable half of the span by five feet.
This temporary final rule is effective from 7 a.m. on March 1, 2017 to 5 p.m. on October 31, 2017.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this temporary final rule, call or email Steven M. Fischer, Bridge Administrator, Thirteenth Coast Guard District Bridge Program Office, telephone 206-220-7282; email
On November 25, 2016, we published a notice of proposed rulemaking entitled Drawbridge Operation Regulation; Youngs Bay, Astoria, OR in the
The Coast guard is issuing this rule under authority 33 U.S.C. 499.
The Old Youngs Bay Bridge across Youngs Bay foot of Fifth Street, mile 2.4, at Astoria, OR, has a vertical clearance of 19 feet above mean high water when in the closed-to-navigation position. The bridge operates in accordance with 33 CFR 117.899(b). ODOT requested to change the operating schedule of the Old Youngs Bay Bridge for several months while work is performed on the north bascule lift.
This temporary rule will allow ODOT to operate the double bascule draw in single leaf mode, one lift at a time. One half of the double bascule bridge will have a containment system installed on the north half of the span, which will reduce the vertical clearance by 5 feet from 19 feet above mean high water to 14 feet above mean high water on the non-operable half of the span. Adjusting the existing drawbridge regulation will allow construction workers to complete bridge and highway upgrades before winter of 2017, while having minimal impact on maritime navigation, and no alternate routes are on this part of Youngs Bay into Youngs River. Marine traffic on Youngs Bay consists of vessels ranging from small pleasure craft, sailboats, small tribal fishing boats, and commercial tug and tow, and mega yachts.
We provided a comment period of 30 days, no comments were received. This rule will temporarily amend 33 CFR 117.899(b) by allowing the south lift only to open in single leaf mode, and suspend a full opening.
We developed this rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on these statutes and Executive Orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section IV.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).
A rule has implications for federalism under E.O. 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule simply promulgates the operating regulations or procedures for drawbridges. This action is categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.
Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Bridges.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:
33 U.S.C. 499; 33 CFR 1.05-1; and Department of Homeland Security Delegation No. 0170.1.
(d) The draw of the Oregon State (Old Youngs Bay) Highway Bridge, mile 2.4, across Youngs Bay foot of Fifth Street, shall open the south half of the double bascule span on signal for the passage of vessels, if at least one half-hour notice is given to the drawtender, at the Lewis and Clark River Bridge by marine radio, telephone, or other suitable means from 7 a.m. to 5 p.m. Monday through Friday and from 8 a.m. to 4 p.m. Saturday and Sunday from March 1, 2017 to October 31, 2017. At all other times, including all Federal holidays, but Columbus Day, at least a two-hour notice by telephone is required. The opening signal is two prolonged blasts followed by one short blast.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a 500-yard temporary safety zone around barge Togiak Trader and tug Rosario within the Bellingham Bay Explosive Anchorage. The safety zone is necessary to ensure the safety of the maritime public due to an operational equipment test utilizing compressed air onboard that vessel. The safety zone will prohibit any person or vessel from entering or remaining in the safety zone unless authorized by the Captain of the Port or his Designated Representative.
This rule is effective from 5 p.m. on February 8, 2017, to 5 a.m. on February 10, 2017. It will only be enforced during two periods: From 5 p.m. on February 8, 2017, to 5 a.m. on February 9, 2017, and from 5 p.m. on February 9, 2017, to 5 a.m. on February 10, 2017.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email MST1 Wayne Lau, Waterways Management Division, U.S. Coast Guard; telephone 206-217-6051, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because publishing an NPRM would be impracticable as delayed promulgation may result in injury or damage to the maritime public from an operational equipment test in Bellingham Bay prior to conclusion of a notice and comment period.
We are issuing this rule, and under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for making it effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port, Puget Sound has determined that potential hazards associated with operational equipment tests will be a safety concern for anyone transiting through the location of the operation. This rule is needed to ensure the safety of the maritime public from hazards associated with operational equipment tests in Bellingham Bay.
This rule establishes a temporary safety zone that will be enforced during two 12-hour periods: From 5 p.m. on February 8, 2017, to 5 a.m. on February 9, 2017, and on from 5 p.m. on February 9, 2017, to 5 a.m. on February 10, 2017. The safety zone will cover all navigable waters within 500 yards of the barge Togiak Trader (ON:637310) and tug Rosario (ON:585319), located near 48°42′48″ N. 122°33′37″ W., within the explosives anchorage in Bellingham Bay.
The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while operational equipment testing is being conducted. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative while the zone is subject to enforcement. Vessels wishing to enter the safety zone during the two enforcement periods must request permission to do so from the Captain of the Port, Puget Sound by contacting the Joint Harbor Operations Center at 206-217-6001 or the on-scene patrol craft, if any, via VHF-FM Channel 16.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
This regulatory action determination is based on the limited nature of the size and duration of the temporary safety zone. Vessel traffic will be able to safely transit around this safety zone which will impact a small designated area of Bellingham Bay. Moreover, the Coast Guard will issue a Special Marine Information Broadcast via VHF-FM Channel 16 about the safety zone and the rule allows vessels to seek permission to enter the safety zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V above, this rule will not have a significant
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under E.O. 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.
Also, this rule does not have tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a temporary safety zone that is limited in duration that will prohibit entry within 500 yards of the designated area. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
Forest Service, USDA.
Final rule; delay of effective date.
This document delays the effective date of a final rule titled, “Roadless Area Conservation; National Forest System Lands in Colorado,” that was published in the
The effective date of the rule amending 36 CFR part 294 published in the
Jason Robertson; Deputy Director; Recreation, Lands, and Minerals; Rocky Mountain Regional Office, U.S. Forest Service, at 303-275-5470. Individuals using telecommunication devices for the deaf may call the Federal Information Relay Services at 1-800-877-8339 between 8 a.m. and 8 p.m. Eastern Time, Monday through Friday.
On January 20, 2017, the Assistant to the President and Chief of Staff (“Chief of Staff”) issued a memorandum, published in the
The Colorado Roadless Rule is a State-specific rule that establishes management direction for the conservation of roadless area values and characteristics across approximately 4.2 million acres of land located within the State of Colorado in Roadless Areas on National Forest System (NFS) lands. The North Fork Coal Mining Area exception to the Colorado Roadless Rule provides for the construction of temporary roads, if needed, for coal exploration and coal-related surface activities in the 19,700-acre area defined as the North Fork Coal Mining Area. In addition, the final rule makes an administrative correction to Colorado Roadless Area boundaries associated with the North Fork Coal Mining Area based on updated information. The correction adds an additional 200 acres to the roadless area. These boundary corrections address changes identified by new road survey information. The temporary 60-day delay in effective date is necessary to give USDA officials the opportunity for further review and consideration of new regulations, consistent with the Chief of Staff's memorandum of January 20, 2017.
To the extent that 5 U.S.C. 553(b)(A) applies to this action, it is exempt from notice and comment for good cause and the reasons cited above. USDA finds that notice and solicitation of comment regarding the brief extension of the effective date for the final regulation are impracticable, unnecessary, and contrary to the public interest pursuant to 5 U.S.C. 553(b)(B). USDA believes that affected entities need to be informed as soon as possible of the extension and its length in order to plan and adjust their implementation process accordingly.
Bureau of Land Management, Interior.
Final order; delay of effective and implementation dates.
In accordance with a January 20, 2017, Memorandum for the Heads of Executive Departments and Agencies (memorandum) from the White House, the Bureau of Land Management (BLM) is delaying the effective date of a rule published on January 10, 2017.
The effective date of the rule that published on January 10, 2017, at 82 FR 2906, is delayed from February 9, 2017, to March 21, 2017. In addition, the implementation date is delayed from March 13, 2017 to April 20, 2017.
Steven Wells, Division Chief, Fluid Minerals Division, 202-912-7143 for information regarding the substance of the final Order or information about the BLM's Fluid Minerals Program. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 1-800-877-8339 to contact the above individual during normal business hours. The Service is available 24 hours a day, 7 days a week to leave a message or question with the above individual. You will receive a reply during normal business hours.
On July 29, 2016, the BLM published for public review and comment a proposed rule to update the filing requirements of Onshore Oil and Gas Order Number 1 (Onshore Order 1), requiring the electronic filing (e-filing) of all Applications for Permit to Drill (APDs) and Notices of Staking (NOSs). The comment period closed on August 28, 2016. Five comments were received; three were substantive, resulting in changes to the final rule; two were non-substantive and considered outside the scope of the proposed rule.
On January 10, 2017, the BLM published a notice at 82 FR 2906 of the final Order to revise Onshore Order 1 to require e-filing of all APDs and NOSs. Per that notice, the final Order is currently scheduled to take effect on February 9, 2017.
Previously, Onshore Order 1 stated that an “operator must file an APD or any other required documents in the BLM Field Office having jurisdiction over the lands described in the application,” but allowed for e-filing of such documents as an alternative. The revision to Onshore Order 1 makes e-filing the required method of submission, subject to limited exceptions. The BLM made this change to improve the efficiency and transparency of the APD and NOS processes.
On January 20, 2017, the White House issued a memorandum instructing Federal agencies to temporarily postpone the effective date of certain regulations for 60 days after January 20, 2017, to ensure the President's appointees or designees have the opportunity to review any new or pending regulations. Section 3 of the memorandum states, “With respect to regulations that have been published in the OFR [Office of the Federal Register] but have not taken effect, as permitted by applicable law, temporarily postpone their effective date for 60 days from the date of this memorandum, . . . for the purpose of reviewing questions of fact, law, and policy they raise.” The memorandum goes on to state in Section 3(a) that following the delay in effective date, “for those regulations that raise no substantial questions of law or policy, no further action needs to be taken.” The BLM is, therefore, delaying the effective date of the rule by 60 days, from the date of the memorandum, to March 21, 2017.
Sections III.A, III.C, and III.E of the final Order include an implementation
To the extent that 5 U.S.C. 553 applies to this action, it is exempt from notice and comment because it constitutes a rule of procedure under 5 U.S.C. 553(b)(A). Alternatively, our implementation of this action without opportunity for public comment, effective immediately upon publication in the
43 CFR part 3160.
For reasons set out in the preamble, the Bureau of Land Management amends the appendix following the regulatory text of the final rule published in the
This appendix does not appear in the BLM regulations in 43 CFR part 3160.
Amend Onshore Oil and Gas Order Number 1 sections III.A, III.C, and III.E by replacing “March 13, 2017,” with “April 20, 2017,” at each place it occurs.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule; delay of effective date.
In accordance with the memorandum of January 20, 2017, from the Assistant to the President and Chief of Staff, entitled “Regulatory Freeze Pending Review,” published in the
Effective February 9, 2017, the effective date of the final rule amending 50 CFR part 223, that published on January 19, 2017, at 82 FR 6309, is delayed until March 21, 2017.
Marta Nammack, NMFS, Office of Protected Resources (OPR), (301) 427-8403.
On January 19, 2017, NMFS published the final rule to list two foreign marine guitarfish species under the Endangered Species Act (ESA). We considered comments submitted on the proposed listing rule and have determined that the blackchin guitarfish (
On January 20, 2017, the White House issued a memorandum instructing Federal agencies to temporarily postpone the effective date for 60 days after January 20, 2017, of any regulations or guidance documents that have published in the
Endangered and threatened species, Exports, Imports, Transportation.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; reallocation.
NMFS is reallocating the projected unused amounts of the Community Development Quota pollock directed fishing allowance from the Aleutian Islands subarea to the Bering Sea subarea. This action is necessary to provide opportunity for harvest of the 2017 total allowable catch of pollock, consistent with the goals and objectives of the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area.
Effective 1200 hrs, Alaska local time (A.l.t.), February 9, 2017 until the effective date of the final 2017 and 2018 harvest specifications for Bering Sea and Aleutian Islands (BSAI) groundfish, unless otherwise modified or superseded through publication of a notification in the
Steve Whitney, 907-586-7228.
NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council (Council)
In the Aleutian Islands subarea, the portion of the 2017 pollock total allowable catch (TAC) allocated to the Community Development Quota (CDQ) directed fishing allowance (DFA) is 1,900 metric tons (mt) as established by the final 2016 and 2017 harvest specifications for groundfish in the BSAI (81 FR 14773, March 16, 2016), and as adjusted by an inseason adjustment (82 FR 2916, January 10, 2017).
As of February 1, 2017, the Administrator, Alaska Region, NMFS, (Regional Administrator) has determined that 1,900 mt of pollock CDQ DFA in the Aleutian Islands subarea will not be harvested. Therefore, in accordance with § 679.20(a)(5)(iii)(B)(
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the reallocation of AI pollock. Since the pollock fishery is currently open, it is important to immediately inform the industry as to the final Bering Sea subarea pollock allocations. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery; allow the industry to plan for the fishing season and avoid potential disruption to the fishing fleet as well as processors; and provide opportunity to harvest increased seasonal pollock allocations while value is optimum. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of February 1, 2017.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.20 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
Coast Guard, DHS.
Supplemental notice of proposed rulemaking.
On July 9, 2015, the Coast Guard published a notice of proposed rulemaking (NPRM) to establish a regulated navigation area (RNA) on the navigable waters of the Fifth Coast Guard District to allow the Coast Guard to impose and enforce restrictions on vessels operating within the RNA where a threat to navigation exists due to ice covered waterways. Based on consideration of the comments received in response to that NPRM and further analysis, the Coast Guard is now proposing to establish 11 safety zones on certain navigable waters of the Fifth Coast Guard District instead of 1 RNA. This action is necessary to promote navigational safety, provide for the safety of life and property, and facilitate the reasonable demands of commerce when navigation safety is threatened due to ice covered waterways. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before April 10, 2017.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LCDR Tiffany Johnson, Fifth Coast Guard District, U.S. Coast Guard; telephone 757-398-6516, email
The purpose of this proposed regulation is to mitigate the potential threat ice poses to the maritime public in the Fifth Coast Guard District by implementing control measures on vessels operating in certain ice-covered waterways. During an average or severe winter, the presence of ice in waterways presents numerous hazards to vessels. Such hazards include vessels becoming beset or dragged off course, sinking or grounding and creating hazards to navigation. The presence of ice in a waterway may hamper a vessel's ability to maneuver and impose additional loads on a vessel's hull, propulsion system and appendages. Blockage of sea suctions can cause the main engine cooling system to overheat, requiring reduced power to be used or the engine to be shut down completely. Visual aids to navigation may become submerged, destroyed, or moved off station, potentially misleading the vessel operator to unsafe waters. Vessels operating in these hazardous conditions could introduce a clear and present danger to the maritime public and environment.
On July 9, 2015, the Coast Guard published an NPRM titled Regulated Navigation Area; Ice Covered Waterways in the Fifth Coast Guard District (80 FR 39403). The purpose of that proposed regulated navigation area (RNA) was to mitigate the aforementioned potential threat ice poses to the maritime public in the Fifth Coast Guard District by implementing control measures on vessels of certain characteristics. We invited comments on our proposed regulatory action related to that RNA. During the comment period that ended October 7, 2015, we received a total of six comments coming from six submitters. No public meeting was requested, and none was held.
Five comments assert that there is no need for this rule because existing Coast Guard methods for ensuring vessel safety are adequate given the practices they have witnessed while operating in the Fifth Coast Guard District in the past. The Coast Guard disagrees that no rule is needed to implement and enforce restrictions on vessels operating where a threat to navigation exists due to ice covered waterways. In the past, Captains of the Ports (COTP) in the Fifth Coast Guard District ensured navigation and vessel safety in ice-covered waterways by establishing temporary safety zones or using other COTP authorities.
This proposed rule would establish 11 permanent safety zones and eliminate the need for the Coast Guard to publish several temporary final rules throughout future ice seasons. The safety zones proposed in this SNPRM are the most appropriate from a regulatory perspective and will ensure consistency throughout the Fifth Coast Guard District. While the regulatory method may be different, the effect on the regulated public is largely the same in that there will be restrictions on navigating based upon prevailing ice conditions and vessel hull, propulsion, sea suction and appendage characteristics.
One comment specifically stated that the Coast Guard already has sufficient authority to control vessel movements under 33 CFR part 6, and therefore the proposed RNA is not needed. The Coast Guard finds relying solely on the authority provided by 33 CFR part 6 is not feasible when ice presents hazardous conditions. Sole reliance on this authority involving the protection and security of vessels, harbors, and waterfront facilities would require the COTP to take individualized action against every vessel desiring to operate in the area, which is counter to public interest due to the significant amount of time it would take to issue and administer an effective amount of orders.
Two comments noted that the decision to transit an ice-covered
Three comments expressed concern regarding the burden this regulation would place on the Coast Guard. The safety zones established by this proposed rule would eliminate the need for the Coast Guard to publish several temporary final rules to establish safety zones throughout future periods of ice accumulation. The Coast Guard also concluded that the notification activities associated with this rule do not place any additional burden on the Coast Guard when compared with implementing other COTP control measures. Furthermore, this regulation would be a permanent rule, would provide for public participation in the rulemaking process, and would establish uniform ice condition control measures to be implemented in the Fifth Coast Guard District to facilitate safe navigation.
One comment received posited the proposed RNA would result in undue economic hardship for commercial vessels. The Coast Guard weighs many factors in its decision to restrict vessel operations in a waterway, specifically focused on ensuring the safe, secure, and environmentally sound transportation of people, goods, and material by water. The Coast Guard has and will continue to use all available resources to safely and efficiently monitor the conditions of the designated waters of the safety zones to minimize impact to waterway users.
Two comments were received that the geographic area defined in the NPRM would be difficult for the Coast Guard to implement or enforce due its size. As stated in this SNPRM, the proposed regulated area has been delineated into 11 safety zones rather than 1 RNA. The cognizant COTPs enforce a wide array of control measures in these same geographic areas.
An anonymous commenter focused on North Carolina waters in the Fifth Coast Guard District. That person's comment recommended that regulators consider inland ponds, streams, marshes, rivers, lakes, reservoirs, and other waters, and concluded that the rule proposed in the NPRM—which would cover all navigable waters in the Fifth Coast Guard District, including those in North Carolina—appears redundant, and difficult to interpret or enforce outside of major seaport areas in North Carolina. We were unable to obtain clarification from this anonymous commenter regarding the desired consideration to be applied to the various waters mentioned, but we believe this SNPRM, which does not propose to regulate any North Carolina waters, addresses this commenter's concerns.
Upon review of the comments and further analysis, the Coast Guard is proposing to change the regulatory method by which control measures would be implemented from 1 regulated navigation area to 11 safety zones throughout the navigable waters of the Fifth Coast Guard District. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.
This proposed rule would establish 11 safety zones on the navigable waters of the Fifth Coast Guard District. We have placed an illustration of these safety zones in the docket for this rulemaking. This proposed rule would allow the Coast Guard to impose and enforce restrictions on vessels operating within the safety zones where a threat to navigation exists due to ice covered waterways. This action is necessary to promote navigational safety, provide for the safety of life and property, and facilitate the reasonable demands of commerce. Vessels transiting in protected waters, such as within a marina, harbor or basin, for the purposes of facilitating icebreaking operations and protecting infrastructure and property would be exempt from the controls. Vessels capable of operating in the prevailing ice condition outside of protected waters may be allowed to operate within the safety zones if granted permission by the cognizant COTP.
Under this proposed rule, a vessel would need permission from the cognizant COTP or the District Commander to enter or continue transiting a zone if, when approaching or after entering a safety zone, the vessel encounters ice of a given thickness, unless the COTP or the District Commander has set an ice condition for the zone and the vessel meets the associated requirements to transit the zone. Here is a description of the three ice conditions and vessels requirements to transit. Under:
• Condition One, when 30 percent of a zone is reported covered with ice 1 to 3 inches thick, only steel hull vessels would be allowed to transit the zone;
• Condition Two, when 30 to 90 percent of a zone is reported covered with ice 3 to 9 inches thick, only steel hull vessels with a 1,500 minimum shaft horsepower and a main engine cooling system design that prevents blockage from ice would be allowed to transit the zone; and
• Condition Three, when 90 percent or more of a zone is reported covered with ice 9 inches thick, only steel hull vessels with a 1,500 minimum shaft horsepower and a main engine cooling system design that prevents blockage from ice in a vessel convoy would be allowed to transit the zone.
For non-steel-hull vessels, entry into or continuing to transit the zone would be prohibited without permission from the cognizant COTP or District Commander if, when approaching the zone or after entering the safety zone, the vessel encounters ice of
We developed this rule after considering numerous statutes and executive related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of
Although this proposed regulation could limit or prevent marine traffic from transiting certain waterways in the Fifth Coast Guard District, the effect of this regulation would not be significant because there is little vessel traffic associated with recreational boating and commercial fishing during enforcement periods. The Coast Guard anticipates only having to implement control measures for limited durations of time. The cognizant COTP will make notifications of the regulated areas to the maritime public via Broadcast Notice to Mariners so mariners can adjust their plans accordingly. Moreover, vessel traffic capable of operating in such conditions will be allowed to enter into or transit within the safety zones as specified by the cognizant COTP.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the regulated areas may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on a substantial number of small entities.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves establishing safety zones. Normally such actions are categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A preliminary environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this SNPRM as being available in the docket, and all public comments, will be in our online docket at
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(1)
(ii)
(iii)
(iv)
(2)
(ii)
(iii)
(iv)
(v)
(vi)
(3)
(ii) [Reserved]
(b)
(c)
(2)
(i) The vessel has less than 1,500 minimum shaft horsepower and encounters ice 1 inch or more thick.
(ii) The vessel has a 1,500 minimum shaft horsepower and a main engine cooling system design that prevents blockage from ice and encounters ice 3 inches or more thick.
(iii) The vessel is part of a vessel convoy and has a 1,500 minimum shaft horsepower and a main engine cooling system design that prevents blockage from ice and encounters ice 9 inches or more thick.
(d)
(i)
(ii)
(iii)
(2) Vessels prohibited from entering or transiting a safety zone under paragraph (c) of this section may request permission to enter or continuing transiting by contacting the cognizant COTP on VHF-FM channel 16 (156.8 MHZ) or via telephone, as follows:
(i) COTP Delaware Bay: 215-271-4940
(ii) COTP Maryland-National Capital Region: 410-576-2693
(iii) COTP Hampton Roads: 757-483-8567.
(3) Vessels granted permission to enter, operate in, or transit though a safety zone must do so in accordance with the directions provided by the cognizant COTP or designated representative.
(4) Vessels may transit within protected waters to facilitate icebreaking operations and protect infrastructure and property without COTP permission.
(e)
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by March 13, 2017 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are required regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by March 13, 2017 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by March 13, 2017 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20503. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by March 13, 2017 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control
Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting of the Virginia Advisory Committee to the Commission will convene by conference call at 12:00 p.m. (EDT) on Thursday, March 2, 2017. The purpose of the meeting is to discuss project planning and eventually select topic(s) for the Committee's civil rights review.
The meeting will be held on Thursday, March 2, 2017, at 12:00 p.m. EST.
Public call information: Dial: 888-601-3861, Conference ID: 417838.
Ivy L. Davis, at
Interested members of the public may listen to the discussion by calling the following toll-free conference call-in number: 1-888-601-3861 and conference ID: 417838. Please be advised that before being placed into the conference call, you will be prompted to provide your name, organizational affiliation (if any), and email address (so that callers may be notified of future meetings). Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free conference call-in number.
Persons with hearing impairments may also follow the discussion by first calling the Federal Relay Service at 1-800-977-8339 and providing the operator with the toll-free conference call-in number: 1-888-601-3861 and conference call ID: 417838.
Members of the public are invited to submit written comments; the comments must be received in the regional office approximately 30 days after each scheduled meeting. Written comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425, faxed to (202) 376-7548, or emailed to Evelyn Bohor at
Records and documents discussed during the meeting will be available for public viewing as they become available at
Commission on Civil Rights.
Announcement of monthly planning meetings.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a meeting of the West Virginia Advisory Committee (Committee) to the Commission will convene by conference call on Friday, March 3, 2017, at 12:00 p.m. (EST) on. The purpose of meetings are to continue discussing topics for civil rights project.
12:00 p.m. (EST). Friday, March 3, 2017.
Public Call-In Information: Conference call-in number: 1-888-601-3861 and password: 636552.
Ivy L. Davis, at
Interested members of the public may listen to the discussion by calling the following toll-free conference call-in number: 1-888-601-3861 and password: 636552. Please be advised that before placing them into the conference call, the conference call operator will ask callers to provide their names, their organizational affiliations (if any), and email addresses (so that callers may be notified of future meetings). Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free conference call-in number.
Persons with hearing impairments may also follow the discussion by first
Members of the public are invited to submit written comments; the comments must be received in the regional office approximately 30 days after each scheduled meeting. Written comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425, faxed to (202) 376-7548, or emailed to Evelyn Bohor at
Records and documents discussed during the meeting will be available for public viewing as they become available at
U.S. Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act that the Georgia Advisory Committee will hold a meeting on Wednesday, March 1, 2017, for discussing potential project topics.
The meeting will be held on Wednesday March 1, 2017 12:00 p.m. EST.
The meeting will be by teleconference. Toll-free call-in number: 888-296-4197, conference ID: 6261373.
Jeffrey Hinton, DFO, at
Members of the public can listen to the discussion. This meeting is available to the public through the following toll-free call-in number: 888-296-4197, conference ID: 6261373. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-977-8339 and providing the Service with the conference call number and conference ID number.
Members of the public are also entitled to submit written comments; the comments must be received in the regional office by February 24, 2017. Written comments may be mailed to the Southern Regional Office, U.S. Commission on Civil Rights, 61 Forsyth Street, Suite 16T126, Atlanta, GA 30303. They may also be faxed to the Commission at (404) 562-7005, or emailed to Regional Director, Jeffrey Hinton at
Records generated from this meeting may be inspected and reproduced at the Southern Regional Office, as they become available, both before and after the meeting. Records of the meeting will be available via
Commission on Civil Rights.
Announcement of meetings.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting of the Wyoming Advisory Committee to the Commission will convene at 11:00 a.m. (MST) on Tuesday, February 21, 2017, via teleconference. The purpose of the meeting is to receive information on services provided by the Community Relations Ombudsman of Riverton and receive an update on former and recent hate crimes legislation in the state.
Tuesday, February 21, 2017, at 11:00 a.m. (MST)
To be held via teleconference:
Malee V. Craft, DFO,
Members of the public may listen to the discussion by dialing the following Conference Call Toll-Free Number: 1-877-741-4244; Conference ID: 8569091. Please be advised that before being placed into the conference call, the operator will ask callers to provide their names, their organizational affiliations (if any), and an email address (if available) prior to placing callers into the conference room. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges.
Persons with hearing impairments may also follow the discussion by first calling the Federal Relay Service (FRS) at 1-800-977-8339 and provide the FRS operator with the Conference Call Toll-Free Number: 1-877-741-4244, Conference ID: 8569091. Members of the public are invited to submit written comments; the comments must be received in the regional office by Tuesday, March 21, 2017. Written comments may be mailed to the Rocky Mountain Regional Office, U.S. Commission on Civil Rights, 1961 Stout Street, Suite 13-201, Denver, CO 80294, faxed to (303) 866-1050, or emailed to Evelyn Bohor at
Records and documents discussed during the meeting will be available for public viewing as they become available at
Commission on Civil Rights.
Notice; correction.
The Commission on Civil Rights published a notice in the
Ana Victoria Fortes, (213) 894-3437.
In the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notification of U.S. fishing opportunities.
We are announcing 2017 fishing opportunities in the Northwest Atlantic Fisheries Organization (NAFO) Regulatory Area. This action is necessary to make fishing privileges available on an equitable basis. The intended effect of this notice is to alert U.S. fishing vessels of the NAFO fishing opportunities, to relay the available quotas available to U.S. participants, and to outline the process and requirements for vessels to apply to participate in the 2017 NAFO fishery.
Effective January 1, 2017, through December 31, 2017. Expressions of interest regarding fishing opportunities in NAFO will be accepted through February 24, 2017.
Expressions of interest regarding U.S. fishing opportunities in NAFO should be made in writing to John K. Bullard, U.S. Commissioner to NAFO, NMFS Greater Atlantic Regional Fisheries Office at 55 Great Republic Drive, Gloucester, MA 01930 (phone: 978-281-9315, email:
Information relating to chartering vessels of another NAFO Contracting Party, transferring NAFO fishing opportunities to or from another NAFO Contracting Party, or U.S. participation in NAFO is available from Patrick E. Moran in the NMFS Office of International Affairs and Seafood Inspection at 1315 East-West Highway, Silver Spring, MD 20910 (phone: 301-427-8370, fax: 301-713-2313, email:
Additional information about NAFO fishing opportunities, NAFO Conservation and Enforcement Measures (CEM), and the High Seas Fishing Compliance Act (HSFCA) Permit required for NAFO participation is available from Moira Kelly, in the NMFS Greater Atlantic Regional Fisheries Office at 55 Great Republic Drive, Gloucester, MA 01930 (phone: 978-281-9218, fax: 978-281-9135, email:
Moira Kelly, (978) 281-9218.
The United States is a Contracting Party to the Northwest Atlantic Fisheries Organization (NAFO). NAFO is an intergovernmental fisheries science and management body whose convention on Northwest Atlantic Fisheries applies to most fishery resources in international waters of the Northwest Atlantic, except salmon, tunas/marlins, whales, and sedentary species such as shellfish. Currently, NAFO has 12 Members from North America, Europe, Asia, and the Caribbean. In addition to the United States, the remaining three coastal states bordering the Convention Area are members: Canada, France (in respect of St. Pierre et Miquelon), and Denmark (in respect of the Faroe Islands and Greenland). NAFO's Fisheries Commission is responsible for the management and conservation of the fishery resources of the Regulatory Area (waters outside the Exclusive Economic
As a Contracting Party within NAFO, the United States may be allocated specific catch quotas or effort allocations for certain species in specific areas within the NAFO Regulatory Area and may participate in fisheries for other species for which we have not received a specific quota. Stocks for which the United States does not receive an allocation, known as the “Others” allocation under the Convention, are shared access between all NAFO Contracting Parties.
Additional information on NAFO can be found online at
This notice announces the fishing opportunities available to U.S. vessels in NAFO regulatory waters, including specific 2017 stocks for which the United States has an allocation under NAFO, and fishing opportunities under the `other' NAFO allocations This notice also outlines the application process and other requirements for U.S. vessels that wish to participate in the 2017 NAFO fisheries.
The principal species managed by NAFO are Atlantic cod, yellowtail and witch flounders, Acadian redfish, American plaice, Greenland halibut, white hake, capelin, shrimp, skates, and
The TACs which may be available to U.S. vessels for stocks where the United States has not been allocated quota (
Note that the United States shares these allocations with other NAFO Contracting Parties, and access is on a first come, first served basis. Directed fishing is stopped by NAFO when the “Others” TAC for a particular stock has been fully harvested.
Additional directed quota for these and other stocks managed within the NAFO Regulatory Area could be made available to U.S. vessels through industry-initiated chartering arrangements or transfers of quota from other NAFO Contracting Parties.
U.S. vessels participating in NAFO may also retain bycatch of NAFO managed species to the following maximum amounts as outlined in Article 6 of the 2017 CEM. The percentage, by weight, is calculated as a percent of each stock of the total catch of species listed in Annex I.A (
1. Cod, Division 3M: 1,250 kg or 5 percent, whichever is more;
2. Witch Flounder, Division 3M: 1,250 kg or 5 percent, whichever is more;
3. Redfish, Division 3LN: 1,250 kg or 5 percent, whichever is more;
4. Cod, Division 3NO: 1,000 kg or 4 percent, whichever is more;
5. For all other Annex I.A stocks where the U.S. has no specific quota the bycatch limit is, 2,500 kg or 10 percent unless a ban on fishing applies or the quota for the stock has been fully utilized. If the fishery for the stock is closed or a retention ban applies, the permitted bycatch limit is 1,250 kg or 5 percent; and
6. For the directed yellowtail flounder fishery in Divisions 3LNO (where the United States has a 1,000 mt yellowtail flounder allocation in 2016) vessels may retain 15 percent of American plaice.
Opportunities to fish for species not listed above (
Expressions of interest to fish for any or all of the 2017 U.S. fishing opportunities in NAFO described above will be considered from all U.S. fishing interests (
Expressions of interest should include a detailed description of anticipated fishing operations in 2017. Descriptions should include, at a minimum:
• Intended target species;
• Proposed dates of fishing operations;
• Vessels to be used to harvest fish, including the name, registration, and home port of the intended harvesting vessel(s);
• The number of fishing personnel and their nationality involved in vessel operations;
• Intended landing port or ports; including for ports outside of the United States, whether or not the product will be shipped to the United States for processing;
• Processing facilities to be used;
• Target market for harvested fish; and,
• Evidence demonstrating the ability of the applicant to successfully prosecute fishing operations in the NAFO Regulatory Area. This may include descriptions of previously successful NAFO or domestic fisheries participation.
Note that applicant U.S. vessels must possess or be eligible to receive a valid HSFCA permit. HSFCA permits are available from the NMFS Greater Atlantic Regional Fisheries Office. Information regarding other requirements for fishing in the NAFO Regulatory Area is detailed below and is also available from the NMFS Greater Atlantic Regional Fisheries Office (see
U.S. applicants wishing to harvest U.S. allocations using a vessel from another NAFO Contracting Party, or hoping to enter a chartering arrangement with a vessel from another NAFO Contracting Party, should see below for details on U.S. and NAFO requirements for such activities. If you have further questions regarding what information is required in an expression of interest, please contact Patrick Moran (see
Applicants demonstrating the greatest benefits to the United States through their intended operations will be most successful. Such benefits may include:
• The use of U.S vessels to harvest fish in the NAFO Regulatory Area;
• Detailed, positive impacts on U.S. employment as a result of the fishing, transport, or processing operations;
• Use of U.S. processing facilities;
• Transport, marketing, and sales of product within the United States;
• Other ancillary, demonstrable benefits to U.S. businesses as a result of the fishing operation; and
• Documentation of the physical characteristics and economics of the fishery for future use by the U.S. fishing industry.
Other factors we may consider include but are not limited to: A documented history of successful fishing operations in NAFO or other similar fisheries; the previous compliance of the vessel with the NAFO CEM or other regulatory requirements; and, for those applicants without NAFO or other international fishery history, a description of demonstrated harvest, processing, marketing, and regulatory compliance within domestic fisheries.
To ensure equitable access by U.S. fishing interests, we may provide additional guidance or procedures or we may issue regulations designed to allocate fishing interests to one or more U.S. applicants from among qualified applicants. After reviewing all requests for allocations submitted, we may also decide not to grant any allocations if it is determined that no requests adequately meet the criteria described in this notice.
We will provide written responses to all applicants notifying them of their application status and, as needed for successful applicants, allocation awards will be made as quickly as possible so that we may notify NAFO and take other necessary actions to facilitate operations in the regulatory area by U.S. fishing interests. Successful applicants will receive additional information from us on permit conditions and applicable regulations before starting 2016 fishing operations.
Under the bilateral arrangement with Canada, the United States may enter into a chartering (or other) arrangement with a Canadian vessel to harvest the transferred yellowtail flounder. For other NAFO-regulated species listed in Annexes I.A and I.B, the United States may enter into a chartering arrangement with a vessel from any other NAFO Contracting Party. Additionally, any U.S. vessel or fishing operation may enter into a chartering arrangement with any other NAFO Contracting Party. The United States and the other Contracting Party involved in a chartering arrangement must agree to the charter, and the NAFO Executive Secretary must be advised of the chartering arrangement before the commencement of any charter fishing operations. Any U.S. vessel or fishing operation interested in making use of the chartering provisions of NAFO must provide at least the following information: The name and registration number of the U.S. vessel; a copy of the charter agreement; a detailed fishing plan; a written letter of consent from the applicable NAFO Contracting Party; the date from which the vessel is authorized to commence fishing; and the duration of the charter (not to exceed six months).
Expressions of interest using another NAFO Contracting Party vessel under charter should be accompanied by a detailed description of anticipated benefits to the United States, as described above. Additional detail on chartering arrangements can be found in Article 26 of the CEM (
Any vessel from another Contracting Party wishing to enter into a chartering arrangement with the United States must be in full current compliance with the requirements outlined in the NAFO Convention and CEM. These requirements include, but are not limited to, submission of the following reports to the NAFO Executive Secretary:
• Notification that the vessel is authorized by its flag state to fish within the NAFO Regulatory Area during 2017;
• Provisional monthly catch reports for all vessels of that NAFO Contracting Party operating in the NAFO Regulatory Area;
• Daily catch reports for each day fished by the subject vessel within the Regulatory Area;
• Observer reports within 30 days following the completion of a fishing trip; and
• An annual statement of actions taken by its flag state to comply with the NAFO Convention.
The United States may also consider the vessel's previous compliance with NAFO bycatch, reporting, and other provisions, as outlined in the NAFO CEM, before authorizing the chartering arrangement. More details on NAFO requirements for chartering operations are available from Patrick Moran (see
Under NAFO rules in effect for 2017, the United States may transfer fishing opportunities by mutual agreement with another NAFO Contracting Party and with prior notification to the NAFO Executive Secretary. An applicant may request to arrange for any of the previously described U.S. opportunities to be transferred to another NAFO party, although such applications will likely be given lesser priority than those that involve more direct harvesting or processing by U.S. entities. Applications to arrange for a transfer of U.S. fishing opportunities should contain a letter of consent from the receiving NAFO Contracting Party, and should also be accompanied by a detailed description of anticipated benefits to the United States. As in the case of chartering operations, the United States may also consider a NAFO Contracting Party's previous compliance with NAFO bycatch, reporting, and other provisions, as outlined in the NAFO CEM, before entering agreeing to a transfer. More details on NAFO requirements for transferring NAFO allocations are available from Patrick Moran (see
Under NAFO rules in effect for 2017, the United States may receive transfers of additional fishing opportunities from other NAFO Contracting Parties. We are required to provide a letter consenting to such a transfer and must provide notice to the NAFO Executive Secretary. In the event that an applicant is able to arrange for the transfer of additional fishing opportunities from another NAFO Contracting Party to the United States, the U.S. may agree to facilitate such a transfer. However, there is no guarantee that if an applicant has facilitated the transfer of quota from another Contracting Party to the United States, such applicant will receive authorization to fish for such quota. If quota is transferred to the United States, we may need to solicit new applications for the use of such quota. All applicable NAFO requirements for transfers must be met. As in the case of chartering operations, the United States may also consider a NAFO Contracting Party's previous compliance with NAFO bycatch, reporting, and other provisions, as outlined in the NAFO CEM, before
U.S. applicant vessels must be in possession of, or obtain, a valid HSFCA permit, which is available from the NMFS Greater Atlantic Regional Fisheries Office. All permitted vessels must comply with any conditions of this permit and all applicable provisions of the Convention on Future Multilateral Cooperation in the Northwest Atlantic Fisheries and the CEM. We reserve the right to impose additional permit conditions that ensure compliance with the NAFO Convention and the CEM, the Magnuson-Stevens Fishery Conservation and Management Act and any other applicable law.
The CEM provisions include, but are not limited to:
• Maintaining a fishing logbook with NAFO-designated entries (Annex II.A and Article 28);
• Adhering to NAFO hail system requirements (Annexes II.D and II.F; Article 28; Article 30 part B);
• Carrying an approved onboard observer consistent with requirements of Article 30 part A;
• Maintaining and using a functioning, autonomous vessel monitoring system authorized by issuance of the HSFCA permit as required by Articles 29 and 30; and
• Complying with all relevant NAFO CEM requirements, including minimum fish sizes, gear, bycatch retention and per-tow move on provisions for exceeding bycatch limits in any one haul/set.
Further details regarding U.S. and NAFO requirements are available from the NMFS Greater Atlantic Regional Fisheries Office, and can also be found in the 2017 NAFO CEM on the Internet (
Vessels issued valid HSFCA permits under 50 CFR part 300 are exempt from certain domestic fisheries regulations governing fisheries in the Northeast United States found in 50 CFR part 648. Specifically, vessels are exempt from the Northeast multispecies and monkfish permit, mesh size, effort-control, and possession limit restrictions (§§ 648.4, 648.80, 648.82, 648.86, 648.87, 648.91, 648.92, and 648.94), while transiting the U.S. exclusive economic zone with multispecies and/or monkfish on board the vessel, or landing multispecies and/or monkfish in U.S. ports that were caught while fishing in the NAFO Regulatory Area. These exemptions are conditional on the following requirements: The vessel operator has a letter of authorization issued by the Regional Administrator on board the vessel; for the duration of the trip, the vessel fishes, except for transiting purposes, exclusively in the NAFO Regulatory Area and does not harvest fish in, or possess fish harvested in, or from, the U.S. EEZ; when transiting the U.S. EEZ, all gear is properly stowed and not available for immediate use as defined under § 648.2; and the vessel operator complies with the provisions, conditions, and restrictions specified on the HSFCA permit and all NAFO CEM while fishing in the NAFO Regulatory Area.
National Technical Information Service (NTIS), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The purpose of this notice is to allow for 60 days of public comment.
Written comments must be submitted on or before April 10, 2017.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to John W. Hounsell, Business and Industry Specialist, Office of Product and Program Management, National Technical Information Service, Department of Commerce, 5301 Shawnee Road, Alexandria, VA 22312, email:
This notice informs the public that the National Technical Information Service (NTIS) is requesting approval for renewal of a currently approved information collection described in Section II for use in connection with the final rule for the “Certification Program for Access to the Death Master File.” The final rule was published on June 1, 2016 (81 FR 34882), and the rule became effective on November 28, 2016.
On December 30, 2014, NTIS initially described a “Limited Access Death Master File Systems Safeguards Attestation Form” in the notice of proposed rulemaking (79 FR 78314 at 78321). To accommodate the requirements of the final rule, NTIS is using both the ACAB Systems Safeguards Attestation Form and the AG
The ACAB Systems Safeguards Attestation Form requires an “Accredited Conformity Assessment Body” (ACAB), as defined in the final rule, to attest that a Person seeking certification or a Certified Person seeking renewal of certification has information security systems, facilities and procedures in place to protect the security of the Limited Access DMF, as required under Section 1110.102(a)(2) of the final rule. The ACAB Systems Safeguards Attestation Form collects information based on an assessment by the ACAB conducted within three years prior to the date of the Person or Certified Person's submission of a completed certification statement under Section 1110.101(a) of the final rule. This collection includes specific requirements of the final rule, which the ACAB must certify are satisfied, and the provision of specific information by the ACAB, such as the date of the assessment and the auditing standard(s) used for the assessment.
Section 1110.501(a)(2) of the final rule provides that a state or local government office of AG or IG and a Person or Certified Person that is a department or agency of the same state or local government, respectively, are not considered to be owned by a common “parent” entity under Section 1110.501(a)(1)(ii) for the purpose of determining independence, and attestation by the AG or IG is possible. The AG or IG Systems Safeguards Attestation Form is for the use of a state or local government AG or IG to attest on behalf of a state or local government department or agency Person or Certified Person. The AG or IG Systems Safeguards Attestation Form requires the state or local government AG or IG to attest that a Person seeking certification or a Certified Person seeking renewal of certification has information security systems, facilities and procedures in place to protect the security of the Limited Access DMF, as required under Section 1110.102(a)(2) of the final rule. The AG or IG Systems Safeguards Attestation Form collects information based on an assessment by the state or local government AG or IG conducted within three years prior to the date of the Person or Certified Person's submission of a completed certification statement under Section 1110.101(a) of the final rule. This collection includes specific requirements of the final rule, which the state or local government AG or IG must certify are satisfied, and the provision of specific information by the state or local government AG or IG, such as the date of the assessment.
ACAB Systems Safeguards Attestation Form: 3 hours.
AG or IG Systems Safeguards Attestation Form: 3 hours.
ACAB Systems Safeguards Attestation Form: 1500 (500 × 3 hours = 1500 hours).
AG or IG Systems Safeguards Attestation Form: 180 (60 × 3 hours = 180 hours).
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection;
Department of Defense.
Notice of meeting.
The Department of Defense is publishing this notice to announce the following Federal Advisory Committee meeting of the Judicial Proceedings Since Fiscal Year 2012 Amendments Panel (“the Judicial Proceedings Panel” or “the Panel”). The meeting is open to the public.
A meeting of the Judicial Proceedings Panel will be held on Friday, February 24, 2017. The public session will begin at 9:00 a.m. and end at 4:00 p.m.
Holiday Inn Arlington at Ballston, Grand Ballroom, 4610 N. Fairfax Drive, Arlington, Virginia 22203.
Ms. Julie Carson, Judicial Proceedings Panel, One Liberty Center, Suite 150, 875 N. Randolph Street, Arlington, Virginia 22203. Email:
This public meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150.
Department of Defense, Defense Security Cooperation Agency.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996.
Pamela Young, DSCA/SA&E-RAN, (703) 697-9107.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 16-85 with attached Policy Justification and Sensitivity of Technology.
(i)
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(vi)
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(viii)
*As defined in Section 47(6) of the Arms Export Control Act.
The Government of the Republic of Korea (ROK) has requested a possible sale of sixty (60) AIM-9X-2 Sidewinder Block II All-up-Round Missiles and six (6) AIM-9X-2 Block II Tactical Guidance Units, containers, spares and missile support, U.S. Government and contractor technical assistance, and other related elements of logistics support. The estimated cost is $70 million.
This proposed sale contributes to the foreign policy and national security of the United States. The ROK is one of the major political and economic powers in East Asia and the Western Pacific and a key partner of the United States in ensuring peace and stability in the region. It is vital to U.S. national interests to assist our Korean ally in developing and maintaining a strong and ready self-defense capability. This sale increases the ROK's capability to participate in Pacific regional security operations and improves its national security posture as a key U.S. ally.
The ROK intends to use the AIM-9X-2 Sidewinder Block II missiles to supplement its existing inventory of AIM-9X-2 Block II missiles. The ROK will use the enhanced capability as a deterrent to regional threats and to strengthen its homeland defense. The ROK will have no difficulty absorbing these additional missiles into its armed forces.
The proposed sale of this equipment and support does not affect the basic military balance in the region.
The principal contractor is Raytheon Missile Systems Company, Tucson, AZ. At this time, there are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will not require the assignment of any additional U.S. Government or contractor representatives to the Republic of Korea. However, U.S. Government or contractor personnel in-country visits will be required on a temporary basis in conjunction with program technical oversight and support requirements.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The AIM-9X-2 Block II Sidewinder Missile represents a substantial increase in missile acquisition and kinematics performance over the AIM-9M and replaces the AIM-9X Block I Missile configuration. The missile includes a high off-bore sight seeker, enhanced countermeasures rejection capability, low drag/high angle of attack airframe and the ability to integrate the Helmet Mounted Cueing System. The software algorithms are the most sensitive portion of the AIM-9X-2 missile. The software continues to be modified via a pre-planned production improvement (P3I) program in order to improve its counter-countermeasure capabilities. No software source code or algorithms will be released. The missile is classified as CONFIDENTIAL.
2. The AIM-9X-2 will result in the transfer of sensitive technology and information. The equipment, hardware, and documentation are classified CONFIDENTIAL. The software and operation performance are classified SECRET. The seeker/guidance control section and the target detector are CONFIDENTIAL and contain sensitive state-of-the-art technology. Manuals and technical documentation that are necessary for support operational use and organizational management are classified to SECRET. Performance and operating logic of the counter-measures circuits are classified SECRET. The hardware, software, and data identified are classified to protect vulnerabilities, design and performance parameters and similar critical information.
3. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures which might reduce system effectiveness or be used in the development of a system with similar or advanced capabilities.
4. A determination has been made that the recipient country can provide the same degree of protection for the sensitive technology being released as the U.S. Government. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlines in the Policy Justification.
5. All defense articles and services listed in this transmittal have been authorized for release and export to the Republic of Korea.
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996.
Pamela Young, DSCA/SA&E-RAN, (703) 697-9107.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 16-83 with attached Policy Justification and Sensitivity of Technology.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
*as defined in Section 47(6) of the Arms Export Control Act.
The Government of the Republic of Korea (ROK) has requested the potential sale of eighty-nine (89) AGM-65G-2 Maverick missiles, missile containers and other related elements of support. The total estimated program cost is $70 million.
This proposed sale contributes to the foreign policy and national security of the United States. The ROK is one of the major political and economic powers in East Asia and the Western Pacific and a key partner of the United States in ensuring peace and stability in the region. It is vital to U.S. national interests to assist our Korean ally in developing and maintaining a strong and ready self-defense capability. This sale increases the ROK's capability to participate in Pacific regional security operations and improves its national security posture as a key U.S. ally.
The proposed sale will improve the ROK's capability to meet current and future threats. The ROK will use the enhanced capability as a deterrent to regional threats and to strengthen its homeland defense. The ROK, which already has AGM-65G missiles in its inventory, will have no difficulty absorbing these additional missiles.
The proposed sale of this equipment and support does not affect the basic military balance in the region.
The principal contractor is Raytheon, Tucson, AZ. At this time, there are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will not require the assignment of any additional U.S. Government or contractor representatives to the Republic of Korea.
There is no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The AGM-65G-2 Maverick is an air-to-ground close air support missile with a lock on before launch day or night capability. The G model has an imaging infrared (IIR) guidance system. The infrared Maverick G can track heat generated by a target and provides the pilot a pictorial display of the target during darkness and hazy or inclement weather. The warhead on the Maverick G is a heavyweight penetrator warhead. Maverick hardware is UNCLASSIFIED. Performance and operating logic of the countermeasures circuits are SECRET. Overall system classification is SECRET.
2. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures or equivalent systems which might reduce weapon effectiveness or be used in the development of a system with similar or advanced capabilities.
3. This sale is necessary to further the U.S. foreign policy and national security objectives outlined in the Policy Justification. Moreover, the benefits derived from this sale, as outlined in the Policy Justification, outweigh the potential damage that could result if the sensitive technology were revealed to unauthorized persons.
4. All defense articles and services listed in this transmittal have been authorized for release and export to the Republic of Korea.
On November 3, 2016, ANR Pipeline Company (ANR), filed an application in Docket No. CP17-9-000 requesting a Certificate of Public Convenience and Necessity pursuant to Section 7(c) and 7(b) of the Natural Gas Act to modify five existing facilities on ANR's Pipeline System. The proposed project is known as the Wisconsin South Expansion Project (Project), and consists of modifying and abandoning facilities in Illinois and Wisconsin to enable ANR to expand delivery by 230,950 dekatherms per day (Dth/d) into the Northern Illinois and Wisconsin market areas.
On November 16, 2016, the Federal Energy Regulatory Commission (Commission or FERC) issued its Notice of Application for the Project. Among other things, that notice alerted agencies issuing federal authorizations of the requirement to complete all necessary reviews and to reach a final decision on a request for a federal authorization within 90 days of the date of issuance of the Commission staff's Environmental Assessment (EA) for the Project. This instant notice identifies the FERC staff's planned schedule for the completion of the EA for the Project.
If a schedule change becomes necessary, additional notice will be provided so that the relevant agencies are kept informed of the Project's progress.
The Project would add an additional capacity of 230,950 Dth/d on ANR's system and consist of the modification of the following facilities: Install one new 6,130-horsepower (HP) Solar Centaur 50 compressor unit at the existing Sandwich Compressor Station in Kendall County, Illinois; increase capacity of the existing Hampshire Meter Station in Kane County, Illinois from the current 304,475 Dth/d to approximately 507,458 Dth/d; replace the existing 0.54-mile-long Line 332 Lateral located in Kane County, Illinois; increase capacity of the existing Tiffany East Meter Station in Rock County, Wisconsin from the current 119,760 Dth/d to approximately 240,535 Dth/d; and re-stage an existing Saturn 10 turbine compressor unit at the Kewaskum Compressor Station in Sheboygan County, Wisconsin.
On November 29, 2016, the Commission issued a
In order to receive notification of the issuance of the EA and to keep track of all formal issuances and submittals in specific dockets, the Commission offers a free service called eSubscription. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
Additional information about the Project is available from the Commission's Office of External Affairs at (866) 208-FERC or on the FERC Web site (
On December 30, 2016, the Commission issued a Notice of Availability of the draft environmental impact statement in the above-captioned proceeding. Due to a scheduling conflict with the contracted venue in Nelson County, the start time for the public comment session scheduled on February 22 at Nelson County High School has changed. This errata notice announces the Wednesday, February 22, 2017 public comment session will begin at 6:30 p.m. The session ending time remains 9:00 p.m. Additional court reporters will be available at the Nelson County High School public comment session to account for the reduced session length.
Take notice that on January 23, 2017, Natural Gas Pipeline Company of America LLC (Natural), located at 3250 Lacey Road, Suite 700, Downers Grove, Illinois 60515, filed in Docket No. CP17-39-000, a prior notice request pursuant to sections 157.205, 157.208 and 157.216 of the Federal Energy Regulatory Commission's regulations under the Natural Gas Act (NGA), seeking authorization to abandon an injection and withdrawal well, the related pipeline lateral, and the related meter, tap and auxiliary facilities at Natural's North Lansing Storage Field located in Harrison County, Texas, all as more fully set forth in the application, which is on file with the Commission and open to public inspection. The filing may also be viewed on the web at
Any questions regarding the Request should be directed to Bruce H. Newsome, Vice President, Regulatory Products and Services, Natural Gas Pipeline Company of America LLC, 3250 Lacey Road, Suite 700, Downers Grove, Illinois 60515-7918, by telephone at: 630-725-3070, or by email at
Any person may, within 60 days after the issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention. Any person filing to intervene or the Commission's staff may, pursuant to section 157.205 of the Commission's Regulations under the NGA (18 CFR 157.205) file a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for protest. If a protest is filed and not withdrawn within 30 days after the time allowed for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenter's will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenter's will not be required to serve copies of filed documents on all other parties. However, the non-party commentary, will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site (
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before April 10, 2017. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via email
For additional information about the information collection, contact Nicole Ongele at (202) 418-2991.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of
Written PRA comments should be submitted on or before April 10, 2017. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via email
For additional information about the information collection, contact Nicole Ongele at (202) 418-2991.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
(xiv)(A) Railroad police officers are a class of users eligible to operate on the nationwide interoperability and mutual aid channels listed in 90.20(i) provided their employer holds a Private Land Mobile Radio (PLMR) license of any radio category, including Industrial/Business (I/B). Eligible users include full and part time railroad police officers, Amtrak employees who qualify as railroad police officers under this subsection, Alaska Railroad employees who qualify as railroad police officers under this subsection, freight railroad employees who qualify as railroad police officers under this subsection, and passenger transit lines police officers who qualify as railroad police officers under this subsection. Railroads and railroad police departments may obtain licenses for the nationwide interoperability and mutual aid channels on behalf of railroad police officers in their employ. Employers of railroad police officers must obtain concurrence from the relevant state interoperability coordinator or regional planning committee before applying for a license to the Federal Communications Commission or operating on the interoperability and mutual aid channels.
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(B) Eligibility for licensing on the 700 MHz narrowband interoperability channels is restricted to entities that have as their sole or principal purpose the provision of public safety services.
To effectively implement the provisions of the new Rule, no other modifications to existing FCC rules are required. The changes are intended to simplify the licensing process for railroad police officers and ensure interoperable communications. The modified rules provide a benefit to public safety licensees by ensuring that only railroad police officers with appropriate governmental authorization can operate on the interoperability and mutual aid channels during emergencies. This will provide the additional benefit of promoting interoperability with railroad police officers by eliminating eligibility as a gating factor when licensing spectrum. The
1. The North American Numbering Plan Administrator (NANPA), the Pooling Administrator, or a state commission may draft a request to the auditor stating the reason for the request, such as misleading or inaccurate data, and attach supporting documentation; and
2. Requests for copies of carriers' applications for numbering resources may be made directly to carriers. The information collected will be used by the FCC, state commissions, the NANPA and the Pooling Administrator to verify the validity and accuracy of such data and to assist state commissions in carrying out their numbering responsibilities, such as area code relief.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before April 10, 2017. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via email
For additional information about the information collection, contact Nicole Ongele at (202) 418-2991.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the
Since release of the
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before April 10, 2017. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
Mandatory electronic filing of applications for Experimental Radio licenses, for FCC Forms 702 and 703, commenced on January 1, 2004.
Applicants for Experimental Radio Services are required by 47 CFR 5.59(e) of the Commission's rules: To submit FCC Form 702 when the legal right to control the use and operation of a station is to be transferred, as a result of a voluntary act (contract or other agreement); of an involuntary act (death or legal disability) of the grantee of a station authorization; by involuntary assignment of the physical property constituting the station under a court decree in bankruptcy proceedings or other court order; or by operation of law in any other manner; and they are also required to submit FCC Form 703 when they propose to change the control of a corporation holding a station license via a transfer of stock ownership or control of a station. The Commission uses the information to determine the eligibility for licenses, without which, violations of ownership regulations may occur.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before April 10, 2017. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
Federal Deposit Insurance Corporation (FDIC).
Notice and request for comment.
The FDIC, as part of its continuing effort to reduce paperwork
Comments must be submitted on or before April 10, 2017.
Interested parties are invited to submit written comments to the FDIC by any of the following methods:
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All comments should refer to the relevant OMB control number. A copy of the comments may also be submitted to the OMB desk officer for the FDIC: Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503.
Jennifer Jones, at the FDIC address above.
Proposal to renew the following currently approved collections of information:
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The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10197 Old Southern Bank, Orlando, Florida (“Receiver”) has been authorized to take all actions necessary to terminate the receivership estate of Old Southern Bank (“Receivership Estate”); the Receiver has made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds. Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10484, First Community Bank of Southwest Florida, Fort Myers, Florida (“Receiver”), has been authorized to take all actions necessary to terminate the receivership estate of First Community Bank of Southwest Florida (“Receivership Estate”); the Receiver has made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds. Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10272, Coastal Community Bank, Panama City Beach, Florida (“Receiver”), has been authorized to take all actions necessary to terminate the receivership estate of Coastal Community Bank (“Receivership Estate”); the Receiver has made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds. Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10372 Mountain Heritage Bank, Clayton, Georgia (“Receiver”) has been authorized to take all actions necessary to terminate the receivership estate of Mountain Heritage Bank (“Receivership Estate”); the Receiver has made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds. Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
Federal Deposit Insurance Corporation.
Update listing of financial institutions in liquidation.
Notice is hereby given that the Federal Deposit Insurance Corporation (Corporation) has been appointed the sole receiver for the following financial institutions effective as of the Date Closed as indicated in the listing. This list (as updated from time to time in the
The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10206, Key West Bank, Key West, Florida (“Receiver”), has been authorized to take all actions necessary to terminate the receivership estate of Key West Bank (“Receivership Estate”); the Receiver has made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds. Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
Based upon the foregoing, the Receiver has determined that the continued existence of the receivership will serve no useful purpose. Consequently, notice is given that the receivership shall be terminated, to be effective no sooner than thirty days after the date of this Notice. If any person wishes to comment concerning the termination of the receivership, such comment must be made in writing and sent within thirty days of the date of this Notice to: Federal Deposit Insurance Corporation, Division of Resolutions and Receiverships, Attention: Receivership Oversight Department 34.6, 1601 Bryan Street, Dallas, TX 75201.
No comments concerning the termination of this receivership will be considered which are not sent within this time frame.
Federal Deposit Insurance Corporation (FDIC).
Notice and request for comment.
The FDIC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on the renewal of existing information collections, as required by the Paperwork Reduction Act of 1995. On November 28, 2016, (81 FR 85562), the FDIC requested comment for 60 days on a proposal to renew the information collections described below. No comments were received. The FDIC hereby gives notice of its plan to submit to OMB a request to approve the renewal of these collections, and again invites comment on this renewal.
Comments must be submitted on or before March 13, 2017.
Interested parties are invited to submit written comments to the FDIC by any of the following methods:
•
•
•
•
All comments should refer to the relevant OMB control number. A copy of the comments may also be submitted to the OMB desk officer for the FDIC: Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503.
Jennifer Jones, at the FDIC address above.
Proposal to renew the following currently approved collections of information:
1.
2.
3.
4.
Comments are invited on: (a) Whether the collections of information are necessary for the proper performance of the FDIC's functions, including whether the information has practical utility; (b) the accuracy of the estimates of the burden of the information collections, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collections of information on respondents, including through the use of automated collection techniques or other forms of information technology. All comments will become a matter of public record.
The Federal Deposit Insurance Corporation (“FDIC”), as Receiver for 10299, WestBridge Bank and Trust Company, Chesterfield, Missouri (“Receiver”), has been authorized to take all actions necessary to terminate the receivership estate of WestBridge Bank and Trust Company (“Receivership Estate”); the Receiver has made all dividend distributions required by law.
The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary; including but not limited to releases, discharges, satisfactions, endorsements, assignments and deeds.
Effective February 1, 2017, the Receivership Estate has been terminated, the Receiver discharged, and the Receivership Estate has ceased to exist as a legal entity.
Federal Trade Commission.
Proposed consent agreement.
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.
Comments must be received on or before March 3, 2017.
Interested parties may file a comment at
Julia Solomon Ensor, Attorney, (202) 326-2377, or Crystal Ostrum, Attorney, (202) 326-3405, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.
Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for February 1, 2017), on the World Wide Web at:
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before March 3, 2017. Write “In the Matter of iSpring Water Systems, LLC, File No. 1723033—Consent Agreement” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at
Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which . . . is privileged or confidential,” as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).
Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at
If you file your comment on paper, write “In the Matter of iSpring Water Systems, LLC, File No. 1723033—Consent Agreement” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at
The Federal Trade Commission (“FTC” or “Commission”) has accepted, subject to final approval, an agreement containing a consent order from iSpring Water Systems, LLC. (“respondent”).
The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreement's proposed order.
This matter involves respondent's marketing, sale, and distribution of water filtration systems and associated parts and accessories with claims that the products are of U.S.-origin. According to the FTC's complaint, respondent represented that all of its products are “Built in USA.” In fact, in many instances, respondent's products are wholly imported. In other instances, respondent sources significant inputs to its products from overseas.
The complaint alleges that respondent's claims that its products are “Built in USA” were false or misleading, or not substantiated at the time the representations were made. Accordingly, the complaint alleges that respondent engaged in deceptive acts or
The proposed consent order contains provisions designed to prevent respondent from engaging in similar acts and practices in the future. Consistent with the FTC's Enforcement Policy Statement on U.S. Origin Claims, Part I prohibits iSpring from making U.S.-origin claims for its products unless either: (1) The final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States; or (2) a clear and conspicuous qualification appears immediately adjacent to the representation that accurately conveys the extent to which the product contains foreign parts, ingredients, and/or processing.
Part II prohibits respondent from making any “Made in the USA” or other country-of-origin claim about a product or service unless the claim is true, not misleading, and respondent has a reasonable basis substantiating the representation.
Parts III through VI are reporting and compliance provisions. Part III requires respondent to acknowledge receipt of the order, to provide a copy of the order to certain current and future principals, officers, directors, and employees, and to obtain an acknowledgement from each such person that they have received a copy of the order. Part IV requires the filing of compliance reports within one year after the order becomes final and within 14 days of any change in respondent that would affect compliance with the order. Part V requires respondent to maintain certain records, including records necessary to demonstrate compliance with the order. Part VI requires respondent to submit additional compliance reports when requested by the Commission and to permit the Commission or its representatives to interview respondent's personnel.
Finally, Part VII is a “sunset” provision, terminating the order after twenty (20) years, with certain exceptions.
The purpose of this analysis is to aid public comment on the proposed order. It is not intended to constitute an official interpretation of the proposed order or to modify its terms in any way.
By direction of the Commission.
Federal Trade Commission (FTC).
Proposed routine use; request for public comment.
The FTC proposes to adopt a new routine use that would permit disclosure of the agency's Freedom of Information Act (“FOIA”) request and appeal records to the Office of Government Information Services (“OGIS”), in order for OGIS to assist FOIA requesters in the processing and resolution of their requests and appeals.
Comments must be submitted by March 13, 2017. This routine use, which is being published in proposed form, shall become final and effective April 10, 2017, without further notice unless otherwise amended or repealed by the Commission on the basis of any comments received.
Interested parties are invited to submit written comments by following the instructions in the Request for Comment part of the
G. Richard Gold and Alex Tang, Attorneys, Office of the General Counsel, FTC, 600 Pennsylvania Avenue NW., Washington, DC 20580, (202) 326-2424.
You can file a comment online or on paper. Write “Privacy Act of 1974; System of Records: FTC File No. P072104” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at
Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, such as a Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is . . . privileged or confidential,” as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you must follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).
If you file your comment on paper, write “Privacy Act of 1974; System of Records: FTC File No. P072104” on your comment and on the envelope, and mail it to the following address: Federal Trade Commission, Office of the
The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before March 13, 2017. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, this document provides public notice that the FTC is proposing to adopt a new “routine use” to the agency's Privacy Act System of Records Notice (“SORN”) on Freedom of Information Act (“FOIA”) Requests and Appeals, FTC-V-1.
The OPEN Government Act of 2007 amended the Freedom of Information Act and created OGIS within the National Archives and Records Administration (“NARA”). The 2007 FOIA amendments require OGIS to review agency FOIA policies, procedures, and compliance, and to offer mediation services to resolve disputes between FOIA requesters and agencies.
In order for OGIS to fulfill its statutory responsibilities, it requires access to FOIA request files originated and maintained by federal agencies including the FTC. However, because the FOIA request and appeal records covered by FTC-V-1 are governed by the Privacy Act of 1974, their disclosure normally requires the prior written consent of the individual to whom the records pertain (including, for example, an individual filing a FOIA request), unless the agency has published a routine use authorizing disclosure.
The Privacy Act authorizes the agency to adopt routine uses that are consistent with the purpose for which information is collected. 5 U.S.C. 552a(b)(3);
In accordance with the Privacy Act,
In light of the updated SORN template set forth in the newly revised OMB Circular A-108, the FTC is reprinting the text of the entire SORN, including the proposed new routine use, for the public's benefit, to read as follows:
Freedom of Information Act Requests and Appeals-FTC (FTC-V-1).
Not applicable.
Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580. See Appendix III for other locations where records may be maintained or accessed.
FOIA/PA Supervisor, Office of General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.
Federal Trade Commission Act, 15 U.S.C. 41
To consider requests and appeals for access to records under the Freedom of Information Act; to determine the status of requested records; to respond to the requests and appeals; to make copies of FOIA requests and frequently requested records available publicly, under the FTC's Rules of Practice and FOIA; to maintain records, documenting the consideration and disposition of the requests for reporting, analysis, and recordkeeping purposes.
Individuals filing requests for access to information under the Freedom of Information Act (FOIA); individuals named in the FOIA request; FTC staff assigned to help process, consider, and respond to such requests, including any appeals.
Communications (
Individual about whom the record is maintained and agency staff assigned to help process, review, or respond to the access request, including any appeal.
(1) Request and appeal letters, and agency letters responding thereto, are
(2) As required by the FOIA, records that have been “frequently requested” and disclosed under the FOIA within the meaning of that Act, as determined by the FTC, are made available to the public for routine inspection and copying. See FTC-I-6 (Public Records-FTC).
(3) Disclosure to the National Archives and Records Administration, Office of Government Information Services (OGIS), to the extent necessary to fulfill its responsibilities in 5 U.S.C. 552(h), to review administrative agency policies, procedures, and compliance with the Freedom of Information Act (FOIA), and to facilitate OGIS's offering of mediation services to resolve disputes between persons making FOIA requests and administrative agencies.
See also Appendix I for other ways that the Privacy Act permits the FTC to use or disclose system records outside the agency.
Records are maintained electronically using a commercial software application run on the agency's internal servers. Temporary paper files are destroyed once the request is complete.
Indexed by name of requesting party and subject matter of request. Records can also be searched by name, address, phone number, fax number, and email of the requesting party, subject matter of the request, requestor organization, FOIA number, and staff member assigned to the request.
Records are retained and disposed of in accordance with General Records Schedule 14.11-14.15, issued by the National Archives and Records Administration.
Requests, appeals, and responses available to the public, as described above. Access to nonpublic system records is restricted to FTC personnel or contractors whose responsibilities require access. Nonpublic paper records are temporary, maintained in lockable file cabinets or offices, and destroyed once the request is complete. Access to electronic records is controlled by “user ID” and password combination and other electronic access or network controls (
See Appendix II.
See Appendix II.
See Appendix II.
Records contained in this system that have been placed on the FTC public record are available upon request, as discussed above. However, pursuant to 5 U.S.C. 552a(k)(2), records in this system, which reflect records that are contained in other systems of records that are designated as exempt, are exempt from the requirements of subsections (c)(3), (d), (e)(1), (e)(4)(G), (H), (I), and (f) of 5 U.S.C. 552a. See § 4.13(m) of the FTC Rules of Practice, 16 CFR 4.13(m).
73 FR 33591-33634 (June 12, 2008).
By direction of the Commission.
Agency for Healthcare Research and Quality (AHRQ), HHS.
Notice of five AHRQ subcommittee meetings.
The subcommittees listed below are part of AHRQ's Health Services Research Initial Review Group Committee. Grant applications are to be reviewed and discussed at these meetings. Each subcommittee meeting will commence in open session before closing to the public for the duration of the meeting.
See below for dates of meetings:
(below specifics where each hotel will be held)
(to obtain a roster of members, agenda or minutes of the non-confidential portions of the meetings.)
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App. 2), AHRQ announces meetings of the above-listed scientific peer review groups, which are subcommittees of AHRQ's Health Services Research Initial Review Group Committees. Each subcommittee meeting will commence in open session before closing to the public for the duration of the meeting. The subcommittee meetings will be closed to the public in accordance with the provisions set forth in 5 U.S.C. App. 2 section 10(d), 5 U.S.C. 552b(c)(4), and 5 U.S.C. 552b(c)(6) The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Agenda items for these meetings are subject to change as priorities dictate.
Agency for Healthcare Research and Quality (AHRQ), Department of Health and Human Services (HHS).
Notice of delisting.
The Patient Safety and Quality Improvement Act of 2005, 42 U.S.C. 299b-21 to b-26, (Patient Safety Act) and the related Patient Safety and Quality Improvement Final Rule, 42 CFR part 3 (Patient Safety Rule), published in the
The directories for both listed and delisted PSOs are ongoing and reviewed weekly by AHRQ. The delisting was effective at 12:00 Midnight ET (2400) on January 6, 2017.
Both directories can be accessed electronically at the following HHS Web site:
Eileen Hogan, Center for Quality Improvement and Patient Safety, AHRQ, 5600 Fishers Lane, Room 06N94B, Rockville, MD 20857; Telephone (toll free): (866) 403-3697; Telephone (local): (301) 427-1111; TTY (toll free): (866) 438-7231; TTY (local): (301) 427-1130; Email:
The Patient Safety Act authorizes the listing of PSOs, which are entities or component organizations whose mission and primary activity are to conduct activities to improve patient safety and the quality of health care delivery.
HHS issued the Patient Safety Rule to implement the Patient Safety Act. AHRQ administers the provisions of the Patient Safety Act and Patient Safety Rule relating to the listing and operation of PSOs. The Patient Safety Rule authorizes AHRQ to list as a PSO an entity that attests that it meets the statutory and regulatory requirements for listing. A PSO can be “delisted” if it is found to no longer meet the requirements of the Patient Safety Act and Patient Safety Rule, when a PSO chooses to voluntarily relinquish its status as a PSO for any reason, or when a PSO's listing expires. Section 3.108(d) of the Patient Safety Rule requires AHRQ to provide public notice when it removes an organization from the list of federally approved PSOs.
AHRQ has accepted a notification from the Fresenius Medical Care PSO, LLC, a component entity of Fresenius Medical Holdings, Inc., PSO number P0081, to voluntarily relinquish its status as a PSO. Accordingly, the Fresenius Medical Care PSO, LLC was delisted effective at 12:00 Midnight ET (2400) on January 6, 2017. AHRQ notes that the Fresenius Medical Care PSO, LLC submitted this request for voluntary relinquishment following receipt of the Notice of Preliminary Finding of Deficiency sent to the PSO on December 12, 2016.
Fresenius Medical Care PSO, LLC has patient safety work product (PSWP) in its possession. The PSO will meet the requirements of section 3.108(c)(2)(i) of the Patient Safety Rule regarding notification to providers that have reported to the PSO. In addition, according to sections 3.108(c)(2)(ii) and 3.108(b)(3) of the Patient Safety Rule regarding disposition of PSWP, the PSO has 90 days from the effective date of delisting and revocation to complete the disposition of PSWP that is currently in the PSO's possession.
More information on PSOs can be obtained through AHRQ's PSO Web site at
Agency for Healthcare Research and Quality (AHRQ), HHS.
Request for Scientific Information Submissions.
The Agency for Healthcare Research and Quality (AHRQ) is seeking scientific information submissions from the public. Scientific information is being solicited to inform our review of
Ryan McKenna, Telephone: 503-220-8262 ext. 51723 or Email:
The Agency for Healthcare Research and Quality has commissioned the
The EPC Program is dedicated to identifying as many studies as possible that are relevant to the questions for each of its reviews. In order to do so, we are supplementing the usual manual and electronic database searches of the literature by requesting information from the public (
This is to notify the public that the EPC Program would find the following information on
A list of completed studies that your organization has sponsored for this indication. In the list, please
Description of whether the above studies constitute all Phase II and above clinical trials sponsored by your organization for this indication and an index outlining the relevant information in each submitted file.
Your contribution is very beneficial to the EPC Program. The contents of all submissions will be made available to the public upon request. Materials submitted must be publicly available or can be made public. Materials that are considered confidential; marketing materials; study types not included in the review; or information on indications not included in the review cannot be used by the EPC Program. This is a voluntary request for information, and all costs for complying with this request must be borne by the submitter.
The draft of this review will be posted on AHRQ's EPC Program Web site and available for public comment for a period of 4 weeks. If you would like to be notified when the draft is posted, please sign up for the email list at:
KQ 1. What definitions of TRD are found in this literature? What consensus, if any, exists about the best definition(s) for this condition?
KQ 2. What methods do investigators use to diagnose this condition in clinical research? What consensus, if any, exists about the best measure(s) to use? Does the setting of the medical visit influence the choices that investigators make about the diagnostic tool they use?
KQ 3. What measures have been developed to determine the success and failure of treatment in clinical research studies of TRD?
KQ 4. What types of research designs are used to study TRD?
KQ 5. What are the risk factors for TRD?
KQ 6. What variables were considered for TRD patients in these studies? Specify at least the factors listed below.
KQ 7. How do these inclusion criteria compare or contrast with the definition(s) of TRD noted in the Narrative Questions?
KQ 8. What were primary characteristics of included studies?
KQ 9. How were included studies designed to account for the risk factors for TRD (see Narrative Question #5)? If the following characteristics are not noted above as risk factors, how did included studies account for at least the following: Age, sex, race, socioeconomic status, duration of symptoms, disease severity, co-existing medical and psychiatric conditions, and placebo effect?
KQ 10. What are relationships between risk factors and various results of included studies?
KQ 11. What variables or information did included studies report? Specifically:
All adults (>18 years old) identified as having a depressive episode (including major depressive disorder [MDD] and bipolar disorder) who have not responded to treatment(s). The depressive episode must be part of a major depressive disorder or a bipolar disorder. Studies of people without a primary diagnosis of major depressive disorder or bipolar disorder, or without evidence of treatment nonresponse, will be excluded.
Any pharmacologic intervention tested as a treatment for TRD as a primary therapy or as an augmentation agent to an existing primary therapy.
Any nonpharmacologic device or procedure tested as a treatment for TRD as a primary therapy or as augmentation to an existing primary therapy and identified as a TRD option by a consensus statement, guideline, the MEDCAC panel, or systematic review (
Any nonpharmacologic intervention tested as a treatment for TRD as a primary therapy or as augmentation to an existing primary therapy and identified as a TRD option by a consensus statement, guideline, the MEDCAC panel, or systematic review.
All comparative studies with a concurrent control group or a control group from an interrupted time-series study. These designs exclude pre/post studies that did not conduct interrupted time-series analyses.
Mental health outcomes identified in previous depression comparative effectiveness review work as either critical or important for decision making:
Our population of interest is adults 18 years of age or older with depression who have not responded to treatment(s). The depressive illness can be part of either major depressive disorder or a bipolar disorder, but one of these diagnoses must be a primary diagnosis. For example, schizophrenia with a secondary diagnosis of MDD, or dysthymia, would not be eligible for this report. If a study involves both eligible and ineligible patients and does not report data separately, that whole study will be excluded. Populations with no evidence of treatment nonresponse (
Eligible interventions include those that have both been tested as a treatment targeting TRD in adults and been identified by guidelines, consensus statements, the MEDCAC panel, or systematic reviews as alternatives for TRD treatment. These criteria ensure consideration of interventions with a minimum threshold amount of data addressing its effectiveness in TRD populations. Comparison groups include concurrent control groups (
We will require outcomes to have been identified previously as the most meaningful to depression management decision making. In our earlier comparative effectiveness work on depression, we asked our Technical Expert Panel and Key Informants to rank the relative importance of these outcomes following a process proposed by the GRADE Working Group.30 We used SurveyMonkey© for an anonymous ranking of the relative importance of outcomes. Participants used a 9-point Likert scale to rank outcomes into three categories: (1) Critical for decision making, (2) important but not critical for decision making, and (3) of low importance for decision making. They identified six outcomes as critical and five as important, and they supported the inclusion of an additional depressive outcome (change in depressive severity). For one of the adverse events outcomes, serious adverse events, we will use the FDA definition and will consider physical, psychological, and cognitive events. We will require relevant studies for the current project to report on at least 1 of these 12 outcomes.
All study durations and all settings are eligible. Pre/post studies that do not use interrupted time series analyses will be excluded, because potential confounding from multiple sources renders questionable the ability of these study designs to support causal inferences. We will include English-language articles and exclude studies that are not published fully in English.
Health Resources and Services Administration (HRSA), Department of Health and Human Services (HHS).
Notice.
HRSA is publishing this notice of petitions received under the National Vaccine Injury Compensation Program (the Program), as required by the Public Health Service (PHS) Act, as amended. While the Secretary of HHS (the Secretary) is named as the respondent in all proceedings brought by the filing of petitions for compensation under the Program, the United States Court of Federal Claims is charged by statute with responsibility for considering and acting upon the petitions.
For information about requirements for filing petitions, and the Program in general, contact the Clerk, United States Court of Federal Claims, 717 Madison Place NW., Washington, DC 20005, (202) 357-6400. For information on HRSA's role in the Program, contact the Director, National Vaccine Injury Compensation Program, 5600 Fishers Lane, Room 08N146B, Rockville, MD 20857; (301) 443-6593, or visit our Web site at:
The Program provides a system of no-fault compensation for certain individuals who have been injured by specified childhood vaccines. Subtitle 2 of Title XXI of the PHS Act, 42 U.S.C. 300aa-10
A petition may be filed with respect to injuries, disabilities, illnesses, conditions, and deaths resulting from vaccines described in the Vaccine Injury Table (the Table) set forth at 42 CFR 100.3. This Table lists for each covered childhood vaccine the conditions that may lead to compensation and, for each condition, the time period for occurrence of the first symptom or manifestation of onset or of significant aggravation after vaccine administration. Compensation may also be awarded for conditions not listed in the Table and for conditions that are manifested outside the time periods specified in the Table, but only if the petitioner shows that the condition was caused by one of the listed vaccines.
Section 2112(b)(2) of the PHS Act, 42 U.S.C. 300aa-12(b)(2), requires that “[w]ithin 30 days after the Secretary receives service of any petition filed under section 2111 the Secretary shall publish notice of such petition in the
Section 2112(b)(2) also provides that the special master “shall afford all interested persons an opportunity to submit relevant, written information” relating to the following:
In accordance with Section 2112(b)(2), all interested persons may submit written information relevant to the issues described above in the case of the petitions listed below. Any person choosing to do so should file an original and three (3) copies of the information with the Clerk of the U.S. Court of Federal Claims at the address listed above (under the heading “For Further Information Contact”), with a copy to HRSA addressed to Director, Division of Injury Compensation Programs, Healthcare Systems Bureau, 5600 Fishers Lane, 08N146B, Rockville, MD 20857. The Court's caption (Petitioner's Name v. Secretary of Health and Human Services) and the docket number assigned to the petition should be used as the caption for the written submission. Chapter 35 of title 44, United States Code, related to paperwork reduction, does not apply to information required for purposes of carrying out the Program.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications/contract proposals and the discussions
National Institutes of Health, HHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the patent applications listed below may be obtained by communicating with the indicated licensing contact at the Technology Transfer and Intellectual Property Office, National Institute of Allergy and Infectious Diseases, 5601 Fishers Lane, Rockville, MD, 20852; tel. 301-496-2644. A signed Confidential Disclosure Agreement will be required to receive copies of unpublished patent applications.
Technology description follows.
This technology relates to the field of radioactive, isotopically-labeled calcofluor derivatives and uses of such compounds to detect a broad spectrum of filamentous fungi including pathogenic species such as
Aspergillosis and other filamentous fungal infections are increasingly common fungal lung infection with high mortality rates (over 50%) in immune compromised patients, such as those receiving chemotherapy, stem cell/organ transplantation, or HIV patients. One-year survival of the infected patients ranges from 59% (organ transplant recipients) to as low as 25% (stem cell transplant recipients). Delayed diagnosis and therapy are likely to lead to poor outcomes and death. This disease is often first detected as nodules on CT scans. A diagnosis is typically made following invasive lung bronchoscopy or biopsy. However, as these patients are immunocompromised, these invasive procedures may themselves lead to significant complications and infections. Therefore, to enable timely treatment and minimize complications, there is a critical need for non-invasive means to detect and diagnose fungal infections.
The calcofluor derivatives disclosed in the patent application may be utilized as imaging agents specific for fungal infections and could potentially become a standard, non-invasive procedure in the work-up of immunocompromised patients with lung infections.
This technology is available for licensing for commercial development in accordance with 35 U.S.C. 209 and 37 CFR part 404, as well as for further development and evaluation under a research collaboration.
• Diagnostics of Aspergillosis and other filamentous fungal infections.
• Non-invasive.
• Low toxicity.
• Specific for
• In vivo data available (animal).
1. Palmer GE, et al., The diverse roles of autophagy in medically important fungi, Autophagy. 2008 Nov; 4(8):982-8. [PMID 18927489]
2. Panepinto JC, et al., Deletion of the Aspergillus fumigatus gene encoding the Ras-related protein RhbA reduces virulence in a model of invasive pulmonary aspergillosis, Infect Immun. 2003 May; 71(5):2819-26. [PMID 12704156]
3. Desoubeaux D, et al., Diagnosis of invasive pulmonary aspergillosis: Updates and recommendations, Med Mal Infect. 2014 Mar; 44(3):89-101. [PMID 24548415]
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of meetings of the Board of Scientific Counselors for Basic Sciences, National Cancer Institute and the Board of Scientific Counselors for Clinical Sciences and Epidemiology, National Cancer Institute.
The meetings will be closed to the public as indicated below in accordance with the provisions set forth in section 552b(c)(6), Title 5 U.S.C., as amended for the review, discussion, and evaluation of individual intramural programs and projects conducted by the National Cancer Institute, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The prize submissions and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the prize submissions, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Institutes of Health, HHS.
Notice.
The National Institute of Allergy and Infectious Diseases, an institute of the National Institutes of Health, Department of Health and Human Services, is contemplating the grant of an Exclusive Commercialization Patent License to practice the inventions embodied in the Patents and Patent Applications listed in the Summary Information section of this notice to Microbiotix, Inc. (“Microbiotix”) located in Worcester, Massachusetts.
Only written comments and/or applications for a license which are received by the National Institute of Allergy and Infectious Diseases' Technology Transfer and Intellectual Property Office on or before February 24, 2017 will be considered.
Requests for copies of the patent application, inquiries, and comments relating to the contemplated Exclusive Commercialization Patent License should be directed to: Peter Tung, Technology Transfer and Patent Specialist, Technology Transfer and Intellectual Property Office, National Institute of Allergy and Infectious Diseases, 5601 Fishers Lane, Suite 6D, MSC9804, Rockville, MD 20852-9804 Telephone: (301) 496-2644; Facsimile: (240) 627-3117; Email:
United States Provisional Patent Application No. 61/083,000, filed July 23, 2008 and entitled “Inhibitors of the Plasmodial Surface Anion Channel as Antimalarials” [HHS Reference No. E-202-2008/0-US-01]; PCT Patent Application PCT/US09/50637, filed July 15, 2009 and entitled “Inhibitors of the Plasmodial Surface Anion Channel as Antimalarials” [HHS Reference No. E-202-2008/0-PCT-02]; and U.S. and foreign patent applications claiming priority to the aforementioned applications.
United States Provisional Patent Application No. 61/474,583, filed April 12, 2011 and entitled “Plasmodial Surface Anion Channel Inhibitors for the Treatment of Malaria” [HHS Reference No. E-145-2011/0-US-01]; PCT Patent Application PCT/US12/33072, filed April 11, 2012 and entitled “Plasmodial Surface Anion Channel Inhibitors for the Treatment of Malaria” [HHS Reference No. E-202-2008/0-PCT-02]; and U.S. and foreign patent applications claiming priority to the aforementioned applications.
The patent rights in these inventions have been assigned to the government of the United States of America.
The prospective exclusive license territory may be worldwide and the field of use may be limited to: “Methods of preventing and/or treating malaria infection by inhibition of Plasmodium Surface Anion Channels (PSAC) with anti-PSAC compounds.”
This technology discloses a novel anion channel on the surface of red blood cells (RBCs) in animals infected with Plasmodium. Named PSAC for “plasmodium surface anion channel,” this channel protein facilitates the transport of nutrients into RBCs for the plasmodium parasite. Sugars, amino acids, purines, vitamins, and precursors for phospholipid biosynthesis have markedly increased uptake into infected RBCs via PSAC. Many of these nutrients have negligible uptake in uninfected RBCs. PSACs, which allow nutrients to reach the growing plasmodium parasites inside RBCs, therefore serves as a new target for the development of antimalarial compounds. The disclosed anti-PSAC compositions and methods of using these anti-PSAC compounds provide a means for prevention or treatment of malaria infection by blocking nutrients to plasmodium parasites.
This notice is made in accordance with 35 U.S.C. 209 and 37 CFR part 404. The prospective exclusive license will be royalty bearing, and the prospective exclusive license may be granted unless within fifteen (15) days from the date of this published notice, the National Institute of Allergy and Infectious Diseases receives written evidence and argument that establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR part 404.
Complete applications for a license in the prospective field of use that are filed in response to this notice will be treated as objections to the grant of the contemplated Exclusive Commercialization Patent License Agreement. Comments and objections submitted to this notice will not be made available for public inspection and, to the extent permitted by law, will not be released under the
United States Geological Survey, Department of the Interior.
Notice of an open meeting of the Advisory Committee on Water Information (ACWI).
Notice is hereby given of a meeting of the ACWI. This meeting is to discuss broad policy-related topics relating to national water initiatives, and the development and dissemination of water information, through reports from ACWI subgroups. The agenda will include updates from ACWI's various subcommittees, unveiling of the strategic plan for the Water Quality Portal for 2017-2021, a proposal for a new Terms of Reference document for the Subcommittee on Ground Water, a proposal to establish a new Risk Management Workgroup within the Subcommittee on Hydrology, an update on activities and accomplishments related to the Open Water Data Initiative, and a report on the Hydrologic Frequency Analysis Work Group's progress on Bulletin 17C, Guidelines For Determining Flood Flow Frequency.
The ACWI was established under the authority of the Office of Management and Budget Memorandum M-92-01 and the Federal Advisory Committee Act. The purpose of the ACWI is to provide a forum for water information users and professionals to advise the Federal Government on activities and plans that may improve the effectiveness of meeting the Nation's water information needs. Member organizations help to foster communications between the Federal and non-Federal sectors on sharing water information.
Membership, limited to 35 organizations, represents a wide range of water resources interests and functions. Representation on the ACWI includes all levels of government, academia, private industry, and professional and technical societies. For more information on the ACWI, its membership, subgroups, meetings and activities, please see the Web site at:
The meeting will take place from 8:30 a.m. until 5:00 p.m. on February 22, 2017, and from 8:30 a.m. until 5:00 p.m. on February 23, 2017 (times are Eastern Daylight Time).
The meeting will be held via teleconference and webinar, with the following call-in and log-in information:
When it is time to attend the meeting, please visit this link:
Audio is available via teleconference:
Ms. Wendy E. Norton, ACWI Executive Secretary and Chief, Water Information Coordination Program, U.S. Geological Survey, 12201 Sunrise Valley Drive, MS 417, Reston, VA 20192; email
This meeting is open to the public. Up to a half hour will be set aside for public comment. Persons wishing to make a brief presentation (up to 5 minutes) are asked to provide a written request with a description of the general subject to Ms. Norton at the above address no later than February 17, 2017. Any member of the public may submit written information and (or) comments to Ms. Norton for distribution at the ACWI meeting.
United States International Trade Commission.
Notice.
Carolyn Carlson (202-205-3002), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
Effective September 16, 2016, the Commission established a general schedule for the conduct of the final phase of its investigations on carbon and alloy steel cut-to-length plate.
The Commission's supplemental schedule is as follows: The deadline for filing supplemental party comments on Commerce's final determinations is February 13, 2017; the staff report in the final phase of these investigations will be placed in the nonpublic record on February 24, 2017; and a public version will be issued thereafter.
Supplemental party comments may address only Commerce's final determinations regarding imports from China. These supplemental final comments may not contain new factual information and may not exceed five (5) pages in length.
For further information concerning these investigations see the Commission's notice cited above and the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and C (19 CFR part 207).
These investigations are being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.21 of the Commission's rules.
By order of the Commission.
The Members of the National Council on Disability (NCD) will hold a quarterly meeting on Thursday and Friday, February 23 and 24, 2017 in Detroit, Michigan, from 9:00 a.m.-4:15 p.m., Eastern, on Thursday, February 23; and from 9:00 a.m.-12:30 p.m., Eastern, on Friday, February 24.
The meeting will occur at the Detroit Marriott at the Renaissance Center located at 400 Renaissance Drive, Detroit, MI 48243. Interested parties may join the meeting in person at the meeting location or may join the phone line in a listening-only capacity (other than the period allotted for public comment noted below) using the following call-in information: Teleconference number: 888-417-8525; Conference ID: 9110702; Conference Title: NCD Meeting; Host Name: Clyde Terry.
The Council will receive panel presentations on education and mental health; the
The times provided below are approximations for when each agenda item is anticipated to be discussed (all times Eastern):
To better facilitate NCD's public comment, any individual interested in providing public comment is asked to register his or her intent to provide comment in advance by sending an email to
Anne Sommers, NCD, 1331 F Street NW., Suite 850, Washington, DC 20004; 202-272-2004 (V), 202-272-2074 (TTY).
A CART streamtext link has been arranged for this teleconference meeting. The web link to access CART on both Thursday and on Friday, February 23-24, 2017 is:
Nuclear Regulatory Commission.
Order; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing an Order prohibiting Mr. Curtis Thompson from involvement in NRC-licensed activities for a period of 1 year. The Order also requires Mr. Thompson to notify the NRC of any current involvement in NRC-licensed activities and for a period of 1 year after the 1-year period of prohibition has expired, that he provide a written notice for his first employment offer involving NRC-licensed activities.
Please refer to Docket ID NRC-2017-0037 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Juan Peralta, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington DC 20555-0001; telephone: 301-287-9510, email:
The text of the Order is attached.
For the Nuclear Regulatory Commission.
Mr. Curtis Thompson was employed as a radiographer for American Engineering Testing, Inc. (AET), whose corporate offices are located in St. Paul, Minnesota. American Engineering Testing, Inc., holds License No. 22-20271-02 issued by the U.S. Nuclear Regulatory Commission (NRC or Commission) pursuant to Part 34 of Title 10 of the
From August 19 through November 19, 2015, the NRC inspected and reviewed AET's use of byproduct material for industrial radiography. During the August 19, 2015, inspection, AET indicated that Mr. Thompson had performed radiography on February 1, 2015, at AET's field station in Gary, Indiana, without another qualified radiographer or radiographer's assistant present. As a result, the NRC's Office of Investigation (OI) initiated an investigation to determine whether Mr. Thompson willfully performed radiographic operations without at least one other qualified individual present.
The NRC investigation found that Mr. Thompson had performed radiography on numerous bridge components for a client of AET in Gary, Indiana, in the week prior to February 1, 2015, with a qualified radiographer's assistant. After that work was completed, the radiography film was determined to be out of specification. The customer requested the work be re-done, which would take several hours. Mr. Thompson decided to redo the work himself on February 1, 2015. He arrived at the client's facility, retrieved the radiography camera and proceeded to re-do all the work. Mr. Thompson then submitted the radiography film to the client and AET.
On the following day, February 2, 2015, AET reviewed the radiography film and questioned Mr. Thompson about when he had performed the work. Mr. Thompson indicated that he completed the work on February 1, 2015. AET then examined key card entry data from the client's security office and determined that Mr. Thompson worked alone, contrary to 10 CFR 34.41(a). Mr. Thompson later admitted to working alone and stated during the OI investigation that, although he knew that NRC rules required radiography be performed only when another qualified individual was present, he felt it was more important to complete the work than to follow those regulations.
By letter dated October 16, 2016, the NRC informed Mr. Thompson that the NRC was considering escalated enforcement action for apparent violations of NRC's deliberate misconduct rule, 10 CFR 30.10, because he engaged in conduct he knew to be contrary to NRC regulations. Specifically, on February 1, 2015, Mr. Thompson performed radiographic operations without another radiographer or qualified individual present, which resulted in AET being in violation of 10 CFR 34.41(a). The NRC's October 16, 2016, letter provided Mr. Thompson the opportunity to request a predecisional enforcement conference (PEC), provide a written response, or request alternative dispute resolution (ADR) with the NRC in an attempt to resolve issues associated with these apparent violations. Mr. Thompson has not subsequently contacted the NRC to request a PEC, provide a written response, or request ADR.
Based on the evidence gathered during the inspection and the OI investigation, the NRC has concluded that Mr. Thompson engaged in deliberate misconduct in violation of 10 CFR 30.10(a)(1). Mr. Thompson engaged in deliberate misconduct that caused AET to be in violation of 10 CFR 34.41(a) by performing radiographic operations alone on February 1, 2015, at a temporary job site in Gary, Indiana.
Based on the above, the NRC has concluded that Mr. Curtis Thompson engaged in deliberate misconduct, in violation of 10 CFR 30.10(a)(1) that has caused the Licensee to be in violation of 10 CFR 34.41(a). American Engineering Testing, Inc., is required to follow those requirements by the license issued to it pursuant to 10 CFR part 34. The NRC must be able to rely on the Licensee and its employees to act with integrity and comply with NRC requirements. Mr. Thompson's action in causing AET to violate 10 CFR 34.41(a) raises serious doubt as to whether he can be relied upon to comply with NRC requirements.
Consequently, the NRC lacks the requisite reasonable assurance that licensed activities can be conducted in compliance with the Commission's requirements and that the health and safety of the public will be protected if Mr. Thompson was permitted at this time to be involved in NRC-licensed activities. Therefore, the public health, safety and interest require that Mr. Thompson be prohibited from any involvement in NRC-licensed activities for a period of 1 year from the date of this Order. Additionally, Mr. Thompson is required to notify the NRC of his first employment in NRC-licensed activities for a period of 1 year following the prohibition period. Furthermore, pursuant to 10 CFR 2.202, I find that the significance of Mr. Thompson's conduct described above is such that the public health, safety and interest require that this Order be immediately effective.
Accordingly, pursuant to sections 81,161b, 161i, 182 and 186 of the Atomic Energy Act of 1954, as amended, and the Commission's regulations in 10 CFR 2.202 and 30.10,
1. Mr. Thompson is prohibited for 1 year from the date of this Order from performing, supervising, directing, or in any other way conducting NRC-licensed activities. NRC-licensed activities are those activities that are conducted pursuant to a specific or general license issued by the NRC, including, but not limited to, those activities of Agreement State licensees conducted in the NRC's jurisdiction pursuant to the authority granted by 10 CFR 150.20.
2. If Mr. Thompson is currently involved in NRC-licensed activities with another licensee, he must cease those activities immediately. In addition, Mr. Thompson must immediately inform the NRC of the name, address and telephone number of the employer, and provide a copy of this Order to the employer.
3. For a period of 1 year after the 1-year period of prohibition has expired, Mr. Thompson shall, within 20 days of acceptance of his first employment offer involving NRC-licensed activities or his becoming involved in NRC-licensed activities, as defined in Paragraph IV.1 above, provide notice to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, of the name, address and telephone number of the employer or the entity where he is, or will be, involved in the NRC-licensed activities. In the notification, Mr. Thompson shall include a statement of his commitment to compliance with regulatory requirements and the basis why the Commission should have confidence
The Director, Office of Enforcement, or designee, may, in writing, relax or rescind any of the above conditions upon demonstration by Mr. Thompson of good cause.
In accordance with 10 CFR 2.202, Mr. Thompson must submit a written answer to this Order under oath or affirmation within 30 days of its issuance. Mr. Thompson's failure to respond to this Order could result in additional enforcement action in accordance with the Commission's Enforcement Policy (ADAMS Accession Number ML16271A446). Any person adversely affected by this Order may submit a written answer to this Order within 30 days of its issuance. In addition, Mr. Thompson and any other person adversely affected by this Order may request a hearing on this Order within 30 days of its issuance. Where good cause is shown, consideration will be given to extending the time to answer or request a hearing. A request for extension of time must be made in writing to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555-001, and include a statement of good cause for the extension.
All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562, August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC Web site at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland, 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
If a person other than Mr. Thompson requests a hearing, that person shall set forth with particularity the manner in which his interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.309(d) and (f).
If a hearing is requested by Mr. Thompson or a person whose interest is adversely affected, the Commission will issue an Order designating the time and place of any hearings. If a hearing is held, the issue to be considered at such hearing shall be whether this Order should be sustained. Pursuant to 10 CFR 2.202(c)(2)(i), Mr. Thompson may, in addition to demanding a hearing at the time the answer is filed or sooner, move the presiding officer to set aside the immediate effectiveness of the Order on the ground that the Order, including the need for immediate effectiveness, is not based on adequate evidence but on mere suspicion, unfounded allegations, or error. In the absence of any request for hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section IV above shall be final 30 days from the date of this Order without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section IV shall be final when the extension expires if a hearing request has not been received. An answer or a request for hearing shall not stay the immediate effectiveness of this order.
Dated at Rockville, Maryland, this 2nd day of February 2017.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Renewal of existing information collection; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) invites public comment on the renewal of Office of Management and Budget (OMB) approval for an existing collection of information. The information collection is entitled, “Licenses and Radiation Safety Requirements for Well Logging.”
Submit comments by April 10, 2017. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods:
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
David Cullison, Office of the Chief Information Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2084; email:
Please refer to Docket ID NRC-2016-0243 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Please include Docket ID NRC-2016-0243 in the subject line of your comment submission, in order to ensure that the NRC is able to make your comment submission available to the public in this docket.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the NRC is requesting public comment on its intention to request the OMB's approval for the information collection summarized below.
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The NRC is seeking comments that address the following questions:
1. Is the proposed collection of information necessary for the NRC to properly perform its functions? Does the information have practical utility?
2. Is the estimate of the burden of the information collection accurate?
3. Is there a way to enhance the quality, utility, and clarity of the information to be collected?
4. How can the burden of the information collection on respondents be minimized, including the use of automated collection techniques or other forms of information technology?
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License amendment; issuance; opportunity to request a hearing and to petition for leave to intervene.
The U.S. Nuclear Regulatory Commission (NRC) is issuing an amendment to Source Materials License No. SUC-1593, issued to the U.S. Army Installation Command (Army). The Army submitted site-specific Environmental Radiation Monitoring Plans (ERMPs) and site-specific dose modeling that are consistent with the programmatic ERMP and the dose modeling methodology approved by License Amendment 1. All site-specific ERMPs meet license conditions (LCs) 18 and 19. License condition 18 was modified indicating that each site-specific ERMP shall be fully implemented within 6 months of approval of License Amendment 2 and LC 19 was deleted because the Army's submittal met this LC. The programmatic ERMP, dated September 15, 2016, was determined to be identical to the approved programmatic ERMP except for the removal of RESRAD environmental default parameters and has been incorporated into the license by reference.
A request for a hearing or petition for leave to intervene must be filed by April 10, 2017.
Please refer to Docket ID NRC-2017-0036 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Amy Snyder, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-6822, email:
In a letter dated September 15, 2016 (ADAMS Accession No. ML16265A221), the Army submitted documents as required by License Conditions (LCs) 18 and 19 of Source Materials License No. SUC-1593, Amendment 1 (ADAMS Accession No. ML16039A234) to the NRC. The NRC reviewed the Army's submittal in support of LC 18, and found that each site-specific environmental radiation monitoring plan (ERMP) is consistent with the previously approved programmatic approach for preparation of site-specific ERMPs. Therefore, the NRC determined that these plans are acceptable. Also, in support of LC 19, the NRC verified that the Army provided site-specific dose assessments for each Radiation Control Area (RCA) demonstrating that doses from each RCA did not exceed 1.0 × 10
Two unsolicited comment letters (ADAMS Accession No. ML17010A188) on the submittal for the Pohakuloa radiological control areas were received. These letters and were considered by the NRC staff in this licensing action.
As a result, the NRC approved the site-specific ERMPs and amended the license to incorporate the site-specific ERMPs; modified the license to incorporate the September 15, 2016 Programmatic ERMP; modified LC 18 to state that within 6 months from the effective date of License Amendment 2, the Army shall fully implement each installation's site-specific ERMPs; and deleted LC 19 from the license.
For further details with respect to this action, see the application for
Within 60 days after the date of publication of this notice, any persons (petitioner) whose interest may be affected by this action may file a request for a hearing and petition for leave to intervene (petition) with respect to the action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult a current copy of 10 CFR 2.309. The NRC's regulations are accessible electronically from the NRC Library on the NRC's Web site at
As required by 10 CFR 2.309(d) the petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements for standing: (1) The name, address, and telephone number of the petitioner; (2) the nature of the petitioner's right under the Act to be made a party to the proceeding; (3) the nature and extent of the petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the petitioner's interest.
In accordance with 10 CFR 2.309(f), the petition must also set forth the specific contentions which the petitioner seeks to have litigated in the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner must provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to the specific sources and documents on which the petitioner intends to rely to support its position on the issue. The petition must include sufficient information to show that a genuine dispute exists with the applicant or licensee on a material issue of law or fact. Contentions must be limited to matters within the scope of the proceeding. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to satisfy the requirements at 10 CFR 2.309(f) with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene. Parties have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that party's admitted contentions, including the opportunity to present evidence, consistent with the NRC's regulations, policies, and procedures.
Petitions must be filed no later than 60 days from the date of publication of this notice. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii). The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission by April 10, 2017. The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document, and should meet the requirements for petitions set forth in this section. Alternatively, a State, local governmental body, Federally-recognized Indian Tribe, or agency thereof may participate as a non-party under 10 CFR 2.315(c).
If a hearing is granted, any person who is not a party to the proceeding and is not affiliated with or represented by a party may, at the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of his or her position on the issues but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Details regarding the opportunity to make a limited appearance will be provided by the presiding officer if such sessions are scheduled.
All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562, August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC Web site at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
For the Nuclear Regulatory Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing recent Postal Service filings for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's Web site (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s)
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This notice will be published in the
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to adopt Chapter 6, Section F to implement the compliance rule (“Compliance Rule”) regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or the “Plan”). The text of the proposed rule change is available on the Exchange's Web site (
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2, Chicago Board Options Exchange, Incorporated (“CBOE”), Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (“FINRA”), International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
CBOE, an exchange affiliate of C2, submitted rule filing SR-CBOE-2017-006 [sic]
This rule filing describes the rule text in the CBOE rule filing. The CBOE rule filing, including the text of the proposed rule language of Chapter VI, Section F of CBOE's rules, is available on CBOE's and C2's Web sites.
Proposed Rule 6.85 (Definitions) sets forth the definitions for the terms used in proposed Section F. Each of the defined terms in proposed Rule 6.85 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-ID” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository.” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry
Specifically, paragraph (a)(i) defines “Account Effective Date to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (A) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (1) the date the relationship identifier was established within the Industry Member; (2) the date when trading began (
Paragraph (a)(ii) states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(iii) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(iv) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(v) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (A) the date established for the account in the Industry Member or in a system of the Industry Member or (B) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of proposed Rule 6.85 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The SROs requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of proposed Rule 6.85 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been allocated, the identifier of the firm reporting the allocation, the price per share of shares allocated, the side of shares allocated, the number of shares allocated to each account, and the time of the allocation; provided, for the avoidance of doubt, any such Allocation Report shall not be required to be linked to particular orders or executions. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of proposed Rule 6.85 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under proposed Section F. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except C2 proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Rule Series.” This change is intended to
Paragraph (e) of proposed Rule 6.85 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of proposed Rule 6.85 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, paragraph (g) of proposed Rule 6.85 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's reporting obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of proposed Rule 6.85 defines the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except C2 uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of proposed Rule 6.85 defines the term “Compliance Threshold” as having the meaning set forth in proposed Rule 6.95(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to proposed Rule 6.95(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, paragraph (k) of proposed Rule 6.85 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (i) The account holder(s) of the account at an Industry Member originating the order; and (ii) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except C2 proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in proposed Section F. C2 also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, C2 proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of proposed Rule 6.85 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 6.85(l), however, provides an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution, the Industry Member will: (i) Provide the Account Effective Date in lieu of the “date account opened”; (ii) provide the relationship identifier in lieu of the “account number”; and (iii) identify the “account type” as a “relationship.” Second, in those circumstances in which the relevant account was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, and no “date account opened” is available for the account, the Industry Member will provide the Account Effective Date in the following circumstances: (i) Where an Industry Member changes back office providers or clearing firms and the date account opened is changed to the date the account was opened on the new back office/clearing firm system; (ii) where an Industry Member acquires another Industry Member and the date account opened is changed to the date the account was opened on the post-merger back office/clearing firm system; (iii) where there are multiple dates associated with an account in an
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, C2 proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of proposed Rule 6.85 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of proposed Section F only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (o) of proposed Rule 6.85 defines the term “Eligible Security” to include: (i) All NMS Securities; and (ii) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based on the Plan Processor's validation processes.
To implement the requirements of the CAT NMS Plan related to the Error Rate, C2 proposes to define the term “Error Rate” in proposed Rule 6.85. Paragraph (p) of proposed Rule 6.85 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each
Paragraph (r) of proposed Rule 6.85 defines the term “Industry Member” to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of proposed Rule 6.85 states that the term “Industry Member Data” has the meaning set forth in Rule 6.87(a)(ii). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6.87(a)(ii).
Paragraph (t) of proposed Rule 6.85 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and proposed Section F applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of proposed Section F apply specifically to Listed Options. Accordingly, paragraph (u) of proposed Rule 6.85 defines the term “Listed Option” or “Option.” Specifically, paragraph (u) of proposed Rule 6.85 states that the term “Listed Option” or “Option” has the meaning set forth in SEC Rule 600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a listed option as “any option traded on a registered national securities exchange or automated facility of a national securities association.” C2 notes that the proposed definition of “Listed Option” is the same definition as the definition set forth in Section 1.1 of the CAT NMS Plan.
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members, which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, C2 proposes to define the term “Manual Order Event” in proposed Rule 6.85. Specifically, paragraph (v) of proposed Rule 6.85 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 6.87 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, C2 proposes to define the term “NMS Security” in proposed Rule 6.85. Specifically, paragraph (x) of proposed Rule 6.85 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, C2 proposes to define the term “NMS Stock” in paragraph (y) of proposed Rule 6.85(y) to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of proposed Rule 6.85 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except C2 proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The SROs, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, C2 proposes to define the term “Options Market Maker” in proposed Rule 6.85. Specifically, paragraph (aa) of proposed Rule 6.85 defines the term “Options Market Makers” to mean a broker-dealer registered with an exchange for the purpose of making markets in options contracts traded on the exchange. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Section F requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, C2 proposes to define the term “Order” in proposed Rule 6.85. Specifically, paragraph (bb) of proposed Rule 6.85 defines the term “Order”, with respect to Eligible Securities, to include: (i) Any order received by an Industry Member from any person; (ii) any order originated by an Industry Member; or (iii) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except C2 proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.” C2 notes that Section 1.1 of the CAT NMS Plan defines “Order” by reference to SEC Rule 613(j)(8).
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, C2 proposes to define the term “OTC Equity Security” in proposed Rule 6.85. Specifically, paragraph (cc) of proposed Rule 6.85 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of proposed Rule 6.85 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of proposed Rule 6.85 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of proposed Rule 6.85 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of proposed Rule 6.85 states that the term “Received Industry Member Data” has the meaning set forth in proposed Rule 6.87(a)(ii). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6.87(a)(ii).
Paragraph (hh) of proposed Rule 6.85 states that the term “Recorded Industry Member Data” has the meaning set forth in proposed Rule 6.87(a)(i). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6.87(a)(i).
Proposed Section F requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, C2 proposes to define the term “Reportable Event” in proposed Rule 6.85. Specifically, paragraph (ii) of proposed Rule 6.85 states that the term
Paragraph (jj) of proposed Rule 6.85 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The SROs requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, C2 proposes to define the term “SRO-Assigned Market Participant Identifier” in proposed Rule 6.85. Specifically, paragraph (kk) of proposed Rule 6.85 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO or an identifier used by a Participant. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan. For example, an Industry Member would be permitted to use any existing SRO-Assigned Market Participant Identifier (
The requirements of proposed Section F differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, C2 proposes to define the term “Small Industry Member” in proposed Rule 6.85. Specifically, paragraph (ll) of proposed Rule 6.85 defines the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in Rule 0-10(c) under the Act. This is the same in substance as the definition of “Small Industry Member” as set forth in Section 1.1 of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a “Small Industry Member” as “an Industry Member that qualifies as a small broker-dealer as defined in SEC Rule 613.” The definition of a small broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as defined in SEC Rule 0-10(c).
Proposed Rule 6.87(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, C2 proposes to define the term “Trading Day” in proposed Rule 6.85. Specifically, paragraph (mm) of proposed Rule 6.85 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by the National Institute of Standards and Technology (“NIST”), consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of proposed Rule 6.86 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(i) of proposed Rule 6.86 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
Paragraph (a)(ii) of proposed Rule 6.86 requires each Industry Member to synchronize (A) its Business Clocks used solely for Manual Order Events and (B) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(iii) of proposed Rule 6.86 clarifies that the tolerance described in paragraphs (a)(i) and (ii) of the proposed Rule 6.86 includes all of the following: (A) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (B) the transmission delay from the source; and (C) the amount of drift of the Industry Member's Business Clock. This
Paragraph (a)(iv) of proposed Rule 6.86 requires Industry Members to synchronize their Business Clocks every business day before market open
Paragraph (b) of proposed Rule 6.86 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the proposed Rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of proposed Rule 6.86 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of proposed Rule 6.86 requires each Industry Member to certify to C2 that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of proposed Rule 6.86 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. C2 intends to announce to its Industry Members the certification schedule established by the Operating Committee via Regulatory Circular.
Paragraph (d) of proposed Rule 6.86 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of proposed Rule 6.86 requires Industry Members to report to the Plan Processor and C2 violations of paragraph (a) of this proposed Rule pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. C2 intends to announce to its Industry Members the relevant thresholds established by the Operating Committee via Regulatory Circular.
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting requirements for Industry Members. To implement these provisions with regard to its Industry Members, C2 proposes Rule 6.87 (Industry Member Data Reporting) to require its Industry Members to comply with the Industry Member Data reporting requirements of the Plan. Proposed Rule 6.87 has five sections covering: (a) Recording and reporting Industry Member Data, (b) timing of the recording and reporting, (c) the applicable securities covered by the recording and reporting requirements, (d) the security symbology to be used in the recording and reporting, and (e) error correction requirements, each of which is described below.
Paragraph (a) of proposed Rule 6.87 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(i) through (a)(iii), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(i) through (a)(iii) of proposed Rule 6.87 set forth the recording and reporting requirements required in Section 6.4(d)(i) through (iii) of the CAT NMS Plan, respectively.
Paragraph (a)(i) requires, subject to paragraph (a)(iii) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
(A)
(B)
(C)
(D)
(E)
(F) other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(ii) of proposed Rule 6.87 requires, subject to paragraph (a)(iii) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in proposed Rule 6.87(a)(i) “Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
(A)
(B) if the trade is cancelled, a cancelled trade indicator; and
(C) for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with Proposed Rule 6.88, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(iii) of proposed Rule 6.87 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of proposed Rule 6.87 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(i) through (b)(iii) of proposed Rule 6.87 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i) through (ii) of the CAT NMS Plan.
Paragraph (b)(i) of proposed Rule 6.87 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(ii) of proposed Rule 6.87 requires each Industry Member to report: (A) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (B) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(iii) states that Industry Members may, but are not required to, voluntarily report Industry Member Data prior to the applicable 8:00 a.m. Eastern time deadline.
Paragraph (c) of proposed Rule 6.87 describes the securities to which the recording and reporting requirements of proposed Rule 6.87 apply. Paragraphs (c)(i) and (c)(ii) of proposed Rule 6.87 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(i) of proposed Rule 6.87 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of proposed Rule 6.87 for each NMS Security registered or listed for trading on an exchange or admitted to unlisted trading privileges on an exchange. Paragraph (c)(ii) of proposed Rule 6.87 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of proposed Rule 6.87 for each Eligible Security for which transaction reports are required to be submitted to a national securities association.
Paragraph (d) of proposed Rule 6.87 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(i) of proposed Rule 6.87 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, paragraph (d)(ii) of proposed Rule 6.87 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. C2 intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee via Regulatory Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, C2 proposes to adopt paragraph (e) of proposed Rule 6.87, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of proposed Rule 6.87 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. C2 proposes Rule 6.88 (Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of proposed Rule 6.88 requires each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6.93.
Paragraph (b) of proposed Rule 6.88 requires each Industry Member to submit to the Central Repository any updates, additions or other changes to the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account on a daily basis.
Paragraph (c) of proposed Rule 6.88 requires each Industry Member, on a periodic basis as designated by the Plan Processor and approved by the Operating Committee, to submit to the Central Repository a complete set of Firm Designated IDs, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account. This periodic refresh is intended to ensure that the Central Repository has the most current information identifying a Customer. C2 intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee via Regulatory Circular.
Finally, paragraph (d) of proposed Rule 6.88 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. C2 proposes Rule 6.89 (Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, proposed Rule 6.89 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6.93, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of proposed Rule 6.90 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of proposed Rule 6.90 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(ii) and (b) of proposed Rule 6.90. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(ii) of proposed Rule 6.90 requires such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of proposed Rule 6.90 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of proposed Rule 6.90 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(i) of proposed Rule 6.90 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (
Proposed Rule 6.91 (Clock Synchronization Rule Violations) describes potential violations of the clock synchronization time period requirements set forth in proposed Section F. Proposed Rule 6.91 states that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in this Rule Series without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 6.92 (Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of proposed Rule 6.92 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of proposed Rule 6.92 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of proposed Rule 6.92 addresses connectivity requirements related to the CAT. Paragraph (b) of proposed Rule 6.92 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, paragraph (c)(1) of proposed Rule 6.92 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under proposed
C2 proposes Rule 6.93 (Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of proposed Rule 6.93 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(i) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(ii) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(ii)(A) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by proposed Rules 6.88(a) and 6.89, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(ii)(B) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by proposed Rules 6.88(a) and 6.89, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(iii) sets forth the deadlines related to the submission of order data. Under paragraph (a)(iii)(A), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(iii)(B), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(iv) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018
Paragraph (b) of proposed Rule 6.93 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 6.94 (Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 6.94 requires each Industry Member to maintain and preserve records of the information required to be recorded under proposed Section F for the period of time and accessibility specified in SEC Rule 17a-4(b). The records required to be maintained and preserved under proposed Section F may be immediately produced or reproduced on “micrographic media” as defined in SEC Rule 17a-4(f)(1)(i) or by means of “electronic storage media” as defined in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC Rule 17a-4(f) and be maintained and preserved for the required time in that form. Proposed Rule 6.94 is based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping requirements related to OATS.
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of proposed Rule 6.95 requires Industry Members to accurately provide the LEIs in their records as required by proposed Section F and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with proposed Section F. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. C2 intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan via Regulatory Circular.
Furthermore, paragraph (d) of proposed Rule 6.95 addresses
Proposed Rule 6.96 (Compliance Dates) sets forth the compliance dates for the various provisions of proposed Section F. Paragraph (a) of proposed Rule 6.96 states that, except as set forth in paragraphs (b) and (c) of proposed Rule 6.96 or otherwise set forth in proposed Section F, the compliance date for proposed Section F is the approval date of the filing.
Paragraph (b) of proposed Rule 6.96 establishes the compliance dates for the clock synchronization requirements as set forth in proposed Rule 6.96. Paragraph (b)(i) states that each Industry Member shall comply with 6.86 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(ii) states that each Industry Member shall comply with Rule 6.86 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(i) reflects the exemptive relief the Participants intend to request with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of proposed Rule 6.96 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(i) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(ii) requires that each Industry Member that is a Small Industry Member to record and report the Industry Member Data to the Central Repository by November 15, 2019. Such compliance dates are consistent with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the Commission noted the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
C2 does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C2 notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist C2 in meeting its regulatory obligations pursuant to the Plan. C2 also notes that proposed Section F implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing rules virtually identical to proposed Section F. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
The Exchange neither solicited nor received comments on the proposed rule change.
Within 45 days of the date of publication of this notice in the
A. By order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to adopt Rules 4.5 through 4.16 to implement the compliance rule (“Compliance Rule”) regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”).
The text of the proposed rule change is available at the Exchange's Web site at
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
Proposed Rule 4.5 (Consolidated Audit Trail—Definitions) sets forth the definitions for the terms used in the Proposed Rules 4.5 through 4.16. Each of the defined terms in Proposed Rule 4.5 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-ID” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository.” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry Members would be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).” Therefore, when reporting Customer Account Information, an Industry Member is required to report the date an account was opened. The Participants requested and received an exemption to allow an “Account Effective Date” to be reported in lieu of an account open date in certain limited circumstances. The definition of “Account Effective Date” as set forth in Paragraph (a) of Proposed Rule 4.5 describes those limited circumstances in which an Industry Member may report an “Account Effective Date” rather than the account open date. The proposed definition is the same as the definition of “Account Effective Date” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
Specifically, Paragraph (a)(1) defines “Account Effective Date to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of Proposed Rule 4.5 states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(4) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date established for the account in the Industry Member or in a system of the Industry Member or (2) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 4.5 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The SROs requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 4.5 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been allocated, the identifier of the firm reporting the allocation, the price per share of shares allocated, the side of shares allocated, the number of shares allocated to each account, and the time of the allocation; provided, for the avoidance of doubt, any such Allocation Report shall not be required to be linked to particular orders or executions. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of Proposed Rule 4.5 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under Rules 4.5 through 4.16. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under Rules 4.5 through 4.16.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in Rules 4.5 through 4.16.
Paragraph (e) of Proposed Rule 4.5 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of Proposed Rule 4.5 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, Paragraph (g) of Proposed Rule 4.5 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of Proposed Rule 4.5 defines the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of Proposed Rule 4.5 defines the term “Compliance Threshold” as having the meaning set forth in Proposed Rule 4.15(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to Proposed Rule 4.15(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, Paragraph (k) of Proposed Rule 4.5 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except the Exchange proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in the Proposed Rules 4.5 through 4.16. The Exchange also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of Proposed Rule 4.5 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 4.5(l), however, provides an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution, the Industry Member will: (1) Provide the Account Effective Date in lieu of the “date account opened”; (2) provide the relationship identifier in lieu of the “account number”; and (3) identify the “account type” as a “relationship.” Second, in those circumstances in which the relevant account was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, and no “date account opened” is available for the account, the Industry Member will provide the Account Effective Date in the following circumstances: (1) Where an Industry Member changes back office providers or clearing firms and the date account opened is changed to the date the account was opened on the new back office/clearing firm system; (2) where an Industry Member acquires another Industry Member and the date account opened is changed to the date the account was opened on the post-merger back office/clearing firm system; (3) where there are multiple dates associated with an account in an Industry Member's system, and the parameters of each date are determined by the individual Industry Member; and (4) where the relevant account is an Industry Member proprietary account. The proposed definition is the same as the definition of “Customer Account Information” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of Proposed Rule 4.5 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of the Proposed Rules 4.5 through 4.16 only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (p) [sic] of Proposed Rule 4.5 defines the term “Eligible Security” to include: (1) All NMS Securities; and (2) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based on the Plan Processor's validation processes.
To implement the requirements of the CAT NMS Plan related to the Error Rate, the Exchange proposes to define the term “Error Rate” in Proposed Rule 4.5. Paragraph (p) of Proposed Rule 4.5 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of Proposed Rule 4.5 defines the term “Industry Member” to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of Proposed Rule 4.5 states that the term “Industry Member Data” has the meaning set forth in Rule 4.7(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 4.7(a)(2).
Paragraph (t) of Proposed Rule 4.5 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and the Proposed Rules 4.5 through 4.16 apply to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, the Exchange proposes to define the term “Manual Order Event” in Proposed Rule 4.5. Specifically, paragraph (v) of Proposed Rule 4.5 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 4.7 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “NMS Security” in Proposed Rule 4.5. Specifically, paragraph (x) of Proposed Rule 4.5 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, the Exchange proposes to define the term “NMS Stock” in Paragraph (y) of Proposed Rule 4.5 to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of Proposed Rule 4.5 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The SROs, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, the Exchange proposes to define the term “Options Market Maker” in Proposed Rule 4.5. Specifically, paragraph (aa) of Proposed Rule 4.5 defines the term “Options Market
The Proposed Rules 4.5 through 4.16 require each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, the Exchange proposes to define the term “Order” in Proposed Rule 4.5. Specifically, paragraph (bb) of Proposed Rule 4.5 defines the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from any person; (2) any order originated by an Industry Member; or (3) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except the Exchange proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.” The Exchange notes that Section 1.1 of the CAT NMS Plan defines “Order” by reference to SEC Rule 613(j)(8).
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “OTC Equity Security” in Proposed Rule 4.5. Specifically, paragraph (cc) of Proposed Rule 4.5 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of Proposed Rule 4.5 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of Proposed Rule 4.5 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of Proposed Rule 4.5 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of Proposed Rule 4.5 states that the term “Received Industry Member Data” has the meaning set forth in Rule 4.7(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 4.7(a)(2).
Paragraph (hh) of Proposed Rule 4.5 states that the term “Recorded Industry Member Data” has the meaning set forth in Rule 4.7(a)(1). This definition has the same substantive meaning as the definition set forth in in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 4.7(a)(1).
The Proposed Rules 4.5 through 4.16 require each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, the Exchange proposes to define the term “Reportable Event” in Proposed Rule 4.5. Specifically, paragraph (ii) of Proposed Rule 4.5 states that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of Proposed Rule 4.5 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The SROs requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members or itself; and information to identify each such Industry Member, including the CRD number and LEI if such LEI has been obtained, and itself, including LEI, if such LEI has been obtained. Additionally, each Industry Member is required to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained. The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, the Exchange proposes to define the term “SRO-Assigned Market Participant Identifier” in Proposed Rule 4.5. Specifically, paragraph (kk) of Proposed Rule 4.5 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier
The requirements of the Proposed Rules 4.5 through 4.16 differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, the Exchange proposes to define the term “Small Industry Member” in Proposed Rule 4.5. Specifically, paragraph (ll) of Proposed Rule 4.5 defines the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in Rule 0-10(c) under the Securities Exchange Act of 1934, as amended. This is the same in substance as the definition of “Small Industry Member” as set forth in Section 1.1 of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a “Small Industry Member” as “an Industry Member that qualifies as a small broker-dealer as defined in SEC Rule 613.” The definition of a small broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as defined in SEC Rule 0-10(c).
Proposed Rule 4.7(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, the Exchange proposes to define the term “Trading Day” in Proposed Rule 4.5. Specifically, Paragraph (mm) of Proposed Rule 4.5 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of Proposed Rule 4.6 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 4.6 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 4.6 requires each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(3) of Proposed Rule 4.6 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the Proposed Rule 4.6 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of Proposed Rule 4.6 requires Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (b) of Proposed Rule 4.6 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The Proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the Proposed Rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of Proposed Rule 4.6 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of Proposed Rule 4.6 requires each Industry Member to certify to the Exchange that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of Proposed Rule 4.6 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the certification schedule established by the Operating Committee via Regulatory Circular.
Paragraph (d) of Proposed Rule 4.6 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 4.6 requires Industry Members to report to the Plan Processor and the Exchange, violations of paragraph (a) of this Rule pursuant to the thresholds set by the
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting requirements for Industry Members. To implement these provisions with regard to its Industry Members, the Exchange proposes Rule 4.7 (Consolidated Audit Trail—Industry Member Data Reporting) to require its Industry Members to comply with the Industry Member Data reporting requirements of the Plan. Proposed Rule 4.7 has six sections [sic] covering: (1) Recording and reporting Industry Member Data, (2) timing of the recording and reporting, (3) the applicable securities covered by the recording and reporting requirements, (4) the security symbology to be used in the recording and reporting, and (5) error correction requirements, each of which is described below.
Paragraph (a) of Proposed Rule 4.7 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 4.7 set forth the recording and reporting requirements required in Section 6.4(d)(i)-(iii) of the CAT NMS Plan, respectively.
Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to Proposed Rule 4.10); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to Proposed Rule 4.10); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to Proposed Rule 4.10); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to Proposed Rule 4.10); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to Proposed Rule 4.10; (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 4.7 requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in Rule 4.7(a)(1) “Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with Proposed Rule 4.8, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(3) of Proposed Rule 4.7 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of Proposed Rule 4.7 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)-(b)(3) of Proposed Rule 4.7 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
Paragraph (b)(1) of Proposed Rule 4.7 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 4.7 requires each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) states that Industry
Paragraph (c) of Proposed Rule 4.7 describes the securities to which the recording and reporting requirements of Proposed Rule 4.7 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 4.7 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of Proposed Rule 4.7 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of Proposed Rule 4.7 for each NMS Security registered or listed for trading on such exchange or admitted to unlisted trading privileges on such exchange. Paragraph (c)(2) of Proposed Rule 4.7 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of this Proposed Rule 4.7 for each Eligible Security for which transaction reports are required to be submitted to FINRA.
Paragraph (d) of Proposed Rule 4.7 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of Proposed Rule 4.7 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, Paragraph (d)(2) of Proposed Rule 4.7 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee via Regulatory Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, the Exchange proposes to adopt paragraph (e) of Proposed Rule 4.7, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 4.7 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. The Exchange proposes Rule 4.8 (Consolidated Audit Trail—Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of Proposed Rule 4.8 requires each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 4.13. Paragraph (b) of Proposed Rule 4.8 requires each Industry Member to submit to the Central Repository any updates, additions or other changes to the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account on a daily basis. Paragraph (c) of Proposed Rule 4.8 requires each Industry Member, on a periodic basis as designated by the Plan Processor and approved by the Operating Committee, to submit to the Central Repository a complete set of Firm Designated IDs, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account. This periodic refresh is intended to ensure that the Central Repository has the most current information identifying a Customer. The Exchange intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee via Regulatory Circular.
Finally, paragraph (d) of Proposed Rule 4.8 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. The Exchange proposes Rule 4.9 (Consolidated Audit Trail—Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, Proposed Rule 4.9 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 4.13, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of Proposed Rule 4.10 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 4.10 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of Proposed Rule 4.10. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of Proposed Rule 4.10 requires such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of Proposed Rule 4.10 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of Proposed Rule 4.10 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 4.10 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (“Electronic Capture Time”) in milliseconds. In addition, paragraph (b)(2) of Proposed Rule 4.10 permits each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 4.11 (Consolidated Audit Trail—Clock Synchronization Rule Violations) describes potential violations of the clock synchronization time period requirements set forth in the Proposed Rules 4.5 through 4.16. Proposed Rule 4.11 states that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in the Proposed Rules 4.5 through 4.16 without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 4.12 (Consolidated Audit Trail—Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 4.12 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of Proposed Rule 4.12 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of Proposed Rule 4.12 addresses connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 4.12 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, Paragraph (c)(1) of Proposed Rule 4.12 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under the Proposed Rules 4.5 through 4.16. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of the Proposed Rules 4.5 through 4.16. The Exchange notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 4.12 requires that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) states that each Industry Member remains primarily responsible for compliance with the requirements of the Proposed Rules 4.5 through 4.16, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 4.12.
The Exchange proposes Rule 4.13 (Consolidated Audit Trail—Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 4.13 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Rules 4.8(a) and 4.9, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 4.8(a) and 4.9, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing
Paragraph (a)(4) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018.
Paragraph (b) of Proposed Rule 4.13 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 4.14 (Consolidated Audit Trail—Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 4.14 requires each Industry Member to maintain and preserve records of the information required to be recorded in accordance with the Proposed Rules 4.5 through 4.16, for the period of time and accessibility specified in SEC Rule 17a-4(b). The records required to be maintained and preserved in accordance with Proposed Rules 4.5 through 4.16, may be immediately produced or reproduced on “micrographic media” as defined in SEC Rule 17a-4(f)(1)(i) or by means of “electronic storage media” as defined in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC Rule 17a-4(f) and be maintained and preserved for the required time in that form. Proposed Rule 4.14 is based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping requirements related to OATS.
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of Proposed Rule 4.15 requires Industry Members to accurately provide the LEIs in their records as required by the Proposed Rules 4.5 through 4.16 and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with the Rules 4.5 through 4.16. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. The Exchange intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan via Regulatory Circular.
Furthermore, paragraph (d) of Proposed Rule 4.15 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 4.15 states that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 4.16 (Consolidated Audit Trail—Compliance Dates) sets forth the compliance dates for the various provisions of the Proposed Rules 4.5 through 4.16. Paragraphs (b) and (c) of this Rule set forth the additional details with respect to the compliance date of the Proposed Rules 4.5 through 4.16. Unless otherwise noted, the Proposed Rules 4.5 through 4.16 will be fully effective upon approval by the Commission and Members must comply with their terms.
Paragraph (b) of Proposed Rule 4.16 establishes the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 4.6. Paragraph (b)(1) states that each Industry Member shall comply with Rule 4.6 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) states that each Industry Member shall comply with Rule 4.6 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) reflects the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of Proposed Rule 4.16 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(2) requires that each Industry Member that is a Small Industry Member to record and report
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that the Proposed Rules 4.5 through 4.16 implement provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing similar rules to apply the requirements of the CAT NMS Plan to their members. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
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:
• Use the Commission's Internet comment form (
• Send an email to
• 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-BatsEDGA-2017-03. 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 (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On October 19, 2016, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change was published for comment in the
This order provides notice of the filing of Partial Amendment No. 1 and approves the Proposal, as modified by Partial Amendment No. 1, on an accelerated basis.
With the aging of the U.S. population, financial exploitation of seniors and other vulnerable adults is a serious and growing problem.
To address these issues, the Proposal would provide members with a way to quickly respond to situations in which they have a reasonable basis to believe that financial exploitation of vulnerable adults has occurred or will be attempted. FINRA believes that a member can better protect its customers from financial exploitation if the member can: (1) Place a temporary hold on a disbursement of funds or securities from a customer's account; and (2)
According to FINRA, a small number of states have enacted statutes that permit financial institutions, including broker-dealers, to place temporary holds on “disbursements” or “transactions” if financial exploitation of covered persons is suspected.
The Proposal would amend Rule 4512 to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer's account.
The Proposal would not prohibit members from opening and maintaining an account if a customer fails to identify a trusted contact person as long as the member made reasonable efforts to obtain a name and contact information.
The Proposal would not require a member to attempt to obtain the name of and contact information for a trusted contact person for accounts in existence prior to the effective date of the Proposal (“existing accounts”) until such time as the member updates the information for the account either in the course of the member's routine and customary business or as otherwise required by applicable laws or rules.
The Proposal would also require, at the time of account opening, a member to disclose in writing (which may be electronic) to the customer that the member or an associated person is authorized to contact the trusted contact person and disclose information about the customer's account to address possible financial exploitation, to confirm the specifics of the customer's current contact information, health status, or the identity of any legal guardian, executor, trustee or holder of a power of attorney, or as otherwise permitted by proposed Rule 2165. With respect to any account that was opened pursuant to a prior FINRA rule, a member would be required to provide this disclosure in writing, which may be electronic, when updating the information for the account pursuant to Rule 4512(b) either in the course of the member's routine and customary business or as otherwise required by applicable laws or rules.
FINRA believes that members and customers will benefit from the trusted contact information in many different settings. For example, consistent with the disclosure, if a member has been unable to contact a customer after multiple attempts, a member could contact a trusted contact person to inquire about the customer's current contact information. Or if a customer is known to be ill or infirm and the member has been unable to contact the customer after multiple attempts, the member could contact a trusted contact person to inquire about the customer's health status. A member also could reach out to a trusted contact person if it suspects that the customer may be suffering from Alzheimer's disease, dementia or other forms of diminished capacity. A member could contact a trusted contact person to address possible financial exploitation of the customer before placing a temporary hold on a disbursement. In addition, as discussed below, pursuant to proposed Rule 2165, when information about a trusted contact person is available, a member must notify the trusted contact person orally or in writing, which may be electronic, if the member has placed a temporary hold on a disbursement of funds or securities from a customer's account, unless the member reasonably believes that the trusted contact person is engaged in the financial exploitation.
The trusted contact person is intended to be a resource for the member in administering the customer's account, protecting assets and responding to possible financial exploitation. A member may use its discretion in relying on any information provided by the trusted contact person. A member may elect to notify an individual that he or she was named as a trusted contact person; however, the
The Proposal would permit a member that reasonably believes that financial exploitation may be occurring to place a temporary hold on the disbursement of funds or securities from the account of a “specified adult” customer.
FINRA believes that “specified adults” may be particularly susceptible to financial exploitation.
Because financial abuse may take many forms, FINRA has proposed a broad definition of “financial exploitation.” Specifically, financial exploitation would mean: (A) The wrongful or unauthorized taking, withholding, appropriation, or use of a specified adult's funds or securities; or (B) any act or omission by a person, including through the use of a power of attorney, guardianship, or any other authority, regarding a specified adult, to: (i) Obtain control, through deception, intimidation or undue influence, over the specified adult's money, assets or property; or (ii) convert the specified adult's money, assets or property.
The Proposal would permit a member to place a temporary hold on a disbursement of funds or securities from the account of a specified adult if the member reasonably believes that financial exploitation of the specified adult has occurred, is occurring, has been attempted or will be attempted.
The Proposal would require that a member's written supervisory procedures identify the title of each person authorized to place, terminate or extend a temporary hold on behalf of the member pursuant to Rule 2165. The Proposal would require that any such person be an associated person of the member who serves in a supervisory, compliance or legal capacity for the member.
If a member places a temporary hold, the Proposal would require the member to immediately initiate an internal review of the facts and circumstances that caused the member to reasonably believe that financial exploitation of the specified adult has occurred, is occurring, has been attempted or will be attempted.
The Proposal would not preclude a member from terminating a temporary hold after communicating with either the customer or trusted contact person. FINRA believes that a customer's objection to a temporary hold or information obtained during an exchange with the customer or trusted contact person may be used in determining whether a hold should be placed or lifted. FINRA believes that, while not dispositive, members should weigh a customer's objection against other information in determining whether a hold should be placed or lifted.
While the Proposal would not require notifying the customer's registered representative of suspected financial exploitation, a customer's registered representative may be the first person to detect potential financial exploitation. If the detection occurs in another way, a member may choose to notify and discuss the suspected financial exploitation with the customer's registered representative.
For purposes of proposed Rule 2165, FINRA would consider the lack of an identified trusted contact person, the inability to contact the trusted contact person or a person's refusal to act as a trusted contact person to mean that the trusted contact person was not available.
The temporary hold authorized by proposed Rule 2165 would expire not later than 15 business days after the date that the member first placed the temporary hold on the disbursement of funds or securities, unless sooner terminated or extended by an order of a state regulator or agency or court of competent jurisdiction.
Proposed Rule 2165 would require members to retain records related to compliance with the Rule, which shall be readily available to FINRA, upon request. Retained records required by the Proposal are records of: (1) Requests for disbursement that may constitute financial exploitation of a specified adult and the resulting temporary hold; (2) the finding of a reasonable belief that financial exploitation has occurred, is occurring, has been attempted or will be attempted underlying the decision to place a temporary hold on a disbursement; (3) the name and title of the associated person that authorized the temporary hold on a disbursement; (4) notification(s) to the relevant parties pursuant to the Rule; and (5) the internal review of the facts and circumstances supporting the member's reasonable belief that the financial exploitation of the specified adult has occurred, is occurring, has been attempted or will be attempted.
The Proposal would require a member that anticipates using a temporary hold in appropriate circumstances to establish and maintain written supervisory procedures reasonably designed to achieve compliance with the Rule, including procedures on the identification, escalation and reporting of matters related to financial exploitation of specified adults.
As discussed in FINRA's response to comments,
The Commission received twenty-one (21) comment letters on the Proposal,
As noted above, twenty (20) commenters generally supported FINRA's Proposal.
However, these twenty (20) commenters suggested modifications to the Proposal. These suggested modifications, along with FINRA's responses to the commenters, are addressed below.
As noted above, the Proposal would amend Rule 4512 to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer's account. One commenter contended that, if a customer refuses to provide the trusted contact person information, Rule 4512 should require a member to maintain records of its reasonable efforts to obtain the trusted contact person information and the customer's refusal to provide the information.
In its Response Letter, FINRA acknowledged that Rule 4512 does not specify the manner in which members should evidence compliance with the rule, or what contact information should be obtained for a trusted contact person.
One commenter suggested modifying the proposed amendments to Rule 4512 to require members to notify an individual that he or she was named as a trusted contact person.
In response, FINRA states its belief that the “administrative burdens of requiring notification would outweigh the benefits.”
As discussed above, proposed Rule 2165 would require a member to provide notification of a temporary hold and the reason for the hold to the trusted contact person, if available, not later than two business days after the date that the member first placed the hold. One commenter recommended voluntary, rather than mandatory, notification,
In response, FINRA encourages members to attempt to resolve a matter with a customer before placing a temporary hold, “unless a member reasonably believes that doing so would cause further harm to a specified adult.”
Another commenter suggested that, rather than disclosing only that the temporary hold was placed, members should have discretion to disclose and discuss any information relevant to the financial exploitation investigation to the trusted contact person.
As previously discussed, with respect to an account that was opened pursuant to a prior FINRA rule (“existing account”), Rule 4512(b) requires members to update the trusted contact information for the account whenever they update the account information in the course of their routine and customary business, or as required by other applicable laws or rules. One commenter recommended a shorter recurring timeframe (
With respect to any account subject to the requirements of Exchange Act Rule 17a-3(a)(17) to periodically update customer records, proposed Supplementary Material .06(c) to Rule 4512 would require a member to make reasonable efforts to obtain or, if previously obtained, to update where appropriate the name of and contact information for a trusted contact person consistent with the requirements in Rule 17a-3(a)(17).
Another commenter requested confirmation that the obligation to obtain trusted contact person information for existing accounts in the course of the member's routine and customary business would be satisfied where the member updated the account within the 36-month period in accordance with the requirements of Rule 17a-3(a)(17)(i)(D).
As set forth in the Proposal, Supplementary Material .01 to Rule 2165 states that members will be provided a safe harbor from FINRA Rules 2010, 2150 and 11870 when members exercise discretion to place temporary holds on disbursements of funds or securities from the accounts of specified adults under the circumstances denoted in the Rule. Rather than providing a safe harbor when members choose to place temporary holds, three commenters supported requiring members to place temporary holds where there is a reasonable belief of financial exploitation.
One commenter requested that the safe harbor language be moved into the body of the rule text and the protection be extended to registered representatives of the member.
Two commenters requested that the Supplementary Material be revised to explicitly state that the safe harbor applies to associated persons.
Another commenter suggested that the inclusion of Rules 2010 and 2150 in Supplementary Material .01 would create protections far beyond the scope of what is necessary to encourage members to act on financial exploitation.
Another commenter requested revising Rule 2165 to clarify that a member's failure to place a hold on a customer account shall not be deemed to be an abrogation of the member's duties under FINRA rules.
Three commenters suggested that any associated person acting in good faith should not be subject to complaints reportable on Form U4 (Uniform Application for Securities Industry Registration or Transfer), and that the safe harbor should be extended to include FINRA Rule 4530 (Reporting Requirements).
Lastly, a commenter stated that members may be subject to FINRA
Six commenters supported extending the scope of proposed Rule 2165 to apply to transactions.
Two commenters suggested extending the safe harbor beyond financial exploitation to address a customer's diminished capacity.
Proposed Rule 2165 would define “specified adult” as: (A) A natural person age 65 and older; or (B) a natural person age 18 and older who the member reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests. With respect to persons younger than age 65, two commenters suggested revising the definition to cover other vulnerable persons (
Another commenter suggested revising proposed Supplementary Material .03 to Rule 2165 to provide that belief of impairment shall not create an assumption or implication that a member or its associated persons are qualified to make, or responsible for making, determinations about impairment.
As noted above, proposed Rule 2165 would define “account” to mean any account of a member for which a specified adult has the authority to transact business. One commenter suggested that the definition of “account” may be overly broad, and suggested clarifying that transactions in securities, such as variable insurance products, sold by a broker-dealer, but not custodied in a brokerage account, are not subject to proposed Rule 2165.
Two commenters expressed concern that a temporary hold pursuant to proposed Rule 2165 may not comply with the requirements of Section 22(e) of the Investment Company Act of 1940 (“1940 Act”).
Another commenter requested clarification on how ACATS transfers would be treated under proposed Rule 2165.
Another commenter requested clarification on where funds from a disbursement subject to a temporary hold should be maintained by a member.
Proposed Rule 2165 would provide that a member may place the hold on a disbursement, provided that the member's written supervisory procedures identify the title of each person authorized to place, terminate or extend a hold on behalf of the member and that each such person be serving in a supervisory, compliance or legal capacity for the member. One commenter suggested expanding the categories of persons authorized to place holds on behalf of a member to include persons who have been designated by the member to review cases involving specified adults as part of the member's escalation process.
As set forth in the Proposal, the temporary hold authorized by proposed Rule 2165 would expire not later than 15 business days for any initial period and up to 10 business days in any subsequent period after the date that the member first placed the temporary hold on the disbursement of funds or securities, unless sooner terminated or extended by an order of a state regulator or agency or court of competent jurisdiction. Two commenters suggested that the time periods may not be adequate to give state regulators and agencies or courts time to take action on a matter.
Another commenter stated that the rule text, as set forth in the Proposal, could be read to require the termination or extension of the temporary hold by the state regulator or agency of competent jurisdiction or a court of competent jurisdiction prior to the initial hold being extended for an additional 10 business day period.
One commenter suggested that Rule 2165 should explicitly provide that a member must terminate a temporary hold as soon as the member's internal review of the facts and circumstances that were the basis for the hold does not support a reasonable belief that financial exploitation is occurring or is attempted.
Under proposed Rule 2165(b)(1)(B)(i), a member is required to notify all parties authorized to transact business on an account of the temporary hold and the reason for the temporary hold when the member places a temporary hold on a disbursement. Two commenters expressed concern that the rule text does not contemplate a party being unavailable, and that notifying all parties could lead to increased risk for the customer where a party is the suspected perpetrator of the financial exploitation.
Another commenter suggested that requiring notification of all parties authorized to transact business on an account could inadvertently interfere with the ability to use the safe harbor in Rule 2165 if a member has trouble locating one or more authorized parties.
Due to the privacy and operational challenges noted by commenters in response to the proposal in Regulatory Notice 15-37, the Proposal did not require notifying an immediate family member when a temporary hold is placed. Three commenters supported removing the requirement to contact an immediate family member.
Proposed Rule 2165 would require the member to provide notification of the temporary hold and the reason for the hold to all parties authorized to transact business on the account and the trusted contact person, if available, no later than two business days after placing the hold. Three commenters suggested extending the time period for notification beyond two business days.
Three commenters requested clarification on what information may be shared pursuant to the Proposal without violating Regulation S-P.
Proposed Rule 2165 would require a member that anticipates using a temporary hold in appropriate circumstances to establish and maintain written supervisory procedures reasonably designed to achieve compliance with the Rule, including, but not limited to, procedures on the identification, escalation and reporting of matters related to financial exploitation of specified adults. One commenter suggested requiring all members to establish and maintain written supervisory procedures reasonably designed to achieve compliance with the Rule.
Another commenter recommended requiring the written supervisory procedures to include provisions designed to ensure that the member lifts a temporary hold as soon as practicable after the member conducts an internal review and finds that the hold is not warranted.
The Proposal would require members to develop and document training policies or programs reasonably designed to ensure that associated persons comply with the requirements of Rule 2165. One commenter supported applying the training requirement to associated persons, but suggested that FINRA should oversee training, including incorporating into its FINRA Rule 1250 (Continuing Education Requirements) training a module on the requirements of the Proposal and recognizing financial exploitation of vulnerable adults.
One commenter supported not requiring as part of proposed Rule 2165 that members report financial exploitation to local adult protective services and law enforcement, asserting that such a permissive approach would allow firms and advisors to undertake a reasonable inquiry and to decide whether or not to freeze an account without considering their own potential liability.
In its Response Letter, FINRA states that, while proposed Rule 2165 does not require members to report a reasonable belief of financial exploitation to a state or local authority, some states mandate such reporting by financial institutions, including broker-dealers.
If the Commission approves the Proposal, some commenters requested that members have from 12 to 18 months to implement the requirements.
One commenter supported the proposed amendments to Rule 4512 regarding a trusted contact person, but opposed the proposed adoption of Rule 2165 that would permit temporary holds on disbursements where there is a reasonable belief of financial exploitation.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended by Partial Amendment No. 1, is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
The Commission has carefully considered the Proposal, the comments received, FINRA's response to the comments, and Partial Amendment No. 1. Based on its review of the record, the Commission finds that the Proposal, as modified by Partial Amendment No. 1, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities association.
As discussed above, the Proposal, as modified by Partial Amendment No. 1, would: (1) Require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer's account; and (2) permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers, where there is a reasonable belief that these customers have been, are being, or will be subject to financial exploitation.
The Commission has considered the twenty-one (21) comment letters received on the Proposal,
The Commission also acknowledges commenters' concerns and recommended modifications to the Proposal. However, it also notes that FINRA's response to comments addresses many of these concerns, and offers additional clarifications regarding FINRA's expectations regarding the operation of the Proposal. For example, FINRA clarified that the notification requirement is a post-hold obligation, and that the proposed safe harbor does not apply to a decision not to place a hold. FINRA also addresses a concern of several commenters through its proposed partial amendment, which makes explicit in the rule text that associated persons are covered by the rule's safe harbor, a position FINRA indicated is consistent with its original interpretation of the scope of the safe harbor. Throughout its response to comments, FINRA has emphasized its attempts to balance members' operational practicalities with the serious investor protection concerns raised both by the specter of financial exploitation and the seriousness of placing a temporary hold on a disbursement. Moreover, FINRA has addressed commenters' questions about the intersection of the Proposal with both Section 22(e) of the 1940 Act, and with Regulation S-P, based on its discussions with Commission staff.
Taking into consideration the comments and FINRA's responses, the Commission finds that the Proposal is consistent with the Exchange Act. Specifically, the Commission believes that the Proposal will protect investors and the public interest by, among other things, providing FINRA members with means by which they can respond to situations where there is a reasonable belief of financial exploitation of seniors and other vulnerable adults. The Commission additionally believes that the Proposal will promote investor protection by providing FINRA members with a safe harbor from the purported violation of certain FINRA rules, without which such members might otherwise be discouraged from placing a temporary hold on disbursements of funds or securities where there is a reasonable belief of financial exploitation.
The Commission believes that FINRA's responses, as discussed in more detail above, appropriately addressed commenters' concerns and adequately explained FINRA's reasons for modifying or declining to modify its Proposal. Accordingly, the Commission believes that the approach proposed by FINRA is appropriate and designed to protect investors and the public interest, consistent with Section 15A(b)(6) of the Exchange Act and the rules and regulations thereunder.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend Rule to modify its fee schedule applicable to the Exchange's options platform (“EDGX Options”) to identify and to set fees for Purge Ports. The Exchange also proposes to amend Exchange Rule 22.11, Mass Cancellation of Trading Interest, to reflect the proposed Purge Port functionality.
The text of the proposed changes to Exchange Rule 22.11 is attached as Exhibit 5A. The proposed changes to the fee schedule are attached as Exhibit 5B. The text of the proposed rule change is available at the Exchange's Web site at
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.
The Exchange proposes to modify the Options Logical Port Fee section of the EDGX Options fee schedule to identify and adopt fees for Purge Ports. The Exchange also proposes to amend Exchange Rule 22.11, Mass Cancellation of Trading Interest, to reflect the proposed Purge Port functionality. The purpose of the proposed rule change is to offer Members,
A logical port represents a port established by the Exchange within the Exchange's system for trading and billing purposes. Each logical port established is specific to a Member or non-Member and grants that Member or non-Member the ability to accomplish a specific Member function, such as order entry, order cancellation, or data receipt. In addition, logical ports enable Users,
The Exchange now proposes to modify the EDGX Options fee schedule to identify fees for Purge Ports, a new type of logical port which would enable Options Members
Options Members may currently cancel orders through their existing logical ports and may send a mass cancel message pertaining to multiple contracts cancelling all orders sent though a particular logical port. The Exchange now proposes to expand the ability of Options Members to cancel orders through the proposed Purge Ports, which would enable them to cancel/purge all open orders, or a subset thereof, across multiple logical ports through a single cancel/purge message. The mass cancel request may be limited to a subset of orders by identifying the range of orders to be purged.
The Exchange proposes to modify the Options Logical Port Fee section of the EDGX Options fee schedule to adopt a fee for Purge Ports of $750 per port/per month. The Exchange also proposed to add language to its fee schedule making clear that logical port fees, including Purge Ports, are limited to logical ports within the primary data center.
The Exchange also proposes to amend Exchange Rule 22.11, Mass Cancellation of Trading Interest, to reflect the proposed Purge Port functionality. Exchange Rule 22.11 currently states that an Options Member may simultaneously cancel all its bids, offers, and orders in all series of options or in all options for a specified underlying security by requesting the Exchange staff to effect such cancellation. First, the Exchange proposes to amend Rule 22.11 to state that an Options Member may also cancel all or a subset of its bids, offers, and orders in all series of options or in all options for a specified underlying security by requesting the Exchange to effect such cancellation.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange notes that the proposed rule change will not relieve Market Makers of their continuous quoting obligations under Exchange Rule 22.6 and under Regulation NMS Rule 602.
The Exchange believes that its proposed fees should facilitate the ability of the Exchange to recoup some costs associated with Purge Ports as well as provide, maintain, and improve Purge Ports.
While the Exchange does not currently charge fees for existing logical ports connections, it believes the proposed fee for Purge Ports is equitable and reasonable because the proposed Purge Ports would offer unique functionality by allowing for the sending of a single message to impact multiple orders. Additionally, Purge Port requests may cancel orders submitted over numerous ports and contain added functionality to purge only a subset of these orders. The Exchange also believes the proposed fee for the Purge Ports is equitable and reasonable as compared to the rates proposed by other exchanges for the same functionality.
The Exchange also believes that the proposed amendments to its fee schedule are non-discriminatory because they will apply uniformly to all Members. The proposed Purge Ports are completely voluntary and no Member is required or under any regulatory obligation to utilize them. All Members that voluntarily select this service options will be charged the same amount for the same services. All
The Exchange believes its proposed amendments to its fee schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. On the contrary, the Exchange believes the proposed rule change will enhance competition because it will enable it to offer similar connectivity and functionality as its competitor exchanges.
The Exchange believes that fees for the proposed Purge Ports and connectivity, in general, are constrained by the robust competition for order flow among exchanges and non-exchange markets. Further, excessive fees for connectivity, including Purge Port fees, would serve to impair an exchange's ability to compete for order flow rather than burdening competition. The Exchange also does not believe the proposed rule change would impact intramarket competition as it would apply to all Members and non-Members equally.
No comments were solicited or received on the proposed rule change.
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
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.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
FINRA is proposing to adopt the FINRA Rule 6800 Series to implement the compliance rule regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”).
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Bats BYX Exchange, Inc.; Bats BZX Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; C2 Options Exchange, Incorporated; Chicago Board Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; FINRA; International Securities Exchange, LLC; Investors' Exchange LLC; ISE Gemini, LLC; ISE Mercury, LLC; Miami International Securities Exchange LLC; MIAX PEARL, LLC; NASDAQ BX, Inc.; NASDAQ PHLX LLC; The NASDAQ Stock Market LLC; National Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
Proposed Rule 6810 (Definitions) sets forth the definitions for the terms used in the proposed Rule 6800 Series. Each of the defined terms in proposed Rule 6810 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties.
Under the Customer Information Approach, the CAT NMS Plan requires each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members are permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members are required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer will be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor will be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members will be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry Members will be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).”
Specifically, paragraph (a)(1) defines “Account Effective Date” to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of proposed Rule 6810 states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(4) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date established for the account in the Industry Member or in a system of the Industry Member or (2) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of proposed Rule 6810 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).”
To assist in implementing the Allocation Report Approach, paragraph (c) of proposed Rule 6810 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of proposed Rule 6810 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under this Rule 6800 Series. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except FINRA proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Rule Series.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in this Rule 6800 Series.
Paragraph (e) of proposed Rule 6810 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of proposed Rule 6810 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, a daisy chain approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement a daisy chain approach, paragraph (g) of proposed Rule 6810 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's Order Audit Trail System (“OATS”) rules. Specifically, Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's reporting obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of proposed Rule 6810 defines the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except FINRA uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of proposed Rule 6810 defines the term “Compliance Threshold” as having the meaning set forth in proposed Rule 6893(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to proposed Rule 6893(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, paragraph (k) of proposed Rule 6810 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except FINRA proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in the proposed Rule 6800 Series.
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, FINRA proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of proposed Rule 6810 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, FINRA proposes to define the term “Customer Account Information” [sic] to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of proposed Rule 6810 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, ITIN/SSN, individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of the proposed Rule 6800 Series only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (o) of proposed Rule 6810 defines the term “Eligible Security” to include: (1) All NMS Securities; and (2) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based
To implement the requirements of the CAT NMS Plan related to the Error Rate, FINRA proposes to define the term “Error Rate” in proposed Rule 6810. Paragraph (p) of proposed Rule 6810 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan requires each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members will be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of proposed Rule 6810 defines the term “Industry Member” to mean “a member of a national securities exchange or a member of a national securities association that is required to record and report information pursuant to the CAT NMS Plan and this Rule 6800 Series.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan; however, FINRA proposes to add the phrase “that is required to record and report information pursuant to the CAT NMS Plan and this Rule 6800 Series” to clarify that FINRA members that do not handle orders in Eligible Securities are not subject to any of the rules in the proposed Rule 6800 Series.
Paragraph (s) of proposed Rule 6810 states that the term “Industry Member Data” has the meaning set forth in Rule 6830(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6830(a)(2).
Paragraph (t) of proposed Rule 6810 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and this proposed Rule 6800 Series applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of the proposed Rule 6800 Series apply specifically to Listed Options. Accordingly, paragraph (u) of proposed Rule 6810 defines the term “Listed Option” or “Option.” Specifically, paragraph (u) of proposed Rule 6810 states that the term “Listed Option” or “Option” has the meaning set forth in Rule 600(b)(35) of Regulation NMS. Rule 600(b)(35) of Regulation NMS, in turn, defines a listed option as “any option traded on a registered national securities exchange or automated facility of a national securities association.”
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, FINRA proposes to define the term “Manual Order Event” in proposed Rule 6810. Specifically, paragraph (v) of proposed Rule 6810 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 6830 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, FINRA proposes to define the term “NMS Security” in proposed Rule 6810. Specifically, paragraph (x) of proposed Rule 6810 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in Rule 600(b)(47) of Regulation NMS
Paragraph (z) of proposed Rule 6810 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except FINRA proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order.
The Participants, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, FINRA proposes to define the term “Options Market Maker” in proposed Rule 6810. Specifically, paragraph (aa) of proposed Rule 6810 defines the term “Options Market Makers” to mean a broker-dealer registered with an exchange for the purpose of making markets in options contracts traded on the exchange. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The proposed Rule 6800 Series requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, FINRA proposes to define the term “Order” in proposed Rule 6810. Specifically, paragraph (bb) of proposed Rule 6810 defines the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from any person; (2) any order originated by an Industry Member; or (3) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except FINRA proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.”
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, FINRA proposes to define the term “OTC Equity Security” in proposed Rule 6810. Specifically, paragraph (cc) of proposed Rule 6810 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of proposed Rule 6810 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of proposed Rule 6810 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of proposed Rule 6810 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the
Paragraph (gg) of proposed Rule 6810 states that the term “Received Industry Member Data” has the meaning set forth in Rule 6830(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6830(a)(2).
Paragraph (hh) of proposed Rule 6810 states that the term “Recorded Industry Member Data” has the meaning set forth in Rule 6830(a)(1). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding proposed Rule 6830(a)(1).
The proposed Rule 6800 Series requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, FINRA proposes to define the term “Reportable Event” in proposed Rule 6810. Specifically, paragraph (ii) of proposed Rule 6810 states that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of proposed Rule 6810 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act.
The Participants requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, FINRA proposes to define the term “SRO-Assigned Market Participant Identifier” in proposed Rule 6810. Specifically, paragraph (kk) of proposed Rule 6810 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO or an identifier used by a Participant. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan. For example, an Industry Member would be permitted to use any existing SRO-Assigned Market Participant Identifier (
The requirements of the proposed Rule 6800 Series differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, FINRA proposes to define the term “Small Industry Member” in proposed Rule 6810. Specifically, paragraph (ll) of proposed Rule 6810 defines the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in SEA Rule 0-10(c).
Proposed Rule 6830(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, FINRA proposes to define the term “Trading Day” in proposed Rule 6810. Specifically, paragraph (mm) of proposed Rule 6810 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in Rule 600(b)(47) of Regulation NMS), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards.
Paragraph (a) of proposed Rule 6820 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of proposed Rule 6820 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan. FINRA notes that this paragraph does not place additional requirements on its Industry Members beyond what is required by Rule 4590.
Paragraph (a)(2) of proposed Rule 6820 requires each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan. FINRA notes that this paragraph does not place additional requirements on its Industry Members beyond what is required by Rule 4590. Paragraph (a)(3) of proposed Rule 6820 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the proposed Rule 6820 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of proposed Rule 6820 requires Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of Rule 4590.
Paragraph (b) of proposed Rule 6820 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The proposed rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the proposed rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of Rule 4590.
Paragraph (c) of proposed Rule 6820 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of proposed Rule 6820 requires each Industry Member to certify to FINRA that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of proposed Rule 6820 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. FINRA intends to announce to its Industry Members the certification schedule established by the Operating Committee via
Paragraph (d) of proposed Rule 6820 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of proposed Rule 6820 requires Industry Members to report to the Plan Processor and FINRA violations of paragraph (a) of this Rule pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. FINRA intends to announce to its Industry Members the relevant thresholds established by the Operating Committee via
SEC Rule 613(c) requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT.
Paragraph (a) of proposed Rule 6830 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data,
Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to proposed Rule 6860); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to proposed Rule 6860); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to proposed Rule 6860); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to proposed Rule 6860); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to proposed Rule 6860); (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of proposed Rule 6830 requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in Rule 6830(a)(1) “Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with proposed Rule 6840, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(3) of proposed Rule 6830 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of proposed Rule 6830 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)-(b)(3) of proposed Rule 6830 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
Paragraph (b)(1) of proposed Rule 6830 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of proposed Rule 6830 requires each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) states that Industry Members may, but are not required to, voluntarily report Industry Member Data prior to the applicable 8:00 a.m. Eastern Time deadline.
Paragraph (c) of proposed Rule 6830 describes the securities to which the recording and reporting requirements of proposed Rule 6830 apply. Paragraphs (c)(1) and (c)(2) of proposed Rule 6830 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of proposed Rule 6830 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of proposed Rule 6830 for each NMS Security registered or listed for trading on such exchange or admitted to unlisted trading privileges on such exchange. Paragraph (c)(2) of proposed Rule 6830 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of this proposed Rule 6830 for each Eligible Security for which transaction reports are required to be submitted to FINRA.
Paragraph (d) of proposed Rule 6830 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of proposed Rule 6830 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, paragraph (d)(2) of proposed Rule 6830 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. FINRA intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee via
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, FINRA proposes to adopt paragraph (e) of proposed Rule 6830, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of proposed Rule 6830 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. FINRA proposes Rule 6840 (Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of proposed Rule 6840 requires each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6880. Paragraph (b) of proposed Rule 6840 requires each Industry Member to submit to the Central Repository any updates, additions or other changes to the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account on a daily basis. Paragraph (c) of proposed Rule 6840 requires each Industry Member, on a periodic basis as designated by the Plan Processor and approved by the Operating Committee, to submit to the Central Repository a complete set of Firm Designated IDs, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account. This periodic refresh is intended to ensure that the Central Repository has the most current information identifying a Customer. FINRA intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee via
Finally, paragraph (d) of proposed Rule 6840 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. FINRA proposes Rule 6850 (Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, proposed Rule 6850 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6880, and keep such information up to date as necessary.
SEC Rule 613(d)(3) sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of proposed Rule 6860 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of proposed Rule 6860 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of proposed Rule 6860. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of proposed Rule 6860 requires such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of proposed Rule 6860 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of proposed Rule 6860 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of proposed Rule 6860 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the Electronic Capture Time in milliseconds. In addition, paragraph (b)(2) of proposed Rule 6860 permits each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 6865 (Clock Synchronization Rule Violations) describes potential violations of the time stamp and clock synchronization time period requirements set forth in the proposed Rule 6800 Series. Proposed
Proposed Rule 6870 (Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of proposed Rule 6870 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of proposed Rule 6870 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of proposed Rule 6870 addresses connectivity requirements related to the CAT. Paragraph (b) of proposed Rule 6870 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, paragraph (c)(1) of proposed Rule 6870 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under the proposed Rule 6800 Series. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of the proposed Rule 6800 Series. FINRA notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of proposed Rule 6870 requires that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) states that each Industry Member remains primarily responsible for compliance with the requirements of the proposed Rule 6800 Series, notwithstanding the existence of an agreement described in paragraph (c) of proposed Rule 6870.
FINRA proposes Rule 6880 (Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of proposed Rule 6880 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Rules 6840(a) and 6850, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 6840(a) and 6850, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(4) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018.
Paragraph (b) of proposed Rule 6880 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 6890 (Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 6890 requires each Industry Member to maintain and preserve records of the information required to be recorded under the proposed Rule 6800 Series for the period of time and accessibility specified in SEA Rule 17a-4(b).
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of proposed Rule 6893 requires Industry Members to accurately provide the LEIs in their records as required by the proposed Rule 6800 Series and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with the Rule 6800 Series. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. FINRA intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan via
Furthermore, paragraph (d) of proposed Rule 6893 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 6893 states that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 6895 (Compliance Dates) sets forth the compliance dates for the various provisions of the proposed Rule 6800 Series. Paragraph (a) of proposed Rule 6895 states that, except as set forth in paragraphs (b) and (c) of this Rule or otherwise set forth in this Rule Series, the compliance date for the proposed Rule 6800 Series will be the date of Commission approval of the proposed rule change.
Paragraph (b) of proposed Rule 6895 establishes the compliance dates for the clock synchronization requirements as set forth in proposed Rule 6820. Paragraph (b)(1) states that each Industry Member shall comply with Rule 6820 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) states that each Industry Member shall comply with Rule 6820 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) reflects the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of proposed Rule 6895 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(2) requires that each Industry Member that is a Small Industry Member to record and report the Industry Member Data to the Central Repository by November 15, 2019. Such compliance dates are consistent with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi),
If the Commission approves the proposed rule change, the effective date of the proposed rule change will be the date of approval.
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
FINRA believes that this proposed rule change is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist FINRA and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist FINRA in meeting its regulatory obligations pursuant to the Plan. FINRA also notes that the proposed rule series implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, the national securities exchanges are proposing similar rules to require compliance by their members with the CAT NMS Plan. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to list and trade shares of the following under NYSE Arca Equities Rule 8.201: Bitcoin Investment Trust (“Trust”). The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
Under NYSE Arca Equities Rule 8.201, the Exchange may propose to list and/or trade pursuant to unlisted trading privileges (“UTP”) “Commodity-Based Trust Shares.”
On March 4, 2016, the Trust submitted to the Commission an amended Form D as a business trust. Shares of the Trust have been quoted on OTC Market's OTCQX Best Marketplace under the symbol “GBTC” since March 26, 2015. On November 11, 2016, the Trust also published a quarterly report for GBTC for the period ended September 30, 2016, which can be found on OTC Market's Web site:
The sponsor of the Trust is Grayscale Investments, LLC (“Sponsor”), a Delaware limited liability company. The Sponsor is a wholly-owned subsidiary of Digital Currency Group, Inc. (“Digital Currency Group”). The trustee for the Trust is Delaware Trust Company (“Trustee”). The Bank of New York Mellon will be the Trust's transfer agent (in such capacity, “Transfer Agent”) and the administrator of the Trust (in such capacity, “Administrator”). Xapo Inc. is the custodian for the Trust (“Custodian”).
The Trust is a Delaware statutory trust, organized on September 13, 2013, that operates pursuant to a trust agreement between the Sponsor and the Trustee. The Trust has no fixed termination date.
According to the Registration Statement, each Share will represent a proportional interest, based on the total number of Shares outstanding, in the bitcoins held by the Trust, less the Trust's liabilities, which include accrued but unpaid fees and expenses. The Trust's assets will consist solely of bitcoins held on the Trust's behalf by the Custodian. The Trust has not had a cash balance at any time since inception. When selling bitcoins to pay expenses, the Sponsor will endeavor to sell the exact number of bitcoins needed to pay expenses in order to minimize the Trust's holdings of assets other than bitcoin. As a consequence, the Trust expects that it will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period.
The activities of the Trust will be limited to (i) issuing “Baskets” (as defined below) in exchange for bitcoins deposited by the “Authorized Participants” (as defined below) or “Liquidity Providers” (as defined below), as applicable, with the Custodian as consideration, (ii) transferring actual bitcoins as necessary to cover the Sponsor's management fee and selling bitcoins as necessary to pay certain other fees that are not contractually assumed by the Sponsor, (iii) transferring actual bitcoins in exchange for Baskets surrendered for redemption by the Authorized Participants, (iv) causing the Sponsor to sell bitcoins on the termination of the Trust and (v) engaging in all administrative and custodial procedures necessary to accomplish such activities in accordance with the provisions of applicable agreements. The Trust is not actively managed. It will not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market price of bitcoins.
According to the Registration Statement, the Trust is neither an investment company registered under the Investment Company Act of 1940, as amended, (“1940 Act”)
According to the Registration Statement, and as further described below, the investment objective of the Trust will be for the Shares to reflect the performance of the value of a bitcoin as represented by the TradeBlock XBX Index (“Index”),
The Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin. A substantial direct investment in bitcoins may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the bitcoins and may involve the payment of substantial fees to acquire such bitcoins from third-party facilitators through cash payments of U.S. dollars. Although the Shares will not be the exact equivalent of a direct investment in bitcoins, they will provide investors with an alternative that constitutes a relatively cost-effective way to participate in bitcoin markets through the securities market.
The following is a brief introduction to the bitcoin industry and the bitcoin market based on information provided in the Registration Statement.
A bitcoin is a decentralized digital currency that is issued by, and transmitted through, an open-source digital protocol platform using cryptographic security that is known as the “Bitcoin Network.” The Bitcoin Network is an online, peer-to-peer user network that hosts a public transaction ledger, known as the “Blockchain,” and the source code that comprises the basis for the cryptography and digital protocols governing the Bitcoin Network. No single entity owns or operates the Bitcoin Network, the infrastructure of which is collectively maintained by a decentralized user base. Bitcoins can be used to pay for goods and services or can be converted to fiat currencies, such as the U.S. dollar, at rates determined on electronic marketplaces where exchange participants may first use fiat currency
The Blockchain is comprised of a digital file, downloaded and stored in a decentralized manner on the computer of each Bitcoin Network user. The file includes all “blocks” that have been solved by miners and is updated to include new blocks as they are solved. As each newly solved block refers back to and “connects” with the immediately prior solved block, the addition of a new block adds to the Blockchain in a manner similar to a new link being added to a chain. Because each new block records outstanding bitcoin transactions, and outstanding transactions are settled and validated through such recording, the Blockchain represents a complete, transparent and unbroken history of all transactions on the Bitcoin Network.
Bitcoins are “stored” or reflected on the Blockchain. The Blockchain records the transaction history of all bitcoins in existence and, through the transparent reporting of transactions, allows the Bitcoin Network to verify the association of each bitcoin with the digital wallet that owns them. The Bitcoin Network and bitcoin software programs can interpret the Blockchain to determine the exact bitcoin balance of any digital wallet listed in the Blockchain as having taken part in a transaction on the Bitcoin Network.
In order to own, transfer or use bitcoins, a person generally must have internet access to connect to the Bitcoin Network. Bitcoin transactions between parties occur very rapidly (typically less than one minute) and may be made directly between end-users without the need for a third-party intermediary, although there are entities that provide third-party intermediary services. To prevent the possibility of double-spending a single bitcoin, each transaction is recorded, time stamped and publicly displayed in a block in the publicly available Blockchain. Thus, the Bitcoin Network provides confirmation against double-spending by memorializing every transaction in the Blockchain, which is publicly accessible and downloaded in part or in whole by all users' Bitcoin Network software programs as described above.
The Bitcoin Network is decentralized and does not rely on either governmental authorities or financial institutions to create, transmit or determine the value of bitcoins. Rather, bitcoins are created and allocated by the Bitcoin Network protocol through a “mining” process subject to a strict, well-known issuance schedule. The value of bitcoins is determined by the supply of and demand for bitcoins in the bitcoin exchange market (and in private end-user-to-end-user transactions), as well as the number of merchants that accept them. As bitcoin transactions can be broadcast to the Bitcoin Network by any user's bitcoin software and bitcoins can be transferred without the involvement of intermediaries or third parties, there are little or no transaction costs in direct peer-to-peer transactions on the Bitcoin Network. Third-party service providers such as Bitcoin Exchanges and bitcoin third-party payment processing services may charge significant fees for processing transactions and for converting, or facilitating the conversion of, bitcoins to or from fiat currency.
“Off-Blockchain transactions” involve the transfer of control over or ownership of a specific digital wallet holding bitcoins or of the reallocation of ownership of certain bitcoins in a pooled-ownership digital wallet, such as a digital wallet owned by a Bitcoin Exchange. Off-Blockchain transactions are not truly bitcoin transactions in that they do not involve the transfer of transaction data on the Bitcoin Network and do not reflect a movement of bitcoins between addresses recorded in the Blockchain. Information and data regarding Off-Blockchain transactions are generally not publicly available in contrast to “true” bitcoin transactions, which are publicly recorded on the Blockchain. Off-Blockchain transactions are subject to risks as any such transfer of bitcoin ownership is not protected by the protocol behind the Bitcoin Network or recorded in and validated through the Blockchain mechanism.
Prior to engaging in bitcoin transactions, a user must first obtain a digital bitcoin “wallet” (analogous to a bitcoin account) in which to store bitcoins. A wallet can be obtained, among other ways, through an open-source software program that generates bitcoin addresses and enables users to engage in the transfer of bitcoins with other users. A user may install a bitcoin software program on a computer or mobile device that will generate a bitcoin wallet or, alternatively, a user may retain a third party to create a digital wallet to be used for the same purpose. There is no limit on the number of digital wallets a user can have, and each such wallet includes one or more unique addresses and a verification system for each address consisting of a “public key” and a “private key,” which are mathematically related.
In a typical bitcoin transaction, the bitcoin recipient must provide the spending party with the recipient's digital wallet address, an identifying series of 27 to 34 alphanumeric characters that represents the wallet's routing number on the Bitcoin Network and allows the Blockchain to record the sending of bitcoins to the recipient's wallet. The receiving party can provide this address to the spending party in alphanumeric format or an encoded format such as a Quick Response Code (commonly known as a QR Code), which may be scanned by a smartphone or other device to quickly transmit the information. This activity is analogous to a recipient providing an address in wire instructions to the payor so that cash may be wired to the recipient's account.
After the provision of the receiving wallet's digital address, the spending party must enter the address into its bitcoin software program along with the number of bitcoins to be sent. The number of bitcoins to be sent will typically be agreed upon between the two parties based on a set number of bitcoins or an agreed upon conversion of the value of fiat currency to bitcoins. Most bitcoin software programs also allow, and often suggest, the payment of a transaction fee (also known as a miner's fee). Transaction fees are not required to be included by many bitcoin software programs, but, when they are included, they are paid by the spending party on top of the specified amount of bitcoins being sent in the transaction. Transaction fees, if any, are typically a fractional number of bitcoins (for example, 0.005 or 0.0005 bitcoins) and are automatically transferred by the Bitcoin Network to the bitcoin miner that solves and adds the block recording the spending transaction on the Blockchain.
After the entry of the receiving wallet's address, the number of bitcoins to be sent and the transaction fees, if any, to be paid, the spending party will transmit the spending transaction. The transmission of the spending transaction results in the creation of a data packet by the spending party's bitcoin software program. The data packet includes data showing (i) the receiving wallet's address, (ii) the number of bitcoins being sent, (iii) the transaction fees, if any, and (iv) the spending party's digital signature, verifying the authenticity of the transaction. The data packet also includes references called “inputs” and “outputs,” which are used by the Blockchain to identify the source of the bitcoins being spent and record the flow
Bitcoin miners record transactions when they solve for and add blocks of information to the Blockchain. When a miner solves for a block, it creates that block, which includes data relating to (i) the solution to the block, (ii) a reference to the prior block in the Blockchain to which the new block is being added and (iii) all transactions that have occurred but have not yet been added to the Blockchain. The miner becomes aware of outstanding, unrecorded transactions through the data packet transmission and propagation discussed above. Typically, bitcoin transactions will be recorded in the next chronological block if the spending party has an internet connection and at least one minute has passed between the transaction's data packet transmission and the solution of the next block. If a transaction is not recorded in the next chronological block, it is usually recorded in the next block thereafter.
Bitcoin transactions that are micropayments (typically, less than 0.01 bitcoins) and that do not include transaction fees to miners are currently deprioritized for recording, meaning that, depending on bitcoin miner policies, these transactions may take longer to record than typical transactions if the transactions do not include a transaction fee. Additionally, transactions initiated by spending wallets with poor connections to the Bitcoin Network (
To the extent that a transaction has not yet been recorded, there is a greater chance that the spending wallet can double-spend the bitcoins sent in the original transaction. If the next block solved is by an honest miner not involved in the attempt to double-spend bitcoin and if the transaction data for both the original and double-spend transactions have been propagated onto the Bitcoin Network, the transaction that is received with the earlier time stamp will be recorded by the solving miner, regardless of whether the double-spending transaction includes a larger transaction fee. If the double-spend transaction propagates to the solving miner and the original transaction has not, then the double-spending has a greater chance of success. As a result of the high difficulty in successfully initiating a double-spend without the assistance of a coordinated attack, the probability of success for a double-spend transaction attempt is limited.
Upon the addition of a block included in the Blockchain, the bitcoin software program of both the spending party and the receiving party will show confirmation of the transaction on the Blockchain and reflect an adjustment to the bitcoin balance in each party's digital wallet, completing the bitcoin transaction. Typically, bitcoin software programs will automatically check for and display additional confirmations of six or more blocks in the Blockchain.
To ensure the integrity of bitcoin transactions from the recipient's side (
A transaction in bitcoins between two parties is recorded in the Blockchain in a block only if that block is accepted as valid by a majority of the nodes on the Bitcoin Network. Validation of a block is achieved by confirming the cryptographic “hash value” included in the block's solution and by the block's addition to the longest confirmed Blockchain on the Bitcoin Network. For a transaction, inclusion in a block on the Blockchain constitutes a “confirmation” of the bitcoin transaction. As each block contains a reference to the immediately preceding block, additional blocks appended to and incorporated into the Blockchain constitute additional confirmations of the transactions in such prior blocks, and a transaction included in a block for the first time is confirmed once against double-spending. The layered confirmation process makes changing historical blocks (and reversing transactions) exponentially more difficult the further back one goes in the Blockchain. Bitcoin Exchanges and users can set their own threshold as to how many confirmations are required until funds from the transferor are considered valid. However, statistically speaking, a transaction is virtually final after six confirmations as it would be extremely difficult to challenge the validity of the transaction at that point.
According to the Registration Statement, at this point in the evolution of the Bitcoin Network, bitcoin transactions are considered irreversible. Once a transaction appears in the Blockchain, no one has the authority to reverse it. If someone were to attempt to undo a past transaction in a block recorded on the Blockchain, such individual would have to exert tremendous processing power in a series of complicated transactions that may not be achieved at this point in the Bitcoin Network's development.
According to the Registration Statement, all transactions on the Bitcoin Network are secured using public-key cryptography, a technique which underpins many online transactions. Public-key cryptography works by generating two mathematically related keys (one a public key and the other a private key). One of these, the private key, is retained in the individual's digital wallet and the other key is made public and serves as the address to which bitcoin(s) can be transferred and from which money can be transferred by the owner of the bitcoin wallet. In the case of bitcoin transactions, the public key is an address (a string of letters and numbers) that is used to encode payments, which can then only be retrieved with its associated private key, which is used to authorize the transaction. In other words, the payor uses his private key to approve any transfers to a recipient's account. Users on the Bitcoin Network can confirm that the user signed the transaction with the appropriate private key, but cannot reverse engineer the private key from the signature.
According to the Registration Statement, the Custodian is responsible
The Bitcoin Account is maintained by the Custodian and cold storage mechanisms are used for the Vault Account by the Custodian. Each digital wallet of the Trust may be accessed using its corresponding private key. The Custodian's custodial operations maintain custody of the private keys that have been deposited in cold storage at its various vaulting premises across the United States, Europe (including Switzerland) and South America. According to the Registration Statement, the locations of the vaulting premises change regularly and are kept confidential by the Custodian for security purposes.
The term “cold storage” refers to a safeguarding method by which the private keys corresponding to bitcoins stored on a digital wallet are removed from any computers actively connected to the internet. Cold storage of private keys may involve keeping such wallet on a non-networked computer or electronic device or storing the public key and private keys relating to the digital wallet on a storage device (for example, a USB thumb drive) or printed medium (for example, papyrus or paper) and deleting the digital wallet from all computers. According to the Registration Statement, most of the private keys in the Wallet Account and all of the private keys in the Vault Account are kept in cold storage. A digital wallet may receive deposits of bitcoins but may not send bitcoins without use of the bitcoins' corresponding private keys. In order to send bitcoin from a digital wallet in which the private keys are kept in cold storage, either the private keys must be retrieved from cold storage and entered into a bitcoin software program to sign the transaction, or the unsigned transaction must be sent to the “cold” server in which the private keys are held for signature by the private keys. At that point, the user of the digital wallet can transfer its bitcoins.
According to the Registration Statement, the Custodian is the custodian of the Trust's private keys and will utilize certain security procedures such as algorithms, codes, passwords, encryption or telephone call-backs in the administration and operation of the Trust and the safekeeping of its bitcoins and private keys. The Custodian has created a Vault Account for the Trust assets in which private keys are placed in cold storage. According to the Registration Statement, the Custodian segregates the private keys stored with it from any other assets it holds or holds for others.
The Custodian is authorized to accept, on behalf of the Trust, deposits of bitcoins from “Authorized Participant Self-Administered Accounts” (as defined below) or “Liquidity Provider Accounts” (as defined below), as applicable, held with the Custodian and transfer such bitcoins into the Bitcoin Account. Deposits of bitcoins will be immediately available to the Trust to the extent such bitcoins have not already been transferred to the Vault Account. Bitcoins transferred to the Bitcoin Account will be directly deposited into digital wallets for which the keys are already in cold storage.
According to the Registration Statement, if bitcoins need to be withdrawn from the Trust in connection with a redemption, the Custodian will ensure that the private keys to those bitcoins sign the withdrawal transaction.
According to the Registration Statement, the process by which bitcoins are created and bitcoin transactions are verified is called mining.
In order to add blocks to the Blockchain, a miner must map an input data set (
A miner's proposed block is added to the Blockchain once a majority of the nodes on the Bitcoin Network confirms the miner's work. Miners that are successful in adding a block to the Blockchain are automatically awarded bitcoins for their effort plus any transaction fees paid by transferors whose transactions are recorded in the block. This reward system is the method by which new bitcoins enter into circulation to the public.
The supply of new bitcoins is mathematically controlled in a manner so that the number of bitcoins grows at a limited rate pursuant to a pre-set schedule. The number of bitcoins awarded for solving a new block is automatically halved after every 210,000 blocks are added to the Blockchain. Recently, in July 2016, the fixed reward for solving a new block decreased from 25 bitcoins to 12.5 bitcoins per block and this is expected to decrease by half to become 6.25 bitcoins after the next 210,000 blocks have entered the Bitcoin Network, which is expected to be July 2020. This deliberately controlled rate of bitcoin creation means that the number of bitcoins in existence will increase at a controlled rate until the number of bitcoins in existence reaches the pre-determined 21 million bitcoins. According to the Registration Statement, as of December 30, 2016, approximately 16.08 million bitcoins have been mined, and estimates of when the 21 million bitcoin limitation will be reached range up to the year 2140.
According to the Registration Statement, due to the peer-to-peer framework of the Bitcoin Network and the protocols thereunder, transferors and recipients of bitcoins are able to determine the value of the bitcoins
According to the Registration Statement, bitcoin price indexes have also been developed by a number of service providers in the bitcoin space. For example, Coindesk, a digital currency content provider and wholly-owned subsidiary of Digital Currency Group, launched a proprietary bitcoin price index in September 2013, and bitcoinaverage.com provides an average of all bitcoin prices on several Bitcoin Exchanges. The Sponsor uses the Index calculated by the Index Provider to determine the “Bitcoin Index Price,” as described below under “Bitcoin Index Price.”
Currently, there are numerous Bitcoin Exchanges operating worldwide in a number of currency pairs including, among others, bitcoin to U.S. dollar, bitcoin to euro, bitcoin to Chinese yuan and bitcoin to Indian rupee. According to the Registration Statement, most of the data with respect to prevailing valuations of bitcoin come from such Bitcoin Exchanges. These exchanges include established exchanges such as Bitstamp, GDAX and Bitfinex, which provide a number of options for buying and selling bitcoins. Among the Bitcoin Exchanges eligible for inclusion in the Index, domicile, regulation and legal compliance varies.
The table below sets forth (1) the aggregate number of bitcoin trades made on the nine largest U.S. dollar-denominated Bitcoin Exchanges by trade volume from May 10, 2015 to December 30, 2016 and (2) the market share of trade volume of each such Bitcoin Exchange.
Information
According to the Registration Statement, in addition to open online Bitcoin Exchanges, there are “dark pools,” which are bitcoin trading platforms that do not publicly report bitcoin trade data. Market participants have the ability to execute large block trades on a dark pool without revealing those trades and the related price data to the public bitcoin exchange market, although any withdrawal from or deposit to a dark pool platform may be recorded on the Blockchain.
Bitcoin may also be traded OTC. OTC trades are not required to be reported through any facilities. However, according to the Sponsor, based on publicly available information, OTC trading may not represent a material volume of overall bitcoin trading. The OTC markets operate in a similar manner to dark pools. However, typically, OTC trades are institutional size block transactions (though on a much lower scale relative to the size of block transactions for other commodities or industries) or transactions made on behalf of high-net worth individuals.
According to the Sponsor, some OTC intermediaries that facilitate OTC trading, such as Genesis and itBit, provide summary statistics on an ad hoc
According to the Sponsor, volatility in bitcoin was pronounced in its earliest days through late 2013. According to the Sponsor, during that time period, almost all bitcoin trading activity centered on two exchanges, which centralized the global order book and led to large price movements. Since then, the bitcoin trading environment has matured with the development of dozens of exchanges around the world, resulting in more transparency with respect to bitcoin pricing, in increased trading volume and in greater liquidity. Additionally, the globalization of bitcoin exchanges, ranging from those domiciled in the United States to other areas of the globe, such as China, has led to development of many bitcoin currency pairs, garnering more market participants. Today, the largest trading pairs are bitcoin to Chinese yuan, bitcoin to U.S. dollars and bitcoin to euro.
Bitcoin price volatility has declined since the inception of bitcoin. According to the Sponsor and as detailed in Exhibit 3, recent figures, such as the three and six month volatility charts, show that the volatility of bitcoin is now at levels lower than those seen for crude oil and natural gas and comparable to those seen for metals like silver, platinum and copper. Moreover, the trailing one-year volatility of bitcoin is approximately in line with that of crude oil and natural gas and continues to trend downward.
According to the Sponsor, while bitcoin price volatility has declined and its volatility approximately corresponds to that of certain commodities over a one-year timeframe, the volatility of bitcoin is not correlated with the volatility of other commodities over shorter- (
According to the Sponsor, demand for bitcoins is based on several factors. Demand may be based on speculation regarding the future appreciation of the value of bitcoins. Continuing development of various applications utilizing the Bitcoin Network for uses such as remittance, payment for goods and services, recording transfer of ownership of certain assets and settlement of both financial and non-financial assets have led many investors to speculate that the price of bitcoins will appreciate as use of these applications increases. As additional applications are developed, demand may increase. Additionally, some investors have developed analogs between bitcoin and other scarce assets such as gold. Bitcoin shares many of the same characteristics as gold,
The “Bitcoin Index Price” is the U.S. dollar value of a bitcoin as represented by the Index, calculated at 4:00 p.m., E.T., on each business day. If the Index becomes unavailable, or if the Sponsor determines in good faith that the Index does not reflect an accurate bitcoin value, then the Sponsor will, on a best efforts basis, contact the Index Provider in order to obtain the Bitcoin Index Price. If after such contact the Index remains unavailable or the Sponsor continues to believe in good faith that the Index does not reflect an accurate bitcoin value, then the Administrator will utilize the following cascading set of rules to calculate the Bitcoin Index Price. For the avoidance of doubt, the Sponsor will employ the below rules sequentially and in the order presented below, should one or more specific rule(s) fail:
(i) Bitcoin Index Price = The price set by the Index as of 4:00 p.m., E.T., on the valuation date. According to the Registration Statement, the Index is a U.S. dollar-denominated composite reference rate for the price of bitcoin based on the volume-weighted price at trading venues selected by the Index Provider. Trading venues used to calculate the Index may include Bitcoin Exchanges, OTC markets or derivative platforms. According to the Registration Statement, to ensure that the Index Provider's trading venue selection process is impartial, the Index Provider considers depth of liquidity, compliance with applicable legal and regulatory requirements, data availability, U.S. domicile and acceptance of U.S. dollar deposits. The Index Provider conducts a quarterly review of these criteria.
According to the Registration Statement, as of the date of the Registration Statement, the eligible Bitcoin Exchanges selected by the Index Provider include Bitfinex, Bitstamp, GDAX (formerly known as Coinbase Exchange), itBit and OKCoin International. Bitfinex is a trading platform based in Hong Kong for digital currencies, including bitcoin, that offers many advanced features such as margin and exchange trading and margin funding. Bitstamp is a European Union-based bitcoin marketplace that enables people from all around the world to safely buy and sell bitcoins. GDAX, based in San Francisco, California, is a digital currency exchange. itBit is a New York City-based, regulated global exchange that offers retail and institutional investors a powerful platform to buy and sell bitcoin. OKCoin International is a worldwide digital currency trading platform that is based in Singapore.
According to the Registration Statement, in the calculation of the Bitcoin Index Price, the Index Provider cleanses the trade data and compiles it in such a manner as to algorithmically reduce the impact of anomalistic or manipulative trading. This is accomplished by adjusting the weight of each input based on price deviation relative to the observable set of data for the relevant trading venue, as well as recent and long-term trading volume at each venue relative to the observable set for the relevant trading venues. The Index Provider reduces the weighting of data inputs as they get further from the mean price across the trading venues and ultimately excludes any trades with a price that deviates beyond a certain predetermined threshold level from the
According to the Registration Statement, the Index Provider does not currently include data from OTC markets or derivative platforms. OTC data is not currently included because of the potential for trades to include a significant premium or discount paid for larger liquidity, which creates an uneven comparison relative to more active markets. There is also a higher potential for OTC transactions to not be arms-length and thus not be representative of a true market price. Bitcoin derivative markets are also not currently included as the markets remain relatively thin. According to the Registration Statement, the Index Provider will consider International Organization of Securities Commissions (“IOSCO”) principles for financial benchmarks and the management of trading venues of bitcoin derivatives when considering inclusion of OTC or derivative platform data in the future. According to the Registration Statement, the Index Provider and Genesis, a Liquidity Provider and affiliate of the Trust, have entered into a platform license agreement under which the Index Provider licenses its OTC market platform software to Genesis. Genesis uses the software to operate its bitcoin trading desk, which Genesis relies upon as a Liquidity Provider. Under the agreement, Genesis has agreed to provide its bitcoin trade data to the Index Provider. Consequently, it is possible that the Index Provider may decide in the future to include Genesis's OTC trading desk as a trading venue that is included in the Index. However, currently, the Index Provider does not include data from the Genesis OTC trading desk (or any other OTC markets).
According to the Registration Statement, to calculate the Bitcoin Index Price, the weighting algorithm is applied to the price and volume of all inputs for the immediately preceding 24-hour period as of 4:00 p.m., E.T., on the valuation date. According to the Registration Statement, to measure volume data and trading halts, the Index Provider monitors trading activity and regards as eligible those Bitcoin Exchanges that it determines represent a substantial portion of U.S. dollar-denominated trading over a sustained period on a platform without a significant history of trading disruptions. The Index Provider maintains a monitoring system that tests for these criteria on an ongoing basis.
The description of the Index is based on information publicly available at the Index Provider's Web site at
If the Index becomes unavailable, or if the Sponsor determines in good faith that the Index does not reflect an accurate bitcoin value, then the Sponsor will, on a best efforts basis, contact the Index Provider to obtain the Bitcoin Index Price directly from the Index Provider. If after such contact the Index remains unavailable or the Sponsor continues to believe in good faith that the Index does not reflect an accurate bitcoin value, then the Sponsor will employ the next rule to determine the Bitcoin Index Price.
(ii) Bitcoin Index Price = The volume-weighted average bitcoin price for the immediately preceding 24-hour period as of 4:00 p.m., E.T., on the valuation date as calculated based upon the volume-weighted average bitcoin prices of the Major Bitcoin Exchanges as published by an alternative third party's public data feed that the Sponsor believes is accurately and reliably providing market data (
(iii) Bitcoin Index Price = The volume-weighted average bitcoin price as calculated by dividing (a) the U.S. dollar value of the bitcoin transactions on the Major Bitcoin Exchanges by (b) the total number of bitcoins traded on the Major Bitcoin Exchanges, in each case for the 24-hour period from 4:00 p.m., E.T. (or as soon as practicable thereafter), on the business day prior to the valuation date to 4:00 p.m., E.T. (or as soon as practicable thereafter), on the valuation date as published by a third party's public data feed that the Sponsor believes is accurately and reliably providing market data (
(iv) Bitcoin Index Price = The volume-weighted average bitcoin price as calculated by dividing (a) the U.S. dollar value of the bitcoin transactions on the Bitcoin Benchmark Exchanges by (b) the total number of bitcoins traded on the Bitcoin Benchmark Exchanges, in each case for the 24-hour period from 4:00 p.m., E.T. (or as soon as practicable thereafter), on the business day prior to the valuation date to 4:00 p.m., E.T. (or as soon as practicable thereafter), on the valuation date. A “Bitcoin Benchmark Exchange” is a Bitcoin Exchange that represents at least 25% of the aggregate U.S. dollar-denominated trading volume of the bitcoin market during the last 30 consecutive calendar days and that to the knowledge of the Sponsor is in substantial compliance with the laws, rules and regulations, including any anti-money laundering (“AML”) and know-your-customer (“KYC”) procedures, of such Bitcoin Exchange's applicable jurisdiction; provided that if there are fewer than three such Bitcoin Exchanges, then the Bitcoin Benchmark Exchanges will include such Bitcoin Exchange or Bitcoin Exchanges that
The Sponsor will review the composition of the exchanges that comprise the Bitcoin Benchmark Exchanges at the beginning of each month, or more frequently if necessary, in order to ensure the accuracy of its composition. Subject to the next sentence, if one or more of the Bitcoin Benchmark Exchanges become unavailable (for example, data sources from the Bitcoin Benchmark Exchanges of bitcoin prices become unavailable, unwieldy or otherwise impractical for use), or if the Sponsor determines in good faith that the Bitcoin Benchmark Exchange does not reflect an accurate bitcoin value, then the Sponsor will, on a best efforts basis, contact the Bitcoin Benchmark Exchange that is experiencing the service outages in an attempt to obtain the relevant data. If after such contact one or more of the Bitcoin Benchmark Exchanges remain unavailable or the Sponsor continues to believe in good faith that the Bitcoin Benchmark Exchange does not reflect an accurate bitcoin price, then the Sponsor will employ the next rule to determine the Bitcoin Index Price.
(v) Bitcoin Index Price = The Sponsor will use its best judgment to determine a good faith estimate of the Bitcoin Index Price.
Data used for the above calculation of the Bitcoin Index Price is gathered by the Administrator or its delegate who calculates the Bitcoin Index Price each business day as of 4:00 p.m., E.T., or as soon thereafter as practicable. The Administrator will disseminate the Bitcoin Index Price each business day.
The Index Provider may change the trading venues that are used to calculate the Index, or otherwise change the way in which the Index is calculated at any time. The Index Provider does not have any obligation to consider the interests of the Sponsor, the Administrator, the Trust, the shareholders or anyone else in connection with such changes. The Index Provider is not required to publicize or explain the changes, or to alert the Sponsor or the Administrator to such changes. The Index Provider will consider IOSCO principles for financial benchmarks and the management of trading venues of bitcoin derivatives when considering inclusion of OTC or derivative platform data in the future.
According to the Registration Statement, the Trust's assets will consist solely of bitcoin. The Administrator will determine the value of the Trust for operational purposes (herein referred to as “Bitcoin Holdings”), which is the aggregate U.S. dollar value, based on the Bitcoin Index Price, of the Trust's bitcoins less its liabilities, on each day the Shares trade on the Exchange as of 4:00 p.m. E.T., or as soon thereafter as practicable.
To calculate the Bitcoin Holdings, the Administrator will determine the Bitcoin Index Price and multiply the Bitcoin Index Price by the Trust's aggregate number of bitcoins owned by the Trust as of 4:00 p.m., E.T., on the immediately preceding day. The Administrator will add the U.S. dollar value of any bitcoins receivable under pending creation “Baskets” (as defined below), if any, determined by multiplying the number of such creation Baskets by the Bitcoin Basket Amount and then multiplying such product by the Bitcoin Index Price. The Administrator will subtract (i) the U.S. dollar value of the bitcoins constituting any accrued but unpaid fees, (ii) the U.S. dollar value of the bitcoins to be distributed under pending redemption Baskets, determined by multiplying the number of such redemption Baskets by the Bitcoin Basket Amount and then multiplying such product by the Bitcoin Index Price and (iii) extraordinary legal fees and certain expenses of the Trust.
The Sponsor will publish the Bitcoin Index Price, the Bitcoin Holdings and the Bitcoin Holdings per Share on the Trust's Web site as soon as practicable after its determination. If the Bitcoin Holdings and Bitcoin Holdings per Share have been calculated using a price per bitcoin other than the Bitcoin Index Price, the publication on the Trust's Web site will note the valuation methodology used and the price per bitcoin resulting from such calculation.
While the Trust's investment objective is for the Shares to reflect the performance of the value of a bitcoin as represented by the Index, less the Trust's liabilities and expenses, the Shares may trade in the secondary market at prices that are lower or higher than the Bitcoin Holdings per Share. The amount of the discount or premium in the trading price relative to the Bitcoin Holdings per Share may be influenced by non-concurrent trading hours and liquidity between the secondary market and larger Bitcoin Exchanges in the bitcoin exchange market. While the Shares will be listed and trade on the Exchange from 9:30 a.m. until 4:00 p.m., E.T., liquidity in the global bitcoin markets may fluctuate depending upon the volume and availability of larger Bitcoin Exchanges. As a result, during periods in which bitcoin exchange market liquidity is limited or a major Bitcoin Exchange is off-line, trading spreads, and the resulting premium or discount, on the Shares may widen.
Because of the potential for arbitrage inherent in the structure of the Trust, the Sponsor believes that the Shares will not trade at a material discount or premium to the underlying bitcoin held by the Trust. The arbitrage process, which in general provides investors the opportunity to profit from differences in prices of assets, increases the efficiency of the markets, serves to prevent potentially manipulative efforts, and can be expected to operate efficiently in the case of the Shares and bitcoin. If the price of the Shares deviates enough from the price of bitcoin to create a material discount or premium, an arbitrage opportunity is created. If the Shares are inexpensive compared to the bitcoin that underlies them, an arbitrageur may buy the Shares at a discount, immediately redeem them in exchange for bitcoin, and sell the bitcoin in the cash market at a profit. If the Shares are expensive compared to the bitcoin that underlies them, an arbitrageur may sell the Shares short, buy enough bitcoin to acquire the number of Shares sold short, acquire the Shares through the creation process, and deliver the Shares to close out the short position.
According to the Registration Statement, the Trust will issue and redeem “Baskets,” each equal to a block of 100 Shares, only to Authorized Participants. The size of a Basket is subject to change. The creation and redemption of a Basket require the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional bitcoins represented by each Basket being created or redeemed, the number of which is determined by dividing the number of bitcoins owned by the Trust at such time by the number of Shares outstanding at such time (calculated to one one-hundred-millionth of one bitcoin), as adjusted for the number of whole and fractional bitcoins constituting accrued but unpaid fees and expenses of the Trust and multiplying the quotient obtained by 100 (“Basket Bitcoin Amount”). The Basket Bitcoin Amount will gradually decrease over time as the Trust's bitcoins are used to pay the Trust's expenses. According to the Registration Statement, as of the date of the Registration Statement, each Share currently represents approximately 0.094 of a bitcoin.
Authorized Participants are the only persons that may place orders to create and redeem Baskets. Each Authorized Participant must (i) be a registered broker-dealer, (ii) enter into a participant agreement with the Sponsor, the Trust and the Liquidity Providers (“Participant Agreement”) and (iii) in the case of the creation or redemption of Baskets that do not use the “Conversion Procedures” (as defined below), own a bitcoin wallet address that is recognized by the Custodian as belonging to the Authorized Participant (“Authorized Participant Self-Administered Account”). Authorized Participants may act for their own accounts or as agents for broker-dealers, custodians and other securities market participants that wish to create or redeem Baskets. Shareholders who are not Authorized Participants will only be able to redeem their Shares through an Authorized Participant.
The creation and redemption of a Basket requires the delivery to the Trust, or the distribution by the Trust, of the Basket Bitcoin Amount (that is, the number of bitcoins represented by each Basket), for each Basket to be created or redeemed. The Basket Bitcoin Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket Bitcoin Amount.”
Although the Trust will only create Baskets upon the receipt of bitcoins, and will only redeem Baskets by distributing bitcoins, an Authorized Participant may deposit cash with the Administrator, which will facilitate the purchase or sale of bitcoins through a Liquidity Provider on behalf of an Authorized Participant (the “Conversion Procedures”). “Liquidity Providers” must (i) enter into a Participant Agreement with the Sponsor, the Trust and the Authorized Participants and (ii) own a bitcoin wallet address that is recognized by the Custodian as belonging to the Liquidity Provider (“Liquidity Provider Account”).
To create Baskets in-kind, Authorized Participants will send the Administrator a creation order on the trade date. The Administrator and the Marketing Agent will accept or reject the creation order on that same date, and the Total Basket Bitcoin Amount will be determined as soon as practicable after 4:00 p.m., E.T., on that date. On the business day following the trade date, the Authorized Participant will transfer the Total Basket Bitcoin Amount to the Custodian. Once the Total Basket Bitcoin Amount is received by the Custodian, the Administrator will instruct the Transfer Agent to deliver the creation Baskets to the Authorized Participant.
To create Baskets using the Conversion Procedures, Authorized Participants will send the Administrator a creation order on the business day preceding the trade date. The Administrator and the Marketing Agent will accept or reject the creation order on that same date. Upon receiving instruction from the Administrator that a creation order has been accepted, the Authorized Participant will send 110% of the U.S. dollar value of the Total Basket Bitcoin Amount, determined using the Bitcoin Index Price as of 4:00 p.m., E.T., on the business day that the Authorized Participant places the creation order (“Cash Collateral Amount”). The Total Basket Bitcoin Amount will be determined as soon as practicable after 4:00 p.m., E.T. the following day. Upon receiving instruction from the Sponsor that a creation order has been placed, a Liquidity Provider will buy bitcoins at the lowest price that it is able to procure using its commercially reasonable efforts and deliver to the Custodian the Total Basket Bitcoin Amount on the business day following the trade date. Once the Total Basket Bitcoin Amount is received by the Custodian, the Administrator will instruct the Transfer Agent to deliver the creation Baskets to the Authorized Participant. The Administrator will then send the Liquidity Providers the amount of cash equal to the Bitcoin Index Price as of 4:00 p.m., E.T., on the business day immediately following the date on which the creation order was placed multiplied by the Total Basket Bitcoin Amount and return any remaining amount of the Cash Collateral Amount to the Authorized Participant. If the Cash Collateral Amount does not sufficiently cover the Total Basket Bitcoin Amount, the Authorized Participant will be responsible for paying the balance before they receive the creation Baskets.
To redeem Baskets in-kind, Authorized Participants will send the Administrator a redemption order on the trade date. The Administrator and the Marketing Agent will accept or reject the redemption order on that same date. On the third business day following the trade date, the Authorized Participant will deliver to the Transfer Agent redemption Baskets from its account. Once the redemption Baskets are received by the Transfer Agent, the Custodian will send the Total Basket Bitcoin Amount to the Authorized Participant.
To redeem Baskets using the Conversion Procedures, Authorized Participants will send the Administrator a redemption order. The Administrator and the Marketing Agent will accept or reject the redemption order on that same date. Upon receiving instruction from the Sponsor that a redemption order has been placed, a Liquidity Provider will sell bitcoins at the highest price that it is able to procure using its commercially reasonable efforts and deliver to the Administrator the cash proceeds equal to the Total Basket Bitcoin Amount. Once the Transfer Agent receives the redemption Baskets from the Authorized Participant, the Administrator will send the cash proceeds equal to the Total Basket Bitcoin Amount to the Authorized Participant. At the instruction of the Administrator, the Custodian will then send the Liquidity Provider the number of bitcoins that comprise the Total Basket Bitcoin Amount.
The Sponsor represents that Liquidity Providers will only transact with exchanges and OTC trading partners that have met AML and KYC regulatory requirements. Authorized Participants that create and redeem Baskets using the Conversion Procedures will be responsible for reimbursing the relevant Liquidity Provider for any expenses incurred in connection with the Conversion Procedures. The Authorized Participants will also pay a variable fee to the Administrator for its facilitation of the Conversion Procedures. There are
Other than the fees mentioned above, Authorized Participants do not pay a transaction fee to the Trust in connection with the creation or redemption of Baskets, but there may be transaction fees associated with the validation of the transfer of bitcoins by the Bitcoin Network or fees payable to the Administrator. Authorized Participants who deposit bitcoins with the Trust in exchange for Baskets will receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust, and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.
On any business day, an Authorized Participant may order one or more creation Baskets from the Trust by placing a creation order with the Administrator. According to the Registration Statement, creation orders may be placed either “in-kind” or “in-cash.” Creation orders must be placed no later than 5:00 p.m., E.T., on each business day.
The Basket Bitcoin Amount required for a creation Basket will be determined by dividing the number of bitcoins owned by the Trust at such time by the number of Shares outstanding at such time (calculated to one one-hundred-millionth of one bitcoin), as adjusted for the number of whole and fractional bitcoins constituting accrued but unpaid fees and expenses of the Trust, and multiplying the quotient obtained by 100. All questions as to the composition of a Basket Bitcoin Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust.
Deposits other than those received from an Authorized Participant Self-Administered Account or a Liquidity Provider Account will be rejected. The expense and risk of delivery, ownership and safekeeping of bitcoins, until such bitcoins have been received by the Trust, shall be borne solely by the Authorized Participant. The Custodian may accept delivery of bitcoins by such other means as the Sponsor, from time to time, may determine to be acceptable for the Trust.
On any business day, an Authorized Participant may place a redemption order specifying the number of redemption Baskets to be redeemed. According to the Registration Statement, redemption orders may be placed either “in-kind” or “in-cash.” Redemption orders must be placed no later than 5:00 p.m., E.T., on each business day. The Authorized Participants may only redeem Baskets and cannot redeem any Shares in an amount less than a Basket.
The Basket Bitcoin Amount required for a redemption Basket will be determined by dividing the number of bitcoins owned by the Trust at such time by the number of Shares outstanding at such time (calculated to one one-hundred-millionth of one bitcoin), as adjusted for the number of whole and fractional bitcoins constituting accrued but unpaid fees and expenses of the Trust, and multiplying the quotient obtained by 100. Redemption distributions will be subject to the deduction of any applicable tax or other governmental charges that may be due. The Sponsor has final determination of all questions as to the composition of the number of bitcoins required for a redemption Basket.
The creation or redemption of Shares may be suspended generally, or refused with respect to particular requested creations or redemptions, during any period when the transfer books of the Transfer Agent are closed or if circumstances outside the control of the Sponsor or its delegates make it for all practical purposes not feasible to process creation orders or redemption orders. The Administrator may reject an order if such order is not presented in proper form as described in the Participant Agreement or if the fulfillment of the order, in the opinion of counsel, might be unlawful.
The Trust's Web site (
The Trust's Web site will provide an intra-day indicative value (“IIV”) per Share updated every 15 seconds, as calculated by the Exchange or a third party financial data provider during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m., E.T.).
The IIV disseminated during the NYSE Arca Core Trading Session should not be viewed as an actual real time update of the Bitcoin Holdings, which will be calculated only once at the end of each trading day. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session by one or more major market data vendors. In addition, the IIV will be available through on-line information services.
The Bitcoin Holdings for the Trust will be calculated by the Administrator once a day and will be disseminated daily to all market participants at the same time. To the extent that the Administrator has utilized the cascading set of rules described in “Bitcoin Index Price” above, the Trust's Web site will note the valuation methodology used and the price per bitcoin resulting from such calculation. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the Consolidated Tape Association (“CTA”).
Quotation and last sale information for bitcoin will be widely disseminated through a variety of major market data vendors, including Bloomberg and Reuters. In addition, the complete real-time price (and volume) data for bitcoin is available by subscription from Reuters and Bloomberg. The spot price of bitcoin is available on a 24-hour basis from major market data vendors, including Bloomberg and Reuters. Information relating to trading,
The Trust will provide Web site disclosure of its Bitcoin Holdings daily. The Web site disclosure of the Trust's Bitcoin Holdings will occur at the same time as the disclosure by the Sponsor of the Bitcoin Holdings to Authorized Participants so that all market participants are provided such portfolio information at the same time. Therefore, the same portfolio information will be provided on the public Web site as well as in electronic files provided to Authorized Participants. Accordingly, each investor will have access to the current Bitcoin Holdings of the Trust through the Trust's Web site.
Additional information regarding the Index may be found at
The Trust will be subject to the criteria in NYSE Arca Equities Rule 8.201, including 8.201(e), for initial and continued listing of the Shares. A minimum of 100,000 Shares will be required to be outstanding at the start of trading. With respect to application of Rule 10A-3 under the Act, the Trust will rely on the exception contained in Rule 10A-3(c)(7). The Exchange believes that the anticipated minimum number of Shares outstanding at the start of trading is sufficient to provide adequate market liquidity.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Trading in the Shares on the Exchange will occur in accordance with NYSE Arca Equities Rule 7.34(a).
Further, NYSE Arca Equities Rule 8.201 sets forth certain restrictions on Equity Trading Permit Holders (“ETP Holders”) acting as registered Market Makers in the Shares to facilitate surveillance. Pursuant to NYSE Arca Equities Rule 8.201(g), an ETP Holder acting as a registered Market Maker in the Shares is required to provide the Exchange with information relating to its trading in the underlying bitcoin, related futures or options on futures, or any other related derivatives. Commentary .04 of NYSE Arca Equities Rule 6.3 requires an ETP Holder acting as a registered Market Maker, and its affiliates, in the Shares to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of any material nonpublic information with respect to such products, any components of the related products, any physical asset or commodity underlying the product, applicable currencies, underlying indexes, related futures or options on futures and any related derivative instruments (including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over its ETP Holders and their associated persons, which include any person or entity controlling an ETP Holder. A subsidiary or affiliate of an ETP Holder that does business only in commodities or futures contracts would not be subject to Exchange jurisdiction, but the Exchange could obtain information regarding the activities of such subsidiary or affiliate through surveillance sharing agreements with regulatory organizations of which such subsidiary or affiliate is a member.
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares. Trading on the Exchange in the Shares may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which conditions in the underlying bitcoin markets have caused disruptions and/or lack of trading or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. In addition, trading in Shares will be subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's “circuit breaker” rule.
The Exchange will halt trading in the Shares if the Bitcoin Holdings of the Trust is not calculated or disseminated daily. The Exchange may halt trading during the day in which an interruption occurs to the dissemination of the IIV or the Index spot price, as discussed above. If the interruption to the dissemination of the IIV or the Index spot price persists past the trading day in which it occurs, the Exchange will halt trading no later than the beginning of the trading day following the interruption.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances administered by the Exchange, as well as cross-market surveillances administered by the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”), and the Exchange or FINRA, on behalf of the Exchange, or both, may
Also, pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is able to obtain information regarding trading in the Shares and the underlying bitcoin or any bitcoin derivative through ETP Holders acting as registered Market Makers, in connection with such ETP Holders' proprietary or customer trades through ETP Holders which they effect on any relevant market.
The Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding (i) the description of the portfolio, (ii) limitations on portfolio holdings or reference assets or (iii) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange.
The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Trust to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Trust is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Equities Rule 5.5(m).
Prior to the commencement of trading, the Exchange will inform its ETP Holders in an “Information Bulletin” of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Baskets (including noting that the Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) how information regarding how the Index and the IIV are disseminated; (4) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; (5) the possibility that trading spreads and the resulting premium or discount on the Shares may widen during the Opening and Late Trading Sessions, when an updated IIV will not be calculated or publicly disseminated; and (6) trading information. For example, the Information Bulletin will advise ETP Holders, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Trust. The Exchange notes that investors purchasing Shares directly from the Trust will receive a prospectus. ETP Holders purchasing Shares from the Trust for resale to investors will deliver a prospectus to such investors.
In addition, the Information Bulletin will reference that the Trust is subject to various fees and expenses as described in the Registration Statement. The Information Bulletin will disclose that information about the Shares of the Trust is publicly available on the Trust's Web site.
The Information Bulletin will also discuss any relief, if granted, by the Commission or the staff from any rules under the Act.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.201. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares from such markets. In addition, the Exchange may obtain information regarding trading in the Shares from markets that are members of ISG or with which the Exchange has in place a CSSA. Also, pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is able to obtain information regarding trading in the Shares and the underlying bitcoin or any bitcoin derivative through ETP Holders acting as registered Market Makers, in connection with such ETP Holders' proprietary or customer trades through ETP Holders which they effect on any relevant market.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that there is a considerable amount of bitcoin price and bitcoin market information available on public Web sites and through professional and subscription services. Investors may obtain on a 24-hour basis bitcoin pricing information based on the spot price for bitcoin from various financial information service providers. The closing price and settlement prices of bitcoin are readily available from the bitcoin exchanges and other publicly available Web sites. In addition, such prices are published in public sources, or on-line information services such as Bloomberg and Reuters. The Trust will provide Web site disclosure of its bitcoin holdings daily. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the CTA. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session (normally 9:30 a.m., E.T., to 4:00 p.m., E.T.) by one or more major market data vendors. In addition, the IIV will be available through on-line information services. The Exchange represents that the Exchange may halt trading during the day in which an interruption to the dissemination of the IIV or the Index spot price occurs. If the interruption to the dissemination of the IIV or the Index spot price persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. In addition, if the Exchange becomes aware that the Bitcoin Holdings with respect to the Shares is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the Bitcoin Holdings is available to all market participants. The Bitcoin Holdings per Share will be calculated daily and made available to all market participants at the same time. One or more major market data vendors will
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a CSSA. In addition, as noted above, investors will have ready access to information regarding the Trust's bitcoin holdings, IIV and quotation and last sale information for the Shares.
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. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of exchange-traded product, and the first such product based on bitcoin, which will enhance competition among market participants, to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 (the “Act”),
OneChicago is proposing to make two amendments to OCX Rule 601 (Fraudulent Acts). First, OneChicago is proposing to amend OCX Rule 601 to clarify that in addition to prohibiting fraudulent acts, the rule also prohibits any attempt to engage in any fraudulent act. Further, the rule is also being amended to track the language in CFTC Regulation 180.1 that expressly prohibits the use or employment of any manipulative device, scheme, or artifice to defraud.
In its filing with the Commission, OneChicago 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 self-regulatory organization has prepared a summary of the most significant aspects of such statements.
The purpose of the proposed rule change to OCX Rule 601 is to prohibit attempts to engage in any fraudulent act or scheme that is already prohibited by Rule 601. Currently, Rule 601 prohibits Clearing Members, Exchange Members, or Access Persons from engaging in any fraudulent act or from engaging in any scheme to defraud, deceive or trick, in connection with or related to any trade on or other activity related to the Exchange or the Exchange's clearinghouse. The proposed rule change to Rule 601 broadens the language of the rule to prohibit attempts to engage in any fraudulent act or any scheme to defraud, deceive or trick. Further, the rule is also being amended to expressly prohibit the use or employment of any manipulative device, scheme, or artifice to defraud. This rule change is being made upon request by the CFTC, and is consistent with CFTC Regulation 180.1 that expressly prohibits the use or employment of any manipulative device, scheme or artifice to defraud.
OneChicago believes that the proposed rule changes are consistent with Section 6(b) of the Act,
OneChicago does not believe that the rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, in that the rule change will enhance OneChicago's ability to carry out its responsibilities as a self-regulatory organization. OneChicago believes that the proposed rule change is equitable and not unfairly discriminatory because the amendments regarding attempted fraudulent acts or schemes apply equally to all market participants.
No written comments were solicited or received with respect to the proposed rule change.
The proposed rule change will become operative on January 31, 2017. At any time within 60 days of the date of the filing by the Exchange of a written certification with the CFTC under Section 5c(c) of the CEA, the Commission, after consultation with the CFTC, may summarily abrogate the proposed rule change and require that the proposed rule change be refiled in accordance with the provisions of Section 19(b)(1) of the Act.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at the Exchange's Web site at
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.
The Exchange proposes to amend its fee schedule applicable to the Exchange's equities platform, effective immediately,
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
In particular, the Exchange believes the addition of Tier 3 under footnote 1 is a reasonable means to encourage Members to increase their liquidity on the Exchange. The Exchange further believes that the proposed tier represents an equitable allocation of reasonable dues, fees, and other charges because the thresholds necessary to achieve the tiers encourages Members to add additional liquidity to the Exchange. Specifically, the Exchange notes that the criteria and reduced rate under proposed Tier 3 are equitable and reasonable as compared to other tiers offered by the Exchange, particularly Tiers 1 and 2, as described above. Therefore, the Exchange believes the proposed Tier 3 is consistent with Section 6(b)(4)
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 Exchange does not believe the proposed tier will impose an undue burden on competition because the Exchange will uniformly offer the reduced fee to all qualifying Members. In fact, the Exchange believes the proposed tier enhances competition, as it is intended to increase the competitiveness of and draw additional volume to the Exchange. The Exchange does not believe that the proposed change represents a significant departure from the Exchange's current pricing structure, but instead, is merely another incentive offered by the Exchange to encourage Members to contribute to the growth of the Exchange. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value or if they view the fees as excessive. Further, excessive fees would serve to impair an exchange's ability to compete for order flow and members rather than burdening competition.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend Exchange Rule 22.11, Mass Cancellation of Trading Interest, to reflect the proposed Purge Port functionality.
The text of the proposed changes to Exchange Rule 22.11 is attached as Exhibit 5A. The proposed changes to the fee schedule are attached as Exhibit 5B. The text of the proposed rule change is available at the Exchange's Web site at
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.
The Exchange also offers a bulk-quoting interface which allows Users of BZX Options to submit and update multiple bids and offers in one message through logical ports enabled for bulk-quoting.
The Exchange now proposes to modify the BZX Options fee schedule to identify fees for Purge Ports, a new type of logical port which would enable Options Members
Options Members may currently cancel orders through their existing logical ports and may send a mass cancel message pertaining to multiple contracts cancelling all orders sent though a particular logical port. The Exchange now proposes to expand the ability of Options Members to cancel orders through the proposed Purge Ports, which would enable them to cancel/purge all open orders, or a subset thereof, across multiple logical ports through a single cancel/purge message. The mass cancel request may be limited to a subset of orders by identifying the range of orders to be purged.
The Exchange also proposes to amend Exchange Rule 22.11, Mass Cancellation of Trading Interest, to reflect the proposed Purge Port functionality. Exchange Rule 22.11 currently states that an Options Member may simultaneously cancel all its bids, offers, and orders in all series of options or in all options for a specified underlying security by requesting the Exchange staff to effect such cancellation. First, the Exchange proposes to amend Rule 22.11 to state that an Options Member may also cancel all or a subset of its bids, offers, and orders in all series of options or in all options for a specified underlying security by requesting the Exchange to effect such cancellation.
The Exchange proposes to remove language from the Option Logical Port Fees section of its fee schedule regarding the summing of logical ports for billing purposes. The fee schedule currently states that the, “[e]xcept for bulk quoting ports, which will be separately evaluated, BZX Options will sum logical ports across all classifications in order to determine applicable fees.” This language was adopted in October 2015 when the Exchange began charging different rates based on the number of logical ports a User utilized.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange notes that the proposed rule change will not relieve Market Makers of their continuous quoting obligations under Exchange Rule 22.6 and under Regulation NMS Rule 602.
The Exchange believes that its proposed fees should facilitate the ability of the Exchange to recoup some costs associated with Purge Ports as well as provide, maintain, and improve Purge Ports.
The Exchange also believes the proposed fee for the Purge Ports is equitable and reasonable as compared to the Exchange's other fees for logical port connectivity. The Exchange currently charges $650 per port/per month for logical ports, Multicast PITCH Spin Server, and GRP Ports. With regard to ports with bulk quoting capabilities, the Exchange charges $1,500 per month for the first five ports and $2,000 per month for each port in excess of five. The Exchange believes it is equitable and reasonable to charge $750 per month for the proposed Purge Ports as such ports are more similar to ports with bulk quoting capabilities than to standard logical ports because both Purge Ports and bulk quoting ports allow for the sending of a single message to impact multiple orders. Additionally, Purge Port requests may cancel orders submitted over numerous ports and contain added functionality to purge only a subset of these orders. The proposed rate is competitive with that charged by competitor exchanges for similar functionality. For example, Phlx charges a rate of $500 per month for the first five SQF Purge Ports, which only allow for the mass purging of quotations and not the purging of a subset of orders and the blocking of new orders as proposed herein.
The Exchange also believes that the proposed amendments to its fee schedule are non-discriminatory because they will apply uniformly to all Members. The proposed Purge Ports are completely voluntary and no Member is required or under any regulatory obligation to utilize them. All Members that voluntarily select this service options will be charged the same amount for the same services. All Members have the option to select any connectivity option, and there is no differentiation among Members with regard to the fees charged for the services offered by the Exchange.
Lastly, the Exchange believes the ministerial change to its fee schedule is also equitable, reasonable and not unfairly discriminatory in that it removes unnecessary language to avoid potential investor confusion.
The Exchange believes its proposed amendments to its fee schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. On the contrary, the Exchange believes the proposed rule change will enhance competition because it will enable it to offer similar connectivity and functionality as its competitor exchanges.
The Exchange believes that fees for the proposed Purge Ports and connectivity, in general, are constrained by the robust competition for order flow among exchanges and non-exchange markets. Further, excessive fees for connectivity, including Purge Port fees, would serve to impair an exchange's ability to compete for order flow rather than burdening competition. The Exchange also does not believe the proposed rule change would impact intramarket competition as it would apply to all Members and non-Members equally.
Lastly, the ministerial change to its fee schedule will have no impact on competition as it does not change any fee or rate. It simply removes unnecessary language to avoid potential investor confusion.
No comments were solicited or received on the proposed rule change.
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
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.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to Adopt Chapter 9. The text of the proposed rule change is available on the Exchange's Web site at
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their
Proposed Rule 900 (Consolidated Audit Trail—Definitions) sets forth the definitions for the terms used in proposed Chapter 9. Each of the defined terms in Proposed Rule 900 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's[sic] associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-IDs” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository[sic].” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry Members would be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).” Therefore, when reporting Customer Account Information, an Industry Member is required to report the date an account was opened. The Participants requested and received an exemption to allow an “Account Effective Date” to be reported in lieu of an account open date in certain limited circumstances. The definition of “Account Effective Date” as set forth in Paragraph (a) of Proposed Rule 900 describes those limited circumstances in which an Industry Member may report an “Account Effective Date” rather than the account open date. The proposed definition is the same as the definition of “Account Effective Date” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
Specifically, Paragraph (a)(1) defines “Account Effective Date” to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) when the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of Proposed Rule 900 states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was
Paragraph (a)(4) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date established for the account in the Industry Member or in a system of the Industry Member or (2) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 900 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The Participants requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 900 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been allocated, the identifier of the firm reporting the allocation, the price per share of shares allocated, the side of shares allocated, the number of shares allocated to each account, and the time of the allocation; provided, for the avoidance of doubt, any such Allocation Report shall not be required to be linked to particular orders or executions. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of Proposed Rule 900 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under this Chapter 9. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Chapter 9.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in this Chapter 9.
Paragraph (e) of Proposed Rule 900 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of Proposed Rule 900 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, Paragraph (g) of Proposed Rule 900 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of Proposed Rule 900 defines the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of Proposed Rule 900 defines the term “Compliance Threshold” as having the meaning set forth in Proposed Rule 910(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to Proposed Rule 910(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, Paragraph (k) of Proposed Rule 900 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except the Exchange proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in proposed Chapter 9. The Exchange also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of Proposed Rule 900 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 900(l), however, provides an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution, the Industry Member will: (1) Provide the Account Effective Date in lieu of the “date account opened”; (2) provide the relationship identifier in lieu of the “account number”; and (3) identify the “account type” as a “relationship.” Second, in those circumstances in which the relevant account was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, and no “date account opened” is available for the account, the Industry Member will provide the Account Effective Date in the following circumstances: (1) Where an Industry Member changes back office providers or clearing firms and the date account opened is changed to the date the account was opened on the new back office/clearing firm system; (2) where an Industry Member acquires another Industry Member and the date account opened is changed to the date the account was opened on the post-merger back office/clearing firm system; (3) where there are multiple dates associated with an account in an Industry Member's system, and the parameters of each date are determined by the individual Industry Member; and (4) where the relevant account is an Industry Member proprietary account. The proposed definition is the same as the definition of “Customer Account Information” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of Proposed Rule 900 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of proposed Chapter 9 only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (o) of Proposed Rule 900 defines the term “Eligible Security” to include: (1) All NMS Securities; and (2) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based on the Plan Processor's validation processes.
To implement the requirements of the CAT NMS Plan related to the Error Rate, the Exchange proposes to define the term “Error Rate” in Proposed Rule 900. Paragraph (p) of Proposed Rule 900 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of Proposed Rule 900 defines the term “Industry Member” to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of Proposed Rule 900 states that the term “Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(2).
Paragraph (t) of Proposed Rule 900 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and proposed Chapter 9 applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of proposed Chapter 9 apply specifically to Listed Options. Accordingly, Paragraph (u) of Proposed
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, the Exchange proposes to define the term “Manual Order Event” in Proposed Rule 900. Specifically, paragraph (v) of Proposed Rule 900 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 902 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “NMS Security” in Proposed Rule 900. Specifically, paragraph (x) of Proposed Rule 900 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, the Exchange proposes to define the term “NMS Stock” in Paragraph (y) of Proposed Rule 900 to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of Proposed Rule 900 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The Participants, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, the Exchange proposes to define the term “Options Market Maker” in Proposed Rule 900. Specifically, paragraph (aa) of Proposed Rule 900 defines the term “Options Market Maker” to mean a broker-dealer registered with an exchange for the purpose of making markets in options
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, the Exchange proposes to define the term “Order” in Proposed Rule 900. Specifically, paragraph (bb) of Proposed Rule 900 defines the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from any person; (2) any order originated by an Industry Member; or (3) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except the Exchange proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.” The Exchange notes that Section 1.1 of the CAT NMS Plan defines “Order” by reference to SEC Rule 613(j)(8).
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “OTC Equity Security” in Proposed Rule 900. Specifically, paragraph (cc) of Proposed Rule 900 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of Proposed Rule 900 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of Proposed Rule 900 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of Proposed Rule 900 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of Proposed Rule 900 states that the term “Received Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(2).
Paragraph (hh) of Proposed Rule 900 states that the term “Recorded Industry Member Data” has the meaning set forth in Rule 902(a)(1). This definition has the same substantive meaning as the definition set forth in in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(1).
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, the Exchange proposes to define the term “Reportable Event” in Proposed Rule 900. Specifically, paragraph (ii) of Proposed Rule 900 states that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of Proposed Rule 900 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The Participants requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, the Exchange proposes to define the term “SRO-Assigned Market Participant” in Proposed Rule 900. Specifically, paragraph (kk) of Proposed Rule 900 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan. For example,
The requirements of Proposed Chapter 9 differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, the Exchange proposes to define the term “Small Industry Member” in Proposed Rule 900. Specifically, paragraph (ll) of Proposed Rule 900 defines the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in Rule 0-10(c) under the Securities Exchange Act of 1934, as amended. This is the same in substance as the definition of “Small Industry Member” as set forth in Section 1.1 of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a “Small Industry Member” as “an Industry Member that qualifies as a small broker-dealer as defined in SEC Rule 613.” The definition of a small broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as defined in SEC Rule 0-10(c).
Proposed Rule 902(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, the Exchange proposes to define the term “Trading Day” in Proposed Rule 900. Specifically, Paragraph (mm) of Proposed Rule 900 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of Proposed Rule 901 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 901 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 901 requires each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(3) of Proposed Rule 901 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the Proposed Rule 901 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of Proposed Rule 901 requires Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (b) of Proposed Rule 901 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The Proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the Proposed Rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of Proposed Rule 901 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of Proposed Rule 901 requires each Industry Member to certify to the Exchange that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of Proposed Rule 901 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the certification schedule established by the Operating Committee in a Regulatory Information Circular.
Paragraph (d) of Proposed Rule 901 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 901 requires Industry Members to report to the Plan Processor and the Exchange violations of paragraph (a) of this Rule pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting requirements for Industry Members. To implement these provisions with regard to its Industry Members, the Exchange proposes Rule 902 (Consolidated Audit Trail—Industry Member Data Reporting) to require its Industry Members to comply with the Industry Member Data reporting requirements of the Plan. Proposed Rule 902 has six sections covering: (1) Recording and reporting Industry Member Data, (2) timing of the recording and reporting, (3) the applicable securities cover[sic] by the recording and reporting requirements, (4) format, (5) the security symbology to be used in the recording and reporting, and (6) error correction requirements, each of which is described below.
Paragraph (a) of Proposed Rule 902 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 902 set forth the recording and reporting requirements required in Section 6.4(d)(i)-(iii) of the CAT NMS Plan, respectively.
Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to Proposed Rule 905); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to Proposed Rule 905); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to Proposed Rule 905; (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 902 requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in Rule 902(a)(1) “Industry Member Data”)) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with Proposed Rule 903, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(3) of Proposed Rule 902 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of Proposed Rule 902 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)-(b)(3) of Proposed Rule 902 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
Paragraph (b)(1) of Proposed Rule 902 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 902 requires each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) states that Industry Members may, but are not required to, voluntarily report Industry Member
Paragraph (c) of Proposed Rule 902 describes the securities to which the recording and reporting requirements of Proposed Rule 902 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 902 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of Proposed Rule 902 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of Proposed Rule 902 for each NMS Security registered or listed for trading on such exchange or admitted to unlisted trading privileges on such exchange. Paragraph (c)(2) of Proposed Rule 902 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of this Proposed Rule 902 for each Eligible Security for which transaction reports are required to be submitted to FINRA.
Paragraph (d) of Proposed Rule 902 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of Proposed Rule 902 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, Paragraph (d)(2) of Proposed Rule 902 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee in a Regulatory Information Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, the Exchange proposes to adopt paragraph (e) of Proposed Rule 902, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 902 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. The Exchange proposes Rule 903 (Consolidated Audit Trail—Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of Proposed Rule 903 requires each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 908. Paragraph (b) of Proposed Rule 903 requires each Industry Member to submit to the Central Repository any updates, additions or other changes to the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account on a daily basis. Paragraph (c) of Proposed Rule 903 requires each Industry Member, on a periodic basis as designated by the Plan Processor and approved by the Operating Committee, to submit to the Central Repository a complete set of Firm Designated IDs, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account. This periodic refresh is intended to ensure that the Central Repository has the most current information identifying a Customer. The Exchange intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee in a Regulatory Information Circular.
Finally, paragraph (d) of Proposed Rule 903 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. The Exchange proposes Rule 904 (Consolidated Audit Trail—Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, Proposed Rule 904 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 908, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of Proposed Rule 905 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 905 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of Proposed Rule 905. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of Proposed Rule 905 requires such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of Proposed Rule 905 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of Proposed Rule 905 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 905 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (“Electronic Capture Time”) in milliseconds. In addition, paragraph (b)(2) of Proposed Rule 905 permits each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 906 (Consolidated Audit Trail—Clock Synchronization Rule Violations) describes potential violations of the clock synchronization time period requirements set forth in proposed Chapter 9. Proposed Rule 906 states that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in this Chapter 9 without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 907 (Consolidated Audit Trail—Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 907 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of Proposed Rule 907 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of Proposed Rule 907 addresses connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 907 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, Paragraph (c)(1) of Proposed Rule 907 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under proposed Chapter 9. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of proposed Chapter 9. The Exchange notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 907 requires that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) states that each Industry Member remains primarily responsible for compliance with the requirements of proposed Chapter 9, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 907.
The Exchange proposes Rule 908 (Consolidated Audit Trail—Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 908 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(4) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018.
Paragraph (b) of Proposed Rule 908 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 909 (Consolidated Audit Trail—Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 909 requires each Industry Member to maintain and preserve records of the information required to be recorded under proposed Chapter 9 for the period of time and accessibility specified in SEC Rule 17a-4(b). The records required to be maintained and preserved under proposed Chapter 9 may be immediately produced or reproduced on “micrographic media” as defined in SEC Rule 17a-4(f)(1)(i) or by means of “electronic storage media” as defined in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC Rule 17a-4(f) and be maintained and preserved for the required time in that form. Proposed Rule 909 is based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping requirements related to OATS.
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of Proposed Rule 910 requires Industry Members to accurately provide the LEIs in their records as required by proposed Chapter 9 and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with Chapter 9. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. The Exchange intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan in a Regulatory Information Circular.
Furthermore, paragraph (d) of Proposed Rule 910 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 910 states that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 911 (Consolidated Audit Trail—Compliance Dates) sets forth the compliance dates for the various provisions in proposed Chapter 9. Paragraph (a) of Proposed Rule 911 states that paragraphs (b) and (c) of this Rule set forth the additional details with respect to the compliance date of the proposed rules in Chapter 9. Unless otherwise noted, the proposed rules in Chapter 9 are fully effective upon approval by the Commission and members must comply with their terms.
Paragraph (b) of Proposed Rule 911 establishes the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 901. Paragraph (b)(1) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) reflects the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of Proposed Rule 911 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(2) requires that each Industry Member that is a Small Industry Member to record and report the Industry Member Data to the Central Repository by November 15, 2019. Such compliance dates are consistent with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that the rules contained in proposed Chapter 9 implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing the rules contained in proposed Chapter 9. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2017-08 and should be submitted on or before March 2, 2017.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The proposed rule change consists of amendments to the FICC Government Securities Division (“GSD”) Rulebook (“GSD Rules”)
In order to effectuate the proposed rule changes described above, FICC proposes to (1) add a new defined term for Margin Proxy in Rule 1 (Definitions); (2) amend the definition of VaR Charge in Rule 1 to reference the Margin Proxy; and (3) amend Section 1b of Rule 4 (Clearing Fund and Loss Allocation) to modify the calculation of the Coverage Charge when the Margin Proxy is applied.
In addition, FICC proposes to make certain technical corrections to Rule 1 and Rule 4, as further described below.
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
FICC is proposing to introduce the Margin Proxy, which would constitute a Netting Member's daily VaR Charge in circumstances where the Margin Proxy would be greater than the Current Volatility Calculation. In circumstances where the Margin Proxy is applied by FICC, FICC also proposes to reduce the Coverage Charge by the amount that the Margin Proxy exceeds the sum of the Current Volatility Calculation and Coverage Charge, but not by an amount greater than the total Coverage Charge, as further described below.
A key tool that FICC uses to manage market risk is the daily calculation and collection of Required Fund Deposits from Netting Members. The objective of a Netting Member's Required Fund Deposit is to mitigate potential losses to FICC associated with liquidation of such Netting Member's Margin Portfolio in the event that FICC ceases to act for such Netting Member (hereinafter referred to as a “default”).
A Netting Member's Required Fund Deposit consists of several components, including the VaR Charge and Coverage Charge. The VaR Charge comprises the largest portion of a Netting Member's Required Fund Deposit amount. The VaR Charge is calculated using a risk-based margin methodology that is intended to cover the market price risk associated with the securities in a Netting Member's Margin Portfolio.
The Coverage Charge is calculated based on the Netting Member's daily backtesting results. FICC employs daily backtesting to determine the adequacy of each Netting Member's Required Fund Deposit. The backtesting compares the Required Fund Deposit for each Netting Member with actual price changes in the Netting Member's Margin Portfolio. The Margin Portfolio values are calculated using the actual positions in such Netting Member's Margin Portfolio on a given day and the observed security price changes over the following three days. These backtesting results are reviewed as part of FICC's VaR model performance monitoring and assessment of the adequacy of each Netting Member's Required Fund Deposit.
The Coverage Charge is incorporated in the Required Fund Deposit for each Netting Member to increase the Required Fund Deposit so that the Netting Member's backtesting coverage may achieve the 99 percent confidence level (
During the fourth quarter of 2016, FICC's Current Volatility Calculation did not respond effectively to the level of market volatility at that time, and the VaR Charge amounts that were calculated using the profit and loss scenarios generated by the Current Volatility Calculation did not achieve backtesting coverage at a 99 percent confidence level. As a result, the Required Fund Deposit yielded backtesting deficiencies beyond FICC's risk tolerance. Therefore, FICC proposes to use the Margin Proxy as the VaR Charge when the Margin Proxy calculation would exceed the Current Volatility Calculation.
The Margin Proxy would cover circumstances where the Current Volatility Calculation is lower than market price volatility from corresponding U.S. Treasury and to-be-announced (“TBA”)
More specifically, the Margin Proxy would reflect separate calculations for U.S. Treasury securities and agency pass-through mortgage backed securities (“MBS”). The purpose of the separate calculations would be to cover the historical market prices of each of those asset classes to a 99 percent confidence level, on a standalone basis, because the historical price changes of the two asset classes are different due to market factors, such as credit spreads and prepayment risk. This separate calculation would also allow FICC to monitor the performance of each of those asset classes individually.
The Margin Proxy would be calculated per Netting Member. Each security in a Netting Member's Margin Portfolio would be mapped to a respective benchmark based on the security's asset class and maturity.
FICC believes that this proposal would provide the adequate Required Fund Deposit per Netting Member because the backtesting coverage including the Margin Proxy has been above the 99 percent confidence level for the past four years. Additionally, the Margin Proxy would be transparent to Netting Members because it would use industry standard benchmarks that can be observed by Netting Members.
The Margin Proxy methodology would be subject to performance reviews by FICC. Specifically, FICC would monitor each Netting Member's Required Fund Deposit and the aggregate Clearing Fund requirements versus the requirements calculated by the Margin Proxy. Consistent with the current GSD Rules,
FICC also proposes to modify the calculation of the Coverage Charge when the Margin Proxy is applied as the VaR Charge. Specifically, FICC would reduce the Coverage Charge by the amount that the Margin Proxy exceeds the sum of the Current Volatility Calculation and Coverage Charge, but not by an amount greater than the total Coverage. FICC's backtesting analysis demonstrates that the proposed Margin Proxy would provide sufficient margin coverage without the addition of the Coverage Charge because FICC backtest results inclusive of the Margin Proxy achieve the 99 percent confidence level without the inclusion of the Coverage Charge.
FICC would not modify the Coverage Charge if the Margin Proxy is not applied as the VaR Charge.
FICC also proposes technical corrections to the GSD Rules. Specifically, FICC proposes to: (1) Capitalize certain words in the definition of VaR Charge in Rule 1 in order to reflect existing defined terms, (2) add “Netting” before “Member” in the definition of VaR Charge to reflect the application of the VaR Charge on Netting Members, and (3) correct typographical errors in Section 1b(a) of Rule 4.
Section 17A(b)(3)(F) of the Act requires, in part, that the rules of a clearing agency be designed to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
Section 17A(b)(3)(F) of the Act also requires, in part, that the GSD Rules promote the prompt and accurate clearance and settlement of securities transactions.
In addition, FICC believes that the proposed rule changes associated with the Margin Proxy and Coverage Charge are consistent with the requirements of Rules 17Ad-22(b)(1) and (b)(2) under the Act.
Rule 17Ad-22(b)(2) under the Act requires a registered clearing agency that performs central counterparty services to establish, implement, maintain and enforce written policies and procedures reasonably designed to use margin requirements to limit its credit exposures to participants under normal market conditions and use risk-based models and parameters to set margin requirements and review such margin requirements and the related risk-based models and parameters at least monthly.
FICC also believes that the proposed changes are consistent with Rules 17Ad-22(e)(4) and (e)(6) of the Act, which were recently adopted by the Commission.
Rule 17Ad-22(e)(6) will require FICC to establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that is monitored by management on an ongoing basis and regularly reviewed, tested, and verified.
FICC believes that the proposed rule changes associated with the Margin Proxy and the Coverage Charge could have an impact upon competition. Specifically, FICC believes that those proposed changes could burden competition because they would result in larger Required Fund Deposit amounts for Netting Members when the Margin Proxy calculates a VaR Charge that is greater than the amount calculated pursuant to the Current Volatility Calculation. When application of the Margin Proxy increases Required Fund Deposits for Netting Members that have lower operating margins or higher costs of capital compared to other Netting Members, the proposed rule changes could burden competition. However, FICC does not believe that the proposed rule changes associated with the Margin Proxy and Coverage Charge would impose a significant burden on competition because the increase in the Required Fund Deposit would be in direct relation to the market risk presented by each Netting Member's Margin Portfolio. Moreover, the Required Fund Deposit would be calculated with the same parameters and at the confidence level for all Netting Members. Therefore, Netting Members that present similar Margin Portfolios would have similar impacts on their Required Fund Deposit amounts.
FICC believes that the above described burden on competition that may be created by the proposed rule changes associated with the Margin Proxy and Coverage Charge would be necessary in furtherance of the Act, specifically Section 17A(b)(3)(F) of the Act, because, as described above, the GSD Rules must be designed to assure the safeguarding of securities and funds that are in FICC's custody or control or for which it is responsible.
FICC believes that the above described burden on competition that could be created by the proposed rule changes associated with the Margin Proxy and Coverage Charge would be appropriate in furtherance of the Act because such changes have been appropriately designed to assure the safeguarding of securities and funds which are in the custody or control of FICC or for which it is responsible, as described above.
Therefore, FICC believes that it has designed the proposed changes in a reasonable and appropriate way in order to meet compliance with its obligations under the Act. Specifically, implementing the proposed changes would improve the risk-based model that FICC employs to set margin requirements and better limit FICC's credit exposures to its Netting Members. Therefore, FICC believes the proposed
In connection with this proposed rule change, FICC received a written letter from Ronin Capital LLC (“Ronin Capital”).
A. The New Backup Model Is Being Rushed Into Production
FICC believes that the Current Volatility Calculation did not respond effectively to volatile market conditions and that it must implement the proposed Margin Proxy as described in this proposed rule change as soon as possible to effectively mitigate the market price risk of each Netting Member's Margin Portfolio. As described in Item II(A)1. above, FICC believes that the proposed changes associated with the Margin Proxy and the Coverage Charge would help to ensure that each Netting Member's Required Fund Deposit achieves a 99 percent confidence level and the proposed changes would mitigate potential losses to FICC and non-defaulting Netting Members associated with the liquidation of a defaulted Netting Member's portfolio. As described in Item II(A)2. above, the proposed changes would support FICC's compliance with Rule 17Ad-22(e)(4) because the Margin Proxy is designed to effectively identify, measure, monitor, and manage FICC's credit exposures to participants and those exposures arising from its payment, clearing, and settlement processes.
As described in Item II(A)1. above, FICC has identified a deficiency in the Current Volatility Calculation and FICC believes that it has a responsibility to rectify this deficiency as soon as possible. With this in mind, FICC is requesting that the Commission accelerate the effectiveness of the proposed rule change pursuant to Section 19(b)(2) of the Act
Ronin Capital's assertion that the Margin Proxy does not provide for risk offsets is incorrect. As described in Item II(A)1. above, the proposed Margin Proxy accounts for risk offsets by including a correlation adjustment to provide risk diversification across tenor buckets that have been historically observed across the U.S. Treasury benchmarks. The VaR Charge would preserve the same diversification between U.S. Treasury and MBS asset classes that is provided by the Current Volatility Calculation. FICC is not aware of any flaws with the proposed Margin Proxy and thus FICC believes that it is prudent to request that the Commission accelerate the effectiveness of the proposed change associated with the Margin Proxy and Coverage Charge.
FICC acknowledges that the proposed rule change associated with the Margin Proxy and Coverage Charge may burden competition, however, FICC believes that this burden would be necessary and appropriate in furtherance of the Act.
As described in Item II(B) above, the proposed rule change associated with the Margin Proxy and the Coverage Charge could burden competition because the proposed change would result in larger Required Fund Deposit amounts for Netting Members when the Margin Proxy calculates a VaR Charge that is greater than the amount calculated pursuant to the Current Volatility Calculation. When application of the Margin Proxy increases Required Fund Deposits for Netting Members that have lower operating margins or higher costs of capital compared to other Netting Members, the proposed rule change could burden competition. However, FICC does not believe that the proposed rule change associated with the Margin Proxy and Coverage Charge would impose a significant burden on competition because the increase in the Required Fund Deposit would be in direct relation to the market risk presented by each Netting Member's Margin Portfolio. Moreover, the Required Fund Deposit would be calculated with the same parameters and at the confidence level for all Netting Members. Therefore, Netting Members that present similar Margin Portfolios would have similar impacts on their Required Fund Deposit amounts.
FICC believes that the burden on competition would be necessary and appropriate in furtherance of the Act, specifically Section 17A(b)(3)(F).
For these reasons, FICC believes that any burden on competition as a result of the proposed changes associated with the Margin Proxy and Coverage Charge would be necessary and appropriate in furtherance in further of the Act as cited above.
Ronin Capital expressed concern about whether FICC conducted a study of the Margin Proxy's impact prior to filing a rule change. Ronin Capital also noted that Netting Members have experience with the idiosyncrasies of the current model and that it does not make sense to rush to a new temporary model without giving Netting Members any length of time to prepare.
FICC believes that it conducted sufficient analysis prior to the submission of this proposed rule change to the Commission. FICC evaluated the sufficiency of the proposed changes for a period that exceeded 2 months. FICC's study included historical analysis of the backtesting sufficiency of the Margin Proxy. In addition, FICC reviewed the impact that the Margin Proxy would have on each Netting Member's Required Fund Deposit. In an effort to help Netting Members prepare for this proposed rule change, FICC outlined the rationale for the Margin Proxy and provided each Netting Member with reports that reflect the impact that the proposed change would have on such Netting Member's Required Fund Deposit. Thus, FICC believes that it has provided Netting Members with sufficient information and advance notice regarding the proposed changes. FICC recognizes that Netting Members may have experience with the idiosyncrasies of the Current Volatility Calculation. Nonetheless, FICC believes that the proposed rule change must be employed to help ensure that FICC collects sufficient Required Fund Deposit amounts at all times, particularly during volatile market conditions.
Ronin Capital acknowledged that it appreciates FICC's communication with Netting Members about sensitive topics before submitting rules for commentary; however, Ronin Capital also noted that it is important for Netting Members to have access to prospective rules changes before such rules are filed with regulatory authorities.
FICC notes that it has and continues to engage in ongoing discussion with Netting Members about how proposals would impact them. With respect to this proposed change, FICC's outreach to Netting Members included discussions regarding GSD's Clearing Fund calculation as well as the VaR Charge methodology. As described above, in an effort to help Netting Members prepare for this proposed rule change, FICC outlined the rationale for the Margin Proxy and provided each Netting Member with reports that reflect the impact that the proposed change would have on such Netting Member's Required Fund Deposit. FICC staff has always made itself available to answer all questions or concerns raised by Netting Members. FICC believes that it has provided Netting Members with an appropriate level of disclosure regarding this proposed rule change and such disclosure gives Netting Members the ability to manage their obligations under the proposed rule change.
Ronin Capital noted that FICC should give Netting Members the ability to conduct margin based scenario analysis. Ronan Capital also noted that given the differing costs of capital across the membership, FICC's inability to provide Netting Members with the ability to conduct such analysis could be anticompetitive.
FICC does not have technology that would allow Netting Members to conduct margin based scenario analysis. While FICC recognizes that that there may be additional benefits that Netting Members could derive from the provision of such technology by FICC, FICC does not believe that the lack of availability of such technology is anticompetitive. FICC has provided sufficient disclosure regarding the proposed change to its Netting Members and each Netting Member has been provided with the same level of disclosure. In addition, FICC staff has made itself available to answer all questions regarding the proposed change. Thus, FICC believes that all Netting Members have the ability to manage their obligations based on the information that FICC has provided in connection with this proposed change. FICC recognizes there may be additional benefits that Netting Members could derive from margin based scenario analysis thus FICC will endeavor to explore the development of this technology in the future.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” or “Act”)
The MSRB filed with the Commission a proposed rule change to add new MSRB Rule G-49, on transactions below the minimum denomination of an issue, to the rules of the MSRB, and, in MSRB Rule G-15, on confirmation, clearance, settlement and other uniform practice requirements with respect to transactions with customers, to rescind paragraph (f), on minimum denominations (the “proposed rule change”). The MSRB requests that the proposed rule change be approved, with an effective date to be announced by the MSRB in a regulatory notice published no later than 60 days following the Commission's approval, which effective date shall be no sooner than six months following the Commission's approval.
The text of the proposed rule change is available on the MSRB's Web site at
In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The minimum denomination of an issue of municipal securities is the minimum amount that may be sold or otherwise transferred, and is determined by the issuer at issuance. Existing MSRB Rule G-15(f) generally prohibits a broker, dealer or a municipal securities dealer (“dealer”) from effecting a customer transaction in a municipal security in an amount lower than the minimum denomination of the issue (the “prohibition”), and provides two exceptions to the prohibition. The policy underlying the prohibition is to protect investors from holding positions that are smaller than the limits established by the issuer.
The exceptions to the prohibition are provided to help preserve the liquidity of customers' below-minimum denomination positions, without creating an additional number of below-minimum denomination positions where there once was one.
The MSRB proposes to transfer the prohibition regarding below-minimum denomination transactions with customers, without substantive amendment, and the two exceptions to the prohibition and the minimum denomination sale disclosure, with certain amendments, from Rule G-15(f) to proposed new Rule G-49. A third exception would be included in the proposed rule, which would permit a dealer to sell a below-minimum denomination position to one or more customers that have a position in the issue and any remainder to a maximum of one customer that does not have a position in the issue. Proposed Rule G-49 also would significantly amend, in the existing exception regarding dealer sales to customers, the requirement that a dealer determine, by receipt of a written statement provided by the party from which the dealer purchases the below-minimum denomination securities position, that the position acquired from such dealer and being sold to a customer is the result of a customer's liquidation of its entire below-minimum denomination position (the “liquidation statement”). Regarding the liberalization of that requirement, proposed Rule G-49 would apply restrictions to inter-dealer transactions in below-minimum denomination positions. Proposed Rule G-49 would also eliminate, for a narrowly defined group of below-minimum denomination transactions, a dealer's obligation to provide the minimum denomination sale disclosure to its customer. Based on the organization of these related provisions in proposed Rule G-49, the existing minimum denomination provisions in Rule G-15(f) would be rescinded.
The MSRB proposes to relocate the prohibition applicable to dealer-customer transactions below the minimum denomination of an issue of municipal securities from Rule G-15(f)(i) to proposed Rule G-49(a), subject only to technical changes, including amending the cross-referenced provisions to reflect the renumbering of such provisions in proposed Rule G-49.
The MSRB proposes to transfer the two existing exceptions to the prohibition from existing Rule G-15(f) to proposed Rule G-49, establish an additional exception permitting certain additional dealer sales to customers consistent with the policies underlying the existing rule, and eliminate an informational requirement, the liquidation statement, applicable to dealers regarding another dealer's customer, which would liberalize the existing exception applicable to dealer sales to customers.
Also, the existing exception for dealer sales, Rule G-15(f)(iii), requires a dealer to provide its customer, at or before the completion of the transaction, the minimum denomination sale disclosure. This disclosure requirement would be retained in proposed Rule G-49, but would be set forth in a separate paragraph that would be applicable to dealer sales to customers effected using either the dealer sale exception (
The existing dealer sale exception in Rule G-15(f)(iii) requires a dealer to determine that the securities position to be sold to a customer is the result of another customer fully liquidating a below-minimum denomination position. As noted above, in cases where the dealer acquires the below-minimum denomination position from another dealer, the acquiring dealer that desires to sell the position to its customer is required to obtain a written statement from the other dealer, referred to herein as a liquidation statement, verifying that the securities position to be sold is the result of another customer fully liquidating its below-minimum denomination position. This requirement, and, when a dealer buys securities from a customer, a similar requirement that the dealer determine that the customer fully liquidated its below-minimum denomination position in such sale, are designed to permit trading in such positions for the protection of investors that own below-minimum denomination positions without creating additional below-minimum denomination positions where there once was one. Without such limiting conditions, a single below-minimum denomination position may, as traded, be restructured as two or many more below-minimum denomination positions.
Several commenters raised concerns regarding the adverse impact that the existing liquidation statement requirement has on dealers' willingness to provide liquidity for below-minimum denomination positions held by customers, and the difficulty of complying with the liquidation statement requirement in positioning such securities for sale using an alternative trading system (“ATS”) or through a brokers-broker. These and other comments are discussed in greater detail below. In response to such concerns, the MSRB proposes to eliminate the requirement to obtain the liquidation statement from the existing dealer sale exception (renumbered as proposed Rule G-49(b)(ii)(A)), and would not apply the requirement as a condition of the additional dealer sale exception set forth in proposed Rule G-49(b)(ii)(B).
Prior to determining that proposed Rule G-49 would be so modified, however, the MSRB carefully considered the ramifications and benefits of such action. Without the restraint imposed by the requirement to obtain a liquidation statement, the MSRB is concerned that dealers, in inter-dealer transactions in below-minimum denomination positions, may create additional below-minimum denomination positions. Moreover, the MSRB is concerned that such positions may then be sold to customers. This result would be contrary to the policy underlying the existing rule, which is to protect investors from holding positions that are smaller than the limits established by the issuer, and to provide liquidity for investors holding such positions, without creating additional below-minimum denomination positions where there once was one. To deter the creation of additional and potentially smaller and less liquid below-minimum denomination positions in municipal securities for the protection of investors, the MSRB believes that the proposed elimination of the liquidation statement should be coupled with proposed Rule G-49(c). Proposed Rule G-49(c) would prohibit a dealer, in an inter-dealer transaction, from selling less than all of a below-minimum denomination position that such dealer acquired either from a customer making a total liquidation or from another dealer, and would provide an additional safeguard to counter the possible impact of the proposed elimination of the liquidation statement. Although some commenters that sought the elimination of the liquidation statement did not favor the inclusion of the inter-dealer limitation on trading, the MSRB believes that the proposed inter-dealer limitation on trading is necessary and appropriate for the protection of investors considering the proposed elimination of the liquidation statement. Although the proposed limitation on inter-dealer transactions may affect some transactions in below-minimum denomination positions in municipal securities, based on the commenters' views, the proposed elimination of the liquidation statement should result in significantly greater liquidity for such positions.
The existing disclosure provision in Rule G-15(f) requires a dealer in every transaction in which the dealer sells a below-minimum denomination position to a customer to provide the customer a minimum denomination sale disclosure (
The MSRB proposes to relocate, with one amendment, the requirements in existing Rule G-15(f) regarding disclosure to proposed Rule G-49(b)(iii), a paragraph that would contain requirements of general applicability regarding dealer purchases from, and sales to, customers of below-minimum denomination positions in municipal securities. The proposed amendment would narrow the scope of the provision, eliminating the requirement that a dealer make the minimum denomination sale disclosure in cases where the dealer would effect a sale of securities that would result in the customer having a position at or above the minimum denomination. The amendment would not adversely impact investor protection because the disclosure would be of limited relevance to customers holding such positions.
Section 15B(b)(2) of the Exchange Act
Section 15B(b)(2)(C) of the Exchange Act
The MSRB believes that the proposed rule change is consistent with the Act in that proposed new Rule G-49, regarding transactions below the minimum denomination of an issue, like its predecessor, Rule G-15(f),
Section 15B(b)(2)(C) of the Exchange Act
The MSRB believes that the proposed rule has potential benefits including reducing the number of investor positions below minimum denominations, increasing the ability of investors currently holding positions below minimum denominations to exit those positions and/or reducing the burden on dealers associated with implementing the minimum denomination regulatory provisions in existing Rule G-15(f), renumbered as proposed Rule G-49. The MSRB recognizes that some dealers may incur costs should they utilize the proposed exceptions, but as the choice of whether and when to exercise these exceptions is wholly within a dealer's volition, the MSRB does not believe that the creation of exceptions
The proposed rule does not impact the choices available to issuers in determining minimum denominations as part of the offering documents. Issuers would continue to select the denomination level that they believe to be optimal for purposes of suitability or for purposes of enhancing secondary market liquidity of traded issues. Therefore, the MSRB believes that competition in the primary issuer market would not be affected by the adoption of this proposed rule.
The MSRB believes that larger dealers with larger inventories and larger numbers of customers may be better positioned to exercise the exceptions offered under the proposed rule, but does not believe that this significantly improves their competitive position or overly burdens those dealers that are less able to exercise the exceptions. Therefore, the MSRB does not believe that the proposed rule change will impose any additional burdens on competition in the dealer market, relative to the baseline, that are not necessary or appropriate in furtherance of the purposes of the Act.
The MSRB does not believe that the proposed rule is likely to result in a net increase in the number of positions below the minimum-denomination amounts. The MSRB also has no reason to believe that any new positions below minimum-denomination amounts associated with the proposed rule would be held by a significantly different or less sophisticated group of investors than the group currently holding such positions. Therefore, the MSRB does not believe that there are any additional costs for investors and the proposed rule may, as discussed above, reduce costs for investors holding such below-minimum denomination positions by generally improving liquidity for those investors.
In 2016, the MSRB twice sought comment on proposed amendments to provisions relating to below-minimum denomination customer transactions, first as proposed amendments to Rule G-15(f) (the “initial draft rule”) and subsequently as draft Rule G-49.
Several commenters, including BDA, SIFMA and Wells Fargo, responding to the initial draft rule in the First Request for Comment, expressed general support for the MSRB's proposal to create additional exceptions to the prohibition that would be consistent with the existing rule's original intent to protect investors that own below-minimum denomination positions in municipal securities without creating an additional number of below-minimum denomination positions. Commenters generally noted that providing additional options for dealers to sell such securities to customers may increase liquidity and improve pricing. At the same time, commenters, including AMS, BDA, Vista and SIFMA, stated that the regulation of, and regulatory uncertainty regarding below-minimum denomination positions adversely affects the liquidity and value of these positions in the secondary market in that dealers are not willing to actively bid securities in amounts below the minimum denomination, and that legitimately created, high-credit quality but nonconforming customer positions are artificially devalued, leaving customers unable to liquidate at a reasonable bid.
In response to the Second Request for Comment, three commenters, FSI, Letti, and Romano, indicated general support and approval of draft Rule G-49. Two of the three commenters, FSI and Romano, commented that the draft provisions would improve liquidity and make it easier for a customer holding a below-minimum denomination position to sell the securities. FSI stated that the stand-alone rule would make the provisions clearer and more accessible. In FSI's view, draft Rule G-49 would strike the appropriate balance between enhancing liquidity and restricting creation of additional below-minimum denomination positions, and the draft rule, with the liquidation statement eliminated, should be adopted. Letti commented that draft Rule G-49 was simple, well-written and easy to understand.
Two commenters, SIFMA and BDA, expressed appreciation that revisions to the minimum denomination provisions were being considered to provide greater flexibility for dealers and investors, noting that some of the changes would improve the rule. These commenters also requested the MSRB to make additional significant amendments to draft Rule G-49. In SIFMA's view, the proposed exceptions would not appropriately balance the interests of issuers, customers, dealers and the market, and some would create additional challenges for dealers and less liquidity for customers. BDA expressed concerns that the rule was extraordinarily complex, predicting that dealers would be confused, and differ over interpretations of permissible transactions under the rule, which would leave customers holding positions that they would not be able to trade, or would be able to trade but only at inferior prices.
One commenter, Angel, did not support any aspect of draft Rule G-49, stating that existing Rule G-15(f) should be rescinded instead of amended.
In response to the First Request for Comment, several commenters requested that additional exceptions to the prohibition be incorporated. BDA, AMS, Vista, SIFMA and Wells Fargo generally commented that, in their view, the circumstances of the creation of a below-minimum denomination account (
In response to the Second Request for Comment, two commenters, BDA and SIFMA, stated that dealers should not be constrained in their transactions involving below-minimum denomination positions with customers under the additional dealer sale exception, proposed Rule G-49(b)(ii)(B), and the exception should be liberalized to allow a dealer selling a portion of a below-minimum denomination position to a customer also to sell a portion of the position to one or more dealers. SIFMA commented that such sales (
The MSRB has carefully reviewed the changes suggested by the commenters. Some of the additional exceptions, or amendments to existing exceptions, suggested by commenters would not provide sufficient additional flexibility to benefit customers. In addition, such changes could result in the creation of additional below-minimum denomination positions, which likely would be transferred ultimately to customers. The creation of additional minimum denomination positions would be contrary to the original policies of existing Rule G-15(f) to protect investors that own below-minimum denomination positions but, at the same time, not allow or facilitate the creation of additional below-minimum denomination positions. The MSRB believes that the existing exceptions and the additional proposed exception are structured to provide customer protection and, at the same time, avoid increasing the number of below-minimum denomination positions held by customers, and the changes suggested above should not be incorporated in proposed Rule G-49.
In response to the comments received, the draft rule published for comment in the Second Request for Comment eliminated the requirement that a dealer obtain a liquidation statement when a dealer obtains a below-minimum denomination position from another dealer. However, the elimination of the liquidation statement was coupled with a new requirement, draft Rule G-49(c), which would prohibit dealers from breaking up below-minimum denomination positions in sales to other dealers to deter the creation of additional below-minimum denomination positions.
In response to the Second Request for Comment, although several commenters, including FSI, SIFMA and BDA, commented favorably on the proposed elimination of the liquidation statement in proposed Rule G-49, certain commenters, including SIFMA and BDA, commented unfavorably on proposed Rule G-49(c). SIFMA and BDA urged that proposed Rule G-49(c) be deleted, commenting that it would result in a loss of dealer flexibility and impair the liquidity of below-minimum denomination positions. SIFMA also commented that the proposed inter-dealer provision is unwarranted and inconsistent with the protection of customers, stating that dealers should be permitted to accumulate below-minimum denomination positions without limitation, and sell such positions to a customer to add to a customer's existing below-minimum denomination position.
The MSRB has carefully considered the issues raised by the commenter relating to the requirements in the bond documents as established by the issuer. For the protection of investors, the MSRB believes that proposed Rule G-49 would balance the need for liquidity in such positions for the protection of customers holding such positions, while continuing a general and broad prohibition against trading in such positions for the protection of issuers establishing such requirements. In developing the proposed rule, the MSRB carefully crafted any exception to the prohibition so that the number of customers holding below-minimum denomination positions would not increase as a result of transactions effected using the rule. However, for purposes of protecting customers already holding such positions by providing additional liquidity for such customers, the proposed rule also would not require that a transaction effectively result in fewer persons holding such below-minimum denomination positions. The MSRB notes that it has not, in the past, nor in considering proposed Rule G-49, represented that transactions effected pursuant to the rule(s) would remedy any contractual or other legal issues or deficiencies regarding such below-minimum denomination transfers. The exceptions to general prohibition are precisely that—exceptions to the prohibition—and do not purport to impact any other legal rights or obligations. The MSRB also notes that certain issues and suggestions raised by the commenter exceed the jurisdiction of the MSRB (
Although commenters expressed general concerns regarding the cost of the regulation on below-minimum denomination transactions, no commenters in response to the First or Second Request for Comment provided data to support these concerns. Issuers set a minimum denomination, presumably, at a level that is consistent with receiving the best possible price, or desired yield, in the primary market. Thus, doing away with the minimum denomination entirely is not a reasonable regulatory alternative since this would lead to suboptimal minimum denominations from the perspective of the issuer.
From the perspective of dealers, proposed Rule G-49 does not require dealers to exercise the exceptions to transact in amounts below the minimum denomination. Therefore, the costs associated with complying with the requirements for transactions below minimum denominations are not forced upon dealers. Presumably, entities only incur these costs when they stand to reap benefits exceeding compliance costs. However, to the extent that compliance costs are incrementally higher because of the proposed rule, dealers can be expected to engage in fewer profitable transactions for positions below the minimum denomination.
Although commenters raised concern over the potential costs associated with the enforcement of minimum denominations, no commenter provided data or quantitative estimates in connection with the preliminary Economic Analysis outlined in the First and Second Requests for Comment. Nevertheless, to reduce uncertainty regarding the exceptions to this proposed rule, and in response to comments, the text of the proposed rule has been simplified while an additional exception was still incorporated.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to adopt Chapter 9 and the rules contained therein to implement the compliance rule (“Compliance Rule”) regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”).
The text of the proposed rule change is available on the Exchange's Web site at
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
Proposed Rule 900 (Consolidated Audit Trail—Definitions) sets forth the definitions for the terms used in proposed Chapter 9. Each of the defined terms in Proposed Rule 900 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's[sic] associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-IDs” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository[sic].” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry Members would be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).” Therefore, when reporting Customer Account Information, an Industry Member is required to report the date an account was opened. The Participants requested and received an exemption to allow an “Account Effective Date” to be reported in lieu of an account open date in certain limited circumstances. The definition of “Account Effective Date” as set forth in Paragraph (a) of Proposed Rule 900 describes those limited circumstances in which an Industry Member may report an “Account Effective Date” rather than the account open date. The proposed definition is the same as the definition of “Account Effective Date” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
Specifically, Paragraph (a)(1) defines “Account Effective Date” to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of Proposed Rule 900 states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(4) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date established for the account in the Industry Member or in a system of the Industry Member or (2) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 900 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The Participants requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 900 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of Proposed Rule 900 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under this Chapter 9. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Chapter 9.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in this Chapter 9.
Paragraph (e) of Proposed Rule 900 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of Proposed Rule 900 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, Paragraph (g) of Proposed Rule 900 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of Proposed Rule 900 defines the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of Proposed Rule 900 defines the term “Compliance Threshold” as having the meaning set forth in Proposed Rule 910(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to Proposed Rule 910(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, Paragraph (k) of Proposed Rule 900 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except the Exchange proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in proposed Chapter 9. The Exchange also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of Proposed Rule 900 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 900(l), however, provides an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of Proposed Rule 900 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of proposed Chapter 9 only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (o) of Proposed Rule 900 defines the term “Eligible Security” to include: (1) All NMS Securities; and (2) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based
To implement the requirements of the CAT NMS Plan related to the Error Rate, the Exchange proposes to define the term “Error Rate” in Proposed Rule 900. Paragraph (p) of Proposed Rule 900 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of Proposed Rule 900 defines the term “Industry Member” to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of Proposed Rule 900 states that the term “Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(2).
Paragraph (t) of Proposed Rule 900 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and proposed Chapter 9 applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of proposed Chapter 9 apply specifically to Listed Options. Accordingly, Paragraph (u) of Proposed Rule 900 defines the term “Listed Option” or “Option.” Specifically, paragraph (u) of Proposed Rule 900 states that the term “Listed Option” or “Option” has the meaning set forth in SEC Rule 600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a listed option as “any option traded on a registered national securities exchange or automated facility of a national securities association.” The Exchange notes that the proposed definition of “Listed Option” is the same definition as the definition set forth in Section 1.1 of the CAT NMS Plan.
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, the Exchange proposes to define the term “Manual Order Event” in Proposed Rule 900. Specifically, paragraph (v) of Proposed Rule 900 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 902 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “NMS Security” in Proposed Rule 900. Specifically, paragraph (x) of Proposed Rule 900 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, the Exchange proposes to define the term “NMS Stock” in Paragraph (y) of Proposed Rule 900 to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of Proposed Rule 900 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The Participants, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, the Exchange proposes to define the term “Options Market Maker” in Proposed Rule 900. Specifically, paragraph (aa) of Proposed Rule 900 defines the term “Options Market Maker” to mean a broker-dealer registered with an exchange for the purpose of making markets in options contracts traded on the exchange. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, the Exchange proposes to define the term “Order” in Proposed Rule 900. Specifically, paragraph (bb) of Proposed Rule 900 defines the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from any person; (2) any order originated by an Industry Member; or (3) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except the Exchange proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.” The Exchange notes that Section 1.1 of the CAT NMS Plan defines “Order” by reference to SEC Rule 613(j)(8).
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “OTC Equity Security” in Proposed Rule 900. Specifically, paragraph (cc) of Proposed Rule 900 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of Proposed Rule 900 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of Proposed Rule 900 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of Proposed Rule 900 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of Proposed Rule 900 states that the term “Received Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion
Paragraph (hh) of Proposed Rule 900 states that the term “Recorded Industry Member Data” has the meaning set forth in Rule 902(a)(1). This definition has the same substantive meaning as the definition set forth in in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(1).
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, the Exchange proposes to define the term “Reportable Event” in Proposed Rule 900. Specifically, paragraph (ii) of Proposed Rule 900 states that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of Proposed Rule 900 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The Participants requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, the Exchange proposes to define the term “SRO-Assigned Market Participant” in Proposed Rule 900. Specifically, paragraph (kk) of Proposed Rule 900 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan. For example, an Industry Member would be permitted to use any existing SRO-Assigned Market Participant Identifier (
The requirements of Proposed Chapter 9 differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, the Exchange proposes to define the term “Small Industry Member” in Proposed Rule 900. Specifically, paragraph (ll) of Proposed Rule 900 defines the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in Rule 0-10(c) under the Securities Exchange Act of 1934, as amended. This is the same in substance as the definition of “Small Industry Member” as set forth in Section 1.1 of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a “Small Industry Member” as “an Industry Member that qualifies as a small broker-dealer as defined in SEC Rule 613.” The definition of a small broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as defined in SEC Rule 0-10(c).
Proposed Rule 902(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, the Exchange proposes to define the term “Trading Day” in Proposed Rule 900. Specifically, Paragraph (mm) of Proposed Rule 900 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of Proposed Rule 901 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 901 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization.
Paragraph (a)(2) of Proposed Rule 901 requires each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(3) of Proposed Rule 901 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the Proposed Rule 901 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of Proposed Rule 901 requires Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (b) of Proposed Rule 901 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The Proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the Proposed Rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of Proposed Rule 901 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of Proposed Rule 901 requires each Industry Member to certify to the Exchange that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of Proposed Rule 901 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the certification schedule established by the Operating Committee in a Regulatory Information Circular.
Paragraph (d) of Proposed Rule 901 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 901 requires Industry Members to report to the Plan Processor and the Exchange violations of paragraph (a) of this Rule pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant thresholds established by the Operating Committee in a Regulatory Information Circular.
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting requirements for Industry Members. To implement these provisions with regard to its Industry Members, the Exchange proposes Rule 902 (Consolidated Audit Trail—Industry Member Data Reporting) to require its Industry Members to comply with the Industry Member Data reporting requirements of the Plan. Proposed Rule 902 has six sections covering: (1) Recording and reporting Industry Member Data, (2) timing of the recording and reporting, (3) the applicable securities cover[sic] by the recording and reporting requirements, (4) format, (5) the security symbology to be used in the recording and reporting, and (6) error correction requirements, each of which is described below.
Paragraph (a) of Proposed Rule 902 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 902 set forth the recording and reporting requirements required in Section 6.4(d)(i)-(iii) of the CAT NMS Plan, respectively.
Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to Proposed Rule 905); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to Proposed Rule 905); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to Proposed Rule 905; (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 902 requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in Rule 902(a)(1) “Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with Proposed Rule 903, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(3) of Proposed Rule 902 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of Proposed Rule 902 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)-(b)(3) of Proposed Rule 902 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
Paragraph (b)(1) of Proposed Rule 902 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 902 requires each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) states that Industry Members may, but are not required to, voluntarily report Industry Member Data prior to the applicable 8:00 a.m. Eastern Time deadline.
Paragraph (c) of Proposed Rule 902 describes the securities to which the recording and reporting requirements of Proposed Rule 902 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 902 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of Proposed Rule 902 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of Proposed Rule 902 for each NMS Security registered or listed for trading on such exchange or admitted to unlisted trading privileges on such exchange. Paragraph (c)(2) of Proposed Rule 902 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of this Proposed Rule 902 for each Eligible Security for which transaction reports are required to be submitted to FINRA.
Paragraph (d) of Proposed Rule 902 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of Proposed Rule 902 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, Paragraph (d)(2) of Proposed Rule 902 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee in a Regulatory Information Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, the Exchange proposes to adopt paragraph (e) of Proposed Rule 902, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 902 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above.
Finally, paragraph (d) of Proposed Rule 903 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. The Exchange proposes Rule 904 (Consolidated Audit Trail—Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, Proposed Rule 904 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 908, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of Proposed Rule 905 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 905 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of Proposed Rule 905. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of Proposed Rule 905 requires such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of Proposed Rule 905 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of Proposed Rule 905 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 905 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (“Electronic Capture Time”) in milliseconds. In addition, paragraph (b)(2) of Proposed Rule 905 permits each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 906 (Consolidated Audit Trail—Clock Synchronization Rule Violations) describes potential violations of the clock synchronization time period requirements set forth in proposed Chapter 9. Proposed Rule 906 states that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in this Chapter 9 without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 907 (Consolidated Audit Trail—Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 907 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of Proposed Rule 907 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of Proposed Rule 907 addresses connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 907 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, Paragraph (c)(1) of Proposed Rule 907 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under proposed Chapter 9. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of proposed Chapter 9. The Exchange notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 907 requires that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) states that each Industry Member remains primarily responsible for compliance with the requirements of proposed Chapter 9, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 907.
The Exchange proposes Rule 908 (Consolidated Audit Trail—Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 908 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(4) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018
Paragraph (b) of Proposed Rule 908 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 909 (Consolidated Audit Trail—Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 909 requires each Industry Member to maintain and preserve records of the information required to be recorded under proposed Chapter 9 for the period of time and accessibility specified in SEC Rule 17a-4(b). The records required to be maintained and preserved under proposed Chapter 9 may be immediately produced or reproduced on “micrographic media” as defined in SEC Rule 17a-4(f)(1)(i) or by means of “electronic storage media” as defined in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC Rule 17a-4(f) and be maintained and preserved for the required time in that form. Proposed Rule 909 is based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping requirements related to OATS.
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of Proposed Rule 910 requires Industry Members to accurately provide the LEIs in their records as required by proposed Chapter 9 and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with Chapter 9. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. The Exchange intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan in a Regulatory Information Circular.
Furthermore, paragraph (d) of Proposed Rule 910 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 910 states that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 911 (Consolidated Audit Trail—Compliance Dates) sets forth the compliance dates for the various provisions in proposed Chapter 9. Paragraph (a) of Proposed Rule 911 states that paragraphs (b) and (c) of this Rule set forth the additional details with respect to the compliance date of the proposed rules in Chapter 9. Unless otherwise noted, the proposed rules in Chapter 9 are fully effective upon approval by the Commission and members must comply with their terms.
Paragraph (b) of Proposed Rule 911 establishes the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 901. Paragraph (b)(1) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) reflects the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of Proposed Rule 911 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(2) requires that each Industry Member that is a Small Industry Member to record and report the Industry Member Data to the Central Repository by November 15, 2019. Such compliance dates are consistent with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that the rules contained in proposed Chapter 9 implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing the rules contained in proposed Chapter 9. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
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-ISEMercury-2017-03 and should be submitted on or before March 2, 2017.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to amend Exchange Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”), and Exchange Rule 519B, Risk Protection Monitor for Orders Entered via the MEO Interface (“RPM-MEO”).
The text of the proposed rule change is available on the Exchange's Web site at
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.
The Exchange proposes to amend Exchange Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”) to make the protections provided by the Rule available to all Members
The Exchange proposes to amend Exchange Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”) by replacing “EEM” with “Member” to make the risk protections described in the rule available to all Members of the Exchange. MIAX PEARL Members may connect to the System
As proposed, RPM-FIX would provide protections to all Members by establishing a counting program that will count the number of orders entered and the number of contracts traded via an order entered during a specified time period established by the Member. The RPM-FIX Monitor would maintain one or more Member-configurable settings, allowing Members to establish FIX Interface Allowable Order Rate setting(s) and FIX Interface Allowable Contract Execution Rate setting(s). When a Member's order is entered or executed, the System would look back over the specified time period to determine if the Member had entered a number of orders exceeding their FIX Interface Allowable Order Rate setting or executed a number of contracts exceeding their FIX Interface Allowable Contract Execution Rate setting, and take action as provided by the rule.
Additionally, the Exchange proposes to harmonize the language and structure of MIAX PEARL Rule 519A, with MIAX Options Rule 519A, Risk Protection Monitor, which provides a more cohesive paragraph describing the Risk Protection Monitor feature, its functionality, the ability of Members to establish and configure multiple Risk Protection Monitor settings, and the ability of Members to determine one of three alternative actions to be taken by the Risk Protection Monitor once it is triggered. MIAX PEARL and MIAX Options have a number of common Members and where feasible the Exchange intends to implement similar behavior to provide consistency between the markets so as to avoid confusion among Members.
The Exchange also proposes to require mandatory participation by EEMs and new paragraph (b) of Rule 519A states that EEMs using the FIX Interface must establish at least one FIX Interface Allowable Order Rate setting with a corresponding specified time period of not less than one second, and not to exceed ten seconds, as established by the Exchange and communicated to Members via Regulatory Circular (a “Corresponding Specified Time Period”) and at least one FIX Interface Allowable Contract Execution Rate setting (with a Corresponding Specified Time Period). The Exchange believes that establishing the Corresponding Specified Time Period within these parameters will provide minimum and maximum guidelines for EEMs, making their required use of the Risk Protection Monitor more effective and efficient.
The Risk Protection Monitor settings must be configured by the EEM such that RPM-FIX, when triggered, will perform one of two steps set forth in proposed Rule 519A(a): Either (A) prevent the System from receiving any new orders in all series in all classes from the EEM; or (B) prevent the System from receiving any new orders in all series in all classes from the EEM and cancel all existing orders with a time-in-force of Day in all series in all classes from the EEM. Under the mandatory provision of proposed Rule 519A(b), the simple Member notification option included in section (C) of the proposed Rule 519A(a) would not be available. As proposed, Rule 519A provides that Members may establish additional FIX Interface Allowable Order Rate settings and additional FIX Interface Allowable Contract Rate settings, and any such additional settings may be configured to perform the step set forth in either (A), or (B), or (C) of Rule 519A as described above, upon engagement of the RPM-FIX Monitor.
While the risk protections available under RPM-FIX are available for all Members of the Exchange, the Exchange believes that mandating one class of Member (EEMs) and not the other (MMs) to use the risk protections provided in the rule to be acceptable given the current construction of the Exchange. The Exchange does not anticipate that every Market Maker will have a FIX Order Interface connection. Further, the Exchange anticipates that Market Makers that do establish a FIX Order Interface connection will use the connection in limited circumstances, and will primarily use the MEO Interface as discussed below. Therefore, the Exchange does not believe it is necessary to require all Members with a FIX Interface connection to use the RPM-FIX Monitor.
The Exchange believes that providing Members with the ability to establish multiple RPM-FIX settings enhances the Members' ability to account for sudden market movements due to extreme market volatility, and for heightened activity in one particular option or group of options in a particular industry or segment of the market due to news or other factors affecting the activity surrounding such option or options.
The Exchange proposes to amend Exchange Rule 519B, Risk Protection Monitor for Orders Entered via the MEO Interface (“RPM-MEO”) to mandate that EEMs with a MEO Interface connection use the risk protections described in the rule. Additionally, the Exchange proposes to harmonize the rule text with the proposed changes to Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”) described and contained herein as it relates to the functionality, organization, and structure of the Rule.
As proposed, RPM-MEO provides identical protections as RPM-FIX by establishing a counting program that will count the number of orders entered and the number of contracts traded via an order entered through the MEO Interface during a specified time period established by the EEM. RPM-MEO maintains one or more EEM-configurable settings, allowing EEMs to establish MEO Interface Allowable Order Rate setting(s) and MEO Interface Allowable Contract Execution Rate setting(s). When an EEM's order is entered or executed, the System will look back over the specified time period to determine if the EEM has entered a number of orders exceeding their MEO Interface Allowable Order Rate setting or executed a number of contracts exceeding their MEO Interface Allowable Contract Execution Rate setting, and take action as provided by the rule.
The Exchange believes that providing EEMs with the ability to establish multiple RPM-MEO settings enhances the EEMs' ability to account for sudden market movements due to extreme market volatility, and for heightened activity in one particular option or group of options in a particular industry or segment of the market due to news or other factors affecting the activity surrounding such option or options.
The Exchange believes that permitting one type of Member (EEMs) and not the other (MMs) to use the risk protections provided in the rule to be acceptable given the current construction of the Exchange. Market Makers have a heightened obligation on the Exchange to maintain a two-sided market, pursuant to Rule 605(d)(1), in those series in which the Market Maker has registered to trade.
Market Makers self-assign the series for which they choose to act as a Market Maker and may register daily for these series.
A large volume of orders submitted to the Exchange could trigger RPM-MEO, therefore the Exchange believes that the use of RPM-MEO is not necessary for Market Makers, as there is a separate risk protection mechanism available to Market Makers to address this risk. The Exchange offers Risk Protection for Market Makers under Exchange Rule 517B, Aggregate Risk Manager for Market Makers (“ARM-M”) which provides a similar counting program (“MM Counting Program”) for each Market Maker who has submitted an order in an option class (an “MM Option Class”) delivered via the MEO Interface (an “MM ARM Eligible Order”). The MM Counting program will count the number of contracts executed by a Market Maker from an MM ARM Eligible Order (“MM ARM Contracts”) within a specified time period either established by the Market Maker or as a default setting (“MM Specified Time Period”).
The Exchange provides default settings for Market Makers for both the MM Specified Time Period, which is not to exceed fifteen (15) seconds
The Exchange is proposing that use of RPM-MEO be mandatory for EEMs who have a MEO Interface connection to the Exchange. While the Exchange does not anticipate that all EEMs will have a MEO Interface connection, the Exchange wishes to ensure that the same risk protections are provided for EEM orders irrespective of the means by which they are introduced to the System. RPM-MEO settings must be configured by the EEM in an identical fashion to RPM-FIX such that RPM-MEO, when triggered, will perform one of two steps set forth in proposed Rule 519B(a): Either (A) prevent the System from receiving any new orders in all series in all classes from the EEM; or (B) prevent the System from receiving any new orders in all series in all classes from the EEM and cancel all existing orders with a time-in-force of Day in all series in all classes from the EEM. Under the mandatory provision of proposed Rule 519B(b), the simple EEM notification option included in section (C) of the proposed Rule 519B(a) would not be available. Proposed Rule 519B provides that EEMs may establish additional MEO Interface Allowable Order Rate settings and additional MEO Interface Allowable Contract Rate settings, and any such additional settings may be configured to perform the step set forth in either (A), or (B), or (C) of Rule 519B as described above, upon engagement of the RPM-MEO Monitor.
The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act
The Exchange believes that the proposed change to the functionality, organization, and language of Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”) to align to MIAX Options Rule 519A, Risk Protection Monitor, better organizes the rule and clarifies the features and functionality of RPM-FIX. Aligning similar rules on MIAX PEARL and MIAX Options provides transparency and clarity in the rules and minimizes the potential for confusion, thereby protecting investors and the public interest. Additionally, aligning Rule 519B, Risk Protection Monitor for Orders Entered via the MEO Interface (“RPM-MEO”) to proposed Rule 519A provides consistency between similar Exchange rules to avoid confusion and promotes the protection of investors and the public interest.
The Exchange believes that the proposal to expand the risk protections provided in Rule 519A to all Members of the Exchange promotes just and equitable principles of trade by ensuring that all Members using FIX for order submission to the Exchange can have risk protections in place to account for sudden market movements due to extreme market volatility. The proposed rule change will help reduce the negative impacts of sudden, unanticipated volatility in individual options, and serve to preserve an orderly market in a transparent and uniform manner, increase overall market confidence, and promote fair and orderly markets and further the protection of investors.
The Exchange believes that EEMs should be required to use the risk protection features provided in the proposed changes to Rule 519A and 519B to manage their risk from excessive order or execution rates that may be triggered by market events. The
The Exchange believes that all Members, and not just EEMs, will benefit from the proposed changes to Rule 519A, Risk Protection Monitor for Orders Entered via the FIX Interface (“RPM-FIX”). Additionally, the Exchange believes that EEMs will benefit from the proposed mandatory use of the Risk Protection Monitor, coupled with the ability of EEMs to tailor their use of the Risk Protection Monitor to their risk tolerance levels. Members are vulnerable to risks stemming from market events which may cause them to send a large number of orders or receive multiple, automatic executions before they can adjust their order exposure in the market. Without adequate risk management tools, such as RPM-FIX and RPM-MEO, Members could reduce the amount of order flow and liquidity that they provide to the market. Such actions may undermine the quality of the markets available to customers and other market participants. Accordingly, the proposed amendments to RPM-FIX and RPM-MEO, especially its mandated use by EEMs, should instill additional confidence in Members that submit orders to the Exchange that their risk tolerance levels are protected, and thus should encourage such Members to submit additional order flow and liquidity to the Exchange with the understanding that they must have this protection, thereby removing impediments to and perfecting the mechanisms of a free an open market and a national market system and, in general, protecting investors and the public interest.
In addition, providing Members with the ability to establish multiple RPM-FIX settings and EEMs with the ability to establish multiple RPM-MEO settings provides Members with more tools to use in managing their specific risks based on their individual risk tolerance levels. This facilitates transactions in securities because, as noted above, Members will have more confidence that protections are in place that reduce the risks from potential market events. As a result, RPM-FIX and RPM-MEO functionality, together with the mandated use by EEMs, has the potential to promote just and equitable principles of trade and contribute to the fair and orderly maintenance of the market.
MIAX PEARL 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 Exchange believes that the amendments to RPM-FIX and RPM-MEO help promote competition by enabling Members to trade more aggressively on the Exchange, with the understanding that there are multiple, configurable risk management tools in place in the System. The Exchange believes the proposed changes will not impose any burden on intra-market competition because the use of the RPM-FIX and RPM-MEO is required of all EEMs.
The Exchange further believes that the proposed mandatory risk protections should promote inter-market competition, and result in more competitive order flow to the Exchange by protecting market participants from market events that may cause them to send a large number of orders or receive multiple, automatic executions before they can adjust their order exposure in the market.
Written comments were neither solicited nor received.
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 after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
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 should be approved or disapproved.
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to adopt Chapter 9 and the rules contained therein to implement the compliance rule (“Compliance Rule”) regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”).
The text of the proposed rule change is available on the Exchange's Web site at
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
Proposed Rule 900 (Consolidated Audit Trail—Definitions) sets forth the definitions for the terms used in proposed Chapter 9. Each of the defined terms in Proposed Rule 900 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's[sic] associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-IDs” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository[sic].” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit to the Central Repository daily and periodic updates for reactivated accounts, newly established accounts, and revised Firm Designated IDs or associated reportable Customer information.
In connection with the Customer Information Approach, Industry Members would be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).” Therefore, when reporting Customer Account Information, an Industry Member is required to report the date an account was opened. The Participants requested and received an exemption to allow an “Account Effective Date” to be reported in lieu of an account open date in certain limited circumstances. The definition of “Account Effective Date” as set forth in Paragraph (a) of Proposed Rule 900 describes those limited circumstances in which an Industry Member may report an “Account Effective Date” rather than the account open date. The proposed definition is the same as the definition of “Account Effective Date” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
Specifically, Paragraph (a)(1) defines “Account Effective Date” to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of Proposed Rule 900 states that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) states that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(4) states that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) states that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 900 defines an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The Participants requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 900 defines an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been allocated, the identifier of the firm reporting the allocation, the price per share of shares allocated, the side of shares allocated, the number of shares allocated to each account, and the time of the allocation; provided, for the avoidance of doubt, any such Allocation Report shall not be required to be linked to particular orders or executions. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of Proposed Rule 900 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under this Chapter 9. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Chapter 9.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in this Chapter 9.
Paragraph (e) of Proposed Rule 900 defines the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of Proposed Rule 900 defines the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, Paragraph (g) of Proposed Rule 900 defines the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 7450. The Reporting Agent for OATS fulfills a similar role to the CAT Reporting Agent.
Paragraph (i) of Proposed Rule 900 defines the term “Central Repository” to mean the repository responsible for the
Paragraph (j) of Proposed Rule 900 defines the term “Compliance Threshold” as having the meaning set forth in Proposed Rule 910(d). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to Proposed Rule 910(d), each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, Paragraph (k) of Proposed Rule 900 proposes to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except the Exchange proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in proposed Chapter 9. The Exchange also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what customer information would need to be reported to the Central Repository.
Paragraph (l) of Proposed Rule 900 defines the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 900(l), however, provides an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution, the Industry Member will: (1) Provide the Account Effective Date in lieu of the “date account opened”; (2) provide the relationship identifier in lieu of the “account number”; and (3) identify the “account type” as a “relationship.” Second, in those circumstances in which the relevant account was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, and no “date account opened” is available for the account, the Industry Member will provide the Account Effective Date in the following circumstances: (1) Where an Industry Member changes back office providers or clearing firms and the date account opened is changed to the date the account was opened on the new back office/clearing firm system; (2) where an Industry Member acquires another Industry Member and the date account opened is changed to the date the account was opened on the post-merger back office/clearing firm system; (3) where there are multiple dates associated with an account in an Industry Member's system, and the parameters of each date are determined by the individual Industry Member; and (4) where the relevant account is an Industry Member proprietary account. The proposed definition is the same as the definition of “Customer Account Information” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of Proposed Rule 900 defines the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of proposed Chapter 9 only apply to Reportable Events in Eligible Securities.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available, including a description of such errors; (3) provide monthly reports to Industry Members that detail an Industry Member's performance and comparison statistics; (4) define educational and support programs for Industry Members to minimize Error Rates; and (5) identify, daily, all Industry Members exceeding the maximum allowable Error Rate. To timely correct data-submitted errors to the Central Repository, the CAT NMS Plan requires that the Central Repository receive and process error corrections at all times. Further, the CAT NMS Plan requires that Industry Members be able to submit error corrections to the Central Repository through a web-interface or via bulk uploads or file submissions, and that the Plan Processor, subject to the Operating Committee's approval, support the bulk replacement of records and the reprocessing of such records. The Participants, furthermore, require that the Plan Processor identify Industry Member data submission errors based on the Plan Processor's validation processes.
To implement the requirements of the CAT NMS Plan related to the Error Rate, the Exchange proposes to define the term “Error Rate” in Proposed Rule 900. Paragraph (p) of Proposed Rule 900 defines the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of Proposed Rule 900 defines the term “Industry Member” “to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of Proposed Rule 900 states that the term “Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(2).
Paragraph (t) of Proposed Rule 900 defines the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and proposed Chapter 9 applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of proposed Chapter 9 apply specifically to Listed Options. Accordingly, Paragraph (u) of Proposed Rule 900 defines the term “Listed Option” or “Option.” Specifically, paragraph (u) of Proposed Rule 900 states that the term “Listed Option” or “Option” has the meaning set forth in SEC Rule 600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a listed option as “any option traded on a registered national securities exchange or automated facility of a national securities association.” The Exchange notes that the proposed definition of “Listed Option” is the same definition as the definition set forth in Section 1.1 of the CAT NMS Plan.
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, the Exchange proposes to define the term “Manual Order Event” in Proposed Rule 900. Specifically, paragraph (v) of Proposed Rule 900 defines the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 902 requires Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “NMS Security” in Proposed Rule 900. Specifically, paragraph (x) of Proposed Rule 900 defines the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, the Exchange proposes to define the term “NMS Stock” in Paragraph (y) of Proposed Rule 900 to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of Proposed Rule 900 defines the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The Participants, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, the Exchange proposes to define the term “Options Market Maker” in Proposed Rule 900. Specifically, paragraph (aa) of Proposed Rule 900 defines the term “Options Market Maker” to mean a broker-dealer registered with an exchange for the purpose of making markets in options contracts traded on the exchange. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, the Exchange proposes to define the term “Order” in Proposed Rule 900. Specifically, paragraph (bb) of Proposed Rule 900 defines the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “OTC Equity Security” in Proposed Rule 900. Specifically, paragraph (cc) of Proposed Rule 900 defines the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of Proposed Rule 900 defines the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of Proposed Rule 900 defines the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of Proposed Rule 900 defines the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of Proposed Rule 900 states that the term “Received Industry Member Data” has the meaning set forth in Rule 902(a)(2). This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(2).
Paragraph (hh) of Proposed Rule 900 states that the term “Recorded Industry Member Data” has the meaning set forth in Rule 902(a)(1). This definition has the same substantive meaning as the definition set forth in in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 902(a)(1).
Proposed Chapter 9 requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, the Exchange proposes to define the term “Reportable Event” in Proposed Rule 900. Specifically, paragraph (ii) of Proposed Rule 900 states that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of Proposed Rule 900 defines the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The Participants requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, the Exchange proposes to define the term “SRO-Assigned Market Participant” in Proposed Rule 900. Specifically, paragraph (kk) of Proposed Rule 900 defines the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan. For example, an Industry Member would be permitted to use any existing SRO-Assigned Market Participant Identifier (
The requirements of Proposed Chapter 9 differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance
Proposed Rule 902(b) establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, the Exchange proposes to define the term “Trading Day” in Proposed Rule 900. Specifically, Paragraph (mm) of Proposed Rule 900 states that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of Proposed Rule 901 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 901 requires each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 901 requires each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(3) of Proposed Rule 901 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the Proposed Rule 901 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of Proposed Rule 901 requires Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (b) of Proposed Rule 901 sets forth documentation requirements with regard to clock synchronization. Specifically, paragraph (b) requires Industry Members to document and maintain their synchronization procedures for their Business Clocks. The Proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the Proposed Rule. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of Proposed Rule 901 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of Proposed Rule 901 requires each Industry Member to certify to the Exchange that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of Proposed Rule 901 periodically in accordance with the certification schedule established by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the certification schedule established by the Operating Committee in a Regulatory Information Circular.
Paragraph (d) of Proposed Rule 901 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 901 requires Industry Members to report to the Plan Processor and the Exchange violations of paragraph (a) of this Rule pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant thresholds established by the Operating Committee in a Regulatory Information Circular.
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting
Paragraph (a) of Proposed Rule 902 describes the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 902 set forth the recording and reporting requirements required in Section 6.4(d)(i)-(iii) of the CAT NMS Plan, respectively.
Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to Proposed Rule 905); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to Proposed Rule 905); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to Proposed Rule 905); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to Proposed Rule 905; (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 902 requires, subject to paragraph (a)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in Rule 902(a)(1) “Industry Member Data”)) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance with Proposed Rule 903, Customer Account Information and Customer Identifying Information for the relevant Customer.
Paragraph (a)(3) of Proposed Rule 902 states that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of Proposed Rule 902 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)-(b)(3) of Proposed Rule 902 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
Paragraph (b)(1) of Proposed Rule 902 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 902 requires each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) states that Industry Members may, but are not required to, voluntarily report Industry Member Data prior to the applicable 8:00 a.m. Eastern Time deadline.
Paragraph (c) of Proposed Rule 902 describes the securities to which the recording and reporting requirements of Proposed Rule 902 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 902 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of Proposed Rule 902 requires each
Paragraph (d) of Proposed Rule 902 describes the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of Proposed Rule 902 requires, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, Paragraph (d)(2) of Proposed Rule 902 requires, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee in a Regulatory Information Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, the Exchange proposes to adopt paragraph (e) of Proposed Rule 902, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 902 requires, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. The Exchange proposes Rule 903 (Consolidated Audit Trail—Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of Proposed Rule 903 requires each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 908. Paragraph (b) of Proposed Rule 903 requires each Industry Member to submit to the Central Repository any updates, additions or other changes to the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account on a daily basis. Paragraph (c) of Proposed Rule 903 requires each Industry Member, on a periodic basis as designated by the Plan Processor and approved by the Operating Committee, to submit to the Central Repository a complete set of Firm Designated IDs, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account. This periodic refresh is intended to ensure that the Central Repository has the most current information identifying a Customer. The Exchange intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee in a Regulatory Information Circular.
Finally, paragraph (d) of Proposed Rule 903 addresses the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) requires, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. The Exchange proposes Rule 904 (Consolidated Audit Trail—Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, Proposed Rule 904 requires each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 908, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of Proposed Rule 905 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 905 requires each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of Proposed Rule 905. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of Proposed Rule 905 requires such Industry Member to record and report Industry Member Data to the Central
Paragraph (b) of Proposed Rule 905 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 905 permits each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (“Electronic Capture Time”) in milliseconds. In addition, paragraph (b)(2) of Proposed Rule 905 permits each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 906 (Consolidated Audit Trail—Clock Synchronization Rule Violations) describes potential violations of the clock synchronization time period requirements set forth in proposed Chapter 9. Proposed Rule 906 states that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in this Chapter 9 without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 907 (Consolidated Audit Trail—Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 907 describes the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of Proposed Rule 907 requires each Industry Member to transmit data as required under the CAT NMS Plan to the Central Repository utilizing such format(s) as may be provided by the Plan Processor and approved by the Operating Committee.
Paragraph (b) of Proposed Rule 907 addresses connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 907 requires each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) permits Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, Paragraph (c)(1) of Proposed Rule 907 states that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under proposed Chapter 9. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of proposed Chapter 9. The Exchange notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 907 requires that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) states that each Industry Member remains primarily responsible for compliance with the requirements of proposed Chapter 9, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 907.
The Exchange proposes Rule 908 (Consolidated Audit Trail—Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 908 sets forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) sets forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) sets forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) requires Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 903(a) and 904, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i), Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii), Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(4) states that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018.
Paragraph (b) of Proposed Rule 908 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 909 (Consolidated Audit Trail—Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 909 requires each Industry Member to maintain and preserve records of the information required to be recorded under proposed Chapter 9 for the period of time and accessibility specified in SEC Rule 17a-4(b). The records required to be maintained and preserved under proposed Chapter 9 may be immediately produced or reproduced on “micrographic media” as defined in SEC Rule 17a-4(f)(1)(i) or by means of “electronic storage media” as defined in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC Rule 17a-4(f) and be maintained and preserved for the required time in that form. Proposed Rule 909 is based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping requirements related to OATS.
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a), paragraph (b) of Proposed Rule 910 requires Industry Members to accurately provide the LEIs in their records as required by proposed Chapter 9 and states that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) notes, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) states that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with Chapter 9. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. The Exchange intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan in a Regulatory Information Circular.
Furthermore, paragraph (d) of Proposed Rule 910 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 910 states that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 911 (Consolidated Audit Trail—Compliance Dates) sets forth the compliance dates for the various provisions in proposed Chapter 9. Paragraph (a) of Proposed Rule 911 states that paragraphs (b) and (c) of this Rule set forth the additional details with respect to the compliance date of the proposed rules in Chapter 9. Unless otherwise noted, the proposed rules in Chapter 9 are fully effective upon approval by the Commission and members must comply with their terms.
Paragraph (b) of Proposed Rule 911 establishes the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 901. Paragraph (b)(1) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) states that each Industry Member shall comply with Rule 901 with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) reflects the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of Proposed Rule 911 establishes the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) requires each Industry Member (other than Small Industry Members) to record and report the Industry Member Data to the Central Repository by November 15, 2018. Paragraph (c)(2) requires that each Industry Member that is a Small Industry Member to record and report the Industry Member Data to the Central Repository by November 15, 2019. Such compliance dates are consistent with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that the rules contained in proposed Chapter 9 implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing the rules contained in proposed Chapter 9. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
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-ISEGemini-2017-04 and should be submitted on or before March 2, 2017.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to adopt rules to implement the compliance rule (“Compliance Rule”) regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”).
The text of the proposed rule change is available on the Exchange's Web site at
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.
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the “Participants”) filed with the Commission, pursuant to Section 11A of the Exchange Act
The Plan is designed to create, implement, and maintain a consolidated audit trail (“CAT”) that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Each Participant is required to enforce compliance by its Industry Members, as applicable, with the provisions of the Plan, by adopting a Compliance Rule applicable to their Industry Members.
Proposed Rule 6810 and paragraph (a) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Definitions) set forth the definitions for the terms used in the Proposed Rules. Each of the defined terms in Proposed Rule 6810 and paragraph (a) of Proposed Chapter IX, Section 8 is discussed in detail in this section.
SEC Rule 613 requires that numerous data elements be reported to the CAT to ensure there is sufficient information to create the lifecycle of an order, and provide regulators with sufficient detail about an order to perform their regulatory duties. Certain required elements are intended to ensure that the regulators can identify the Customer's[sic] associated with orders. For example, SEC Rule 613(c)(7)(i)(A) requires an Industry Member to report the “Customer-IDs” for each Customer for the original receipt or origination of an order. “Customer-ID” is defined in SEC Rule 613(j)(5) to mean “with respect to a customer, a code that uniquely and consistently identifies such customer for purposes of providing data to the Central Repository[sic].” SEC Rule 613(c)(8) requires Industry Members to use the same Customer-ID for each Customer. The SEC granted the Participants exemptive relief to permit the use of an alternative approach to the requirement that an Industry Member report a Customer-ID for every Customer upon original receipt or origination.
Under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. As the Firm Designated ID, Industry Members would be permitted to use an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
In accordance with the Customer Information Approach, Industry Members would be required to report only the Firm Designated ID for each new order submitted to the Central Repository, rather than the “Customer-ID” with individual order events. Within the Central Repository, each Customer would be uniquely identified by identifiers or a combination of identifiers such as ITIN/SSN, date of birth, and as applicable, LEI and LTID. The Plan Processor would be required to use these unique identifiers to map orders to specific Customers across all Industry Members and Participants. To ensure information identifying a Customer is up to date, Industry Members would be required to submit
In connection with the Customer Information Approach, Industry Members would be required to report Customer Account Information to the Central Repository. “Customer Account Information” is defined in SEC Rule 613(j)(4) to “include, but not be limited to, account number, account type, customer type, date account opened, and large trader identifier (if applicable).” Therefore, when reporting Customer Account Information, an Industry Member is required to report the date an account was opened. The Participants requested and received an exemption to allow an “Account Effective Date” to be reported in lieu of an account open date in certain limited circumstances. The definition of “Account Effective Date” as set forth in paragraph (a) of Proposed Rule 6810 and paragraph (a)(i) of Proposed Chapter IX, Section 8 describes those limited circumstances in which an Industry Member may report an “Account Effective Date” rather than the account open date. The proposed definition is the same as the definition of “Account Effective Date” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
Specifically, the rules define “Account Effective Date to mean, with regard to those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution: (1) When the trading relationship was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, either (a) the date the relationship identifier was established within the Industry Member; (b) the date when trading began (
Paragraph (a)(2) of Proposed Rule 6810 and paragraph (a)(i)(2) of Proposed Chapter IX, Section 8 state that an “Account Effective Date” means, where an Industry Member changes back office providers or clearing firms prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(3) of Proposed Rule 6810 and paragraph (a)(i)(3) of Proposed Chapter IX, Section 8 state that an “Account Effective Date” means, where an Industry Member acquires another Industry Member prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the date an account was established at the relevant Industry Member, either directly or via transfer.
Paragraph (a)(4) of Proposed Rule 6810 and paragraph (a)(i)(4) of Proposed Chapter IX, Section 8 state that “Account Effective Date” means, where there are multiple dates associated with an account established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, the earliest available date.
Paragraph (a)(5) of Proposed Rule 6810 and paragraph (a)(i)(5) of Proposed Chapter IX, Section 8 state that an “Account Effective Date” means, with regard to Industry Member proprietary accounts established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members: (1) The date established for the account in the Industry Member or in a system of the Industry Member or (2) the date when proprietary trading began in the account (
Under the Customer Information Approach, Industry Members are required to report Customer Identifying Information and Customer Account Information for only those accounts that are active. This will alleviate the need for Industry Members to update such information for non-active accounts, but still ensure that the Central Repository will collect audit trail data for Customer accounts that have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 6810 and paragraph (a)(ii) of Proposed Chapter IX, Section 8 define an “Active Account” as an account that has had activity in Eligible Securities within the last six months. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record and report to the Central Repository “the account number for any subaccounts to which the execution is allocated (in whole or in part).” The Participants requested and received from the SEC exemptive relief from SEC Rule 613 for an alternative to this approach (“Allocation Report Approach”). The Allocation Report Approach would permit Industry Members to record and report to the Central Repository an Allocation Report that includes, among other things, the Firm Designated ID for any account(s) to which executed shares are allocated when an execution is allocated in whole or part in lieu of requiring the reporting of the account number for any subaccount to which an execution is allocated, as is required by SEC Rule 613.
To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 6810 and paragraph (a)(iii) of Proposed Chapter IX, Section 8 define an “Allocation Report.” Specifically, an “Allocation Report” means a report made to the Central Repository by an Industry Member that identifies the Firm Designated ID for any account(s), including subaccount(s), to which executed shares are allocated and provides the security that has been allocated, the identifier of the firm reporting the allocation, the price per share of shares allocated, the side of shares allocated, the number of shares allocated to each account, and the time of the allocation; provided, for the avoidance of doubt, any such Allocation
To create the required audit trail, Industry Members are required to record the date and time of various Reportable Events to the Central Repository. Industry Members will use “Business Clocks” to record such dates and times. Accordingly, paragraph (d) of Proposed Rule 6810 and paragraph (a)(iv) of Proposed Chapter IX, Section 8 defines the term “Business Clock” as a clock used to record the date and time of any Reportable Event required to be reported under this Rule 6800 Series. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to replace the phrase “under SEC Rule 613” at the end of the definition in Section 1.1 of the Plan with the phrase “under this Rule Series.” This change is intended to recognize that the Industry Members' obligations with regard to the CAT are set forth in the Proposed Rules.
Paragraph (e) of Proposed Rule 6810 and paragraph (a)(v) of Proposed Chapter IX, Section 8 define the term “CAT” to mean the consolidated audit trail contemplated by SEC Rule 613. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (f) of Proposed Rule 6810 paragraph (a)(vi) of Proposed Chapter IX, Section 8 define the term “CAT NMS Plan” to mean the National Market System Plan Governing the Consolidated Audit Trail, as amended from time to time.
Under the CAT NMS Plan, the Daisy Chain Approach is used to link and reconstruct the complete lifecycle of each Reportable Event in CAT. According to this Approach, Industry Members assign their own identifiers to each order event. Within the Central Repository, the Plan Processor later replaces the identifier provided by the Industry Member for each Reportable Event with a single identifier, called the CAT Order-ID, for all order events pertaining to the same order. This CAT Order-ID is used to link the Reportable Events related to the same order.
To implement the Daisy Chain Approach, paragraph (g) of Proposed Rule 6810 and paragraph (a)(vii) of Proposed Chapter IX, Section 8 define the term “CAT-Order-ID.” The term “CAT-Order-ID” is defined to mean a unique order identifier or series of unique order identifiers that allows the Central Repository to efficiently and accurately link all Reportable Events for an order, and all orders that result from the aggregation or disaggregation of such order. This is the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the CAT NMS Plan defines “CAT-Order-ID” by reference to SEC Rule 613(j)(1).
The CAT NMS Plan permits an Industry Member to use a third party, such as a vendor, to report the required data to the Central Repository on behalf of the Industry Member.
This definition is based on FINRA's definition of a “Reporting Agent” as set forth in FINRA's rule related to its Order Audit Trail System (“OATS”). Specifically, FINRA Rule 7410(n) defines a “Reporting Agent” as a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 7450.
Paragraph (i) of Proposed Rule 6810 and paragraph (a)(ix) of Proposed Chapter IX, Section 8 define the term “Central Repository” to mean the repository responsible for the receipt, consolidation, and retention of all information reported to the CAT pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange uses the phrase “CAT NMS Plan” in place of the phrase “this Agreement.”
Paragraph (j) of Proposed Rule 6810 and paragraph (a)(x) of Proposed Chapter IX, Section 8 define the term “Compliance Threshold” as having the meaning set forth in Proposed Rule 6893(d) and paragraph (k) of Proposed Chapter IX, Section 8. This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below with regard to Proposed Rule 6893(d) and paragraph (k) of Proposed Chapter IX, Section 8, each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT. This Industry Member-specific rate is the “Compliance Threshold.”
Industry Members are required to submit to the Central Repository certain information related to their Customers, including Customer Identifying Information and Customer Account Information, as well as data related to their Customer's Reportable Events. Accordingly, paragraph (k) of Proposed Rule 6810 and paragraph (a)(xi) of Proposed Chapter IX, Section 8 propose to define the term “Customer.” Specifically, the term “Customer” would be defined to mean: (1) The account holder(s) of the account at an Industry Member originating the order; and (2) any person from whom the Industry Member is authorized to accept trading instructions for such account, if different from the account holder(s). This is the same definition as set forth in SEC Rule 613(j)(3), except the Exchange proposes to replace the references to a registered broker-dealer or broker-dealer with a reference to an Industry Member for consistency of terms used in the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8. The Exchange also notes that Section 1.1 of the CAT NMS Plan defines “Customer” by reference to SEC Rule 613(j)(3).
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Account Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what customer
Paragraph (l) of Proposed Rule 6810 and paragraph (a)(xii) of Proposed Chapter IX, Section 8 define the term “Customer Account Information” to include, in part, account number, account type, customer type, date account opened, and large trader identifier (if applicable). Proposed Rule 6810(l) and paragraph (a)(xii) of Proposed Chapter IX, Section 8, however, provide an alternative definition of “Customer Account Information” in two limited circumstances. First, in those circumstances in which an Industry Member has established a trading relationship with an institution but has not established an account with that institution, the Industry Member will: (1) Provide the Account Effective Date in lieu of the “date account opened”; (2) provide the relationship identifier in lieu of the “account number”; and (3) identify the “account type” as a “relationship.” Second, in those circumstances in which the relevant account was established prior to November 15, 2018 for Industry Members other than Small Industry Members, or prior to November 15, 2019 for Small Industry Members, and no “date account opened” is available for the account, the Industry Member will provide the Account Effective Date in the following circumstances: (1) Where an Industry Member changes back office providers or clearing firms and the date account opened is changed to the date the account was opened on the new back office/clearing firm system; (2) where an Industry Member acquires another Industry Member and the date account opened is changed to the date the account was opened on the post-merger back office/clearing firm system; (3) where there are multiple dates associated with an account in an Industry Member's system, and the parameters of each date are determined by the individual Industry Member; and (4) where the relevant account is an Industry Member proprietary account. The proposed definition is the same as the definition of “Customer Account Information” set forth in Section 1.1 of the CAT NMS Plan, provided, however, that specific dates have replaced the descriptions of those dates set forth in Section 1.1 of the Plan.
As discussed above, under the Customer Information Approach, Industry Members are required to report Customer Identifying Information to the Central Repository as part of the customer definition process. Accordingly, the Exchange proposes to define the term “Customer Account Information” to clarify what Customer information would need to be reported to the Central Repository.
Paragraph (m) of Proposed Rule 6810 and paragraph (a)(xiii) of Proposed Chapter IX, Section 8 define the term “Customer Identifying Information” to mean information of sufficient detail to identify a Customer. With respect to individuals, “Customer Identifying Information” includes, but is not limited to: Name, address, date of birth, individual tax payer identification number (“ITIN”)/social security number (“SSN”), individual's role in the account (
The CAT NMS Plan uses the term “Data Submitter” to refer to any person that reports data to the Central Repository.
The reporting requirements of the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8 only apply to Reportable Events in Eligible Securities. Currently, an Eligible Security includes NMS Securities and OTC Equity Securities. Accordingly, paragraph (o) of Proposed Rule 6810 and paragraph (a)(xv) of Proposed Chapter IX, Section 8 define the term “Eligible Security” to include: (1) All NMS Securities; and (2) all OTC Equity Securities. The terms “NMS Securities” and “OTC Equity Securities” are defined, in turn, below. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee sets the maximum Error Rate that the Central Repository would tolerate from an Industry Member reporting data to the Central Repository.
The CAT NMS Plan requires the Plan Processor to: (1) Measure and report errors every business day; (2) provide Industry Members daily statistics and error reports as they become available,
To implement the requirements of the CAT NMS Plan related to the Error Rate, the Exchange proposes to define the term “Error Rate” in Proposed Rule 6810 and paragraph (a)(xvi) of Proposed Chapter IX, Section 8. Paragraph (p) of Proposed Rule 6810 and paragraph (a)(xvi) of Proposed Chapter IX, Section 8 define the term “Error Rate” to mean the percentage of Reportable Events collected by the Central Repository in which the data reported does not fully and accurately reflect the order event that occurred in the market. This is the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the CAT NMS Plan defines “Error Rate” by reference to SEC Rule 613(j)(6).
As discussed above, under the Customer Information Approach, the CAT NMS Plan would require each Industry Member to assign a unique Firm Designated ID to each Customer. Industry Members would be permitted to use as the Firm Designated ID an account number or any other identifier defined by the firm, provided each identifier is unique across the firm for each business date (
Paragraph (r) of Proposed Rule 6810 and paragraph (a)(xiii) of Proposed Chapter IX, Section 8 define the term “Industry Member” to mean a member of a national securities exchange or a member of a national securities association.” This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (s) of Proposed Rule 6810 and paragraph (a)(xix) of Proposed Chapter IX, Section 8 state that the term “Industry Member Data” has the meaning set forth in Proposed Rule 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter IX, Section 8, respectively. This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter IX, Section 8, respectively.
Paragraph (t) of Proposed Rule 6810 and paragraph (a)(xx) of Proposed Chapter IX, Section 8 define the term “Initial Plan Processor” to mean the first Plan Processor selected by the Operating Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS Plan and the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, although the proposed definition uses the full name of the “Selection Plan.”
The CAT NMS Plan and this Proposed Rule 6800 Series applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of the Proposed Rules apply specifically to Listed Options. Accordingly, Paragraph (u) of Proposed Rule 6810 and paragraph (a)(xxi) of Proposed Chapter IX, Section 8 define the term “Listed Option” or “Option.” Specifically, paragraph (u) of Proposed Rule 6810 and paragraph (a)(xxi) of Proposed Chapter IX, Section 8 states that the term “Listed Option” or “Option” has the meaning set forth in SEC Rule 600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a listed option as “any option traded on a registered national securities exchange or automated facility of a national securities association.” The Exchange notes that the proposed definition of “Listed Option” is the same definition as the definition set forth in Section 1.1 of the CAT NMS Plan.
The CAT NMS Plan sets forth clock synchronization and timestamp requirements for Industry Members which reflect exemptions for Manual Order Events granted by the Commission.
In order to clarify what a Manual Order Event is for clock synchronization and time stamp purposes, the Exchange proposes to define the term “Manual Order Event” in Proposed Rule 6810 and paragraph (a)(xxii) of Proposed Chapter IX, Section 8. Specifically, paragraph (v) of Proposed Rule 6810 and paragraph (a)(xxii) of Proposed Chapter IX, Section 8 define the term “Manual Order Event” to mean a non-electronic communication of order-related information for which Industry Members must record and report the time of the event. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Proposed Rule 6830 and paragraph (c) of Proposed Chapter IX, Section 8 require Industry Members to record and report to the Central Repository Material Terms of the Order with certain Reportable Events (
NMS Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “NMS Security” in Proposed Rule 6810 and paragraph (a)(xxiv) of Proposed Chapter IX, Section 8. Specifically, paragraph (x) of Proposed Rule 6810 and paragraph (a)(xxiv) of Proposed Chapter IX, Section 8 define the term “NMS Security” to mean any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in Listed Options. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Under the CAT NMS Plan, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47)), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time. Accordingly, the Exchange proposes to define the term “NMS Stock” in Paragraph (y) of Proposed Rule 6810 and paragraph (a)(xxv) of Proposed Chapter IX, Section 8 to mean any NMS Security other than an option. This is the same definition as set forth in SEC Rule 600(b)(47) of Regulation NMS.
Paragraph (z) of Proposed Rule 6810 and paragraph (a)(xxvi) of Proposed Chapter IX, Section 8 define the term “Operating Committee” to mean the governing body of the CAT NMS, LLC designated as such and described in Article IV of the CAT NMS Plan. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except the Exchange proposes to use the phrase “CAT NMS LLC” in place of the phrase “the Company” for clarity.
SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each Industry Member to record and electronically report to the Central Repository details for each order and each reportable event, including the routing and modification or cancellation of an order. SEC Rule 613(j)(8) defines “order” to include “any bid or offer.” Therefore, under SEC Rule 613, the details for each Options Market Maker quotation must be reported to the Central Repository by both the Options Market Maker and the options exchange to which it routes its quote.
The Participants, however, requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit Options Market Maker quotes to be reported to the Central Repository by the relevant options exchange in lieu of requiring that such reporting be done by both the options exchange and the Options Market Maker, as is required by SEC Rule 613.
To implement the requirements related to Option Market Maker quotes, the Exchange proposes to define the term “Options Market Maker” in Proposed Rule 6810 and paragraph (a)(xxvii) of Proposed Chapter IX, Section 8. Specifically, paragraph (aa) of Proposed Rule 6810 and paragraph (a)(xxvii) of Proposed Chapter IX, Section 8 define the term “Options Market Maker” to mean a broker-dealer registered with an exchange for the purpose of making markets in options contracts traded on the exchange. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The Proposed Rules require each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, the Exchange proposes to define the term “Order” in Proposed Rule 6810 and paragraph (a)(xxviii) of Proposed Chapter IX, Section 8. Specifically, paragraph (bb) of Proposed Rule 6810 and paragraph (a)(xxviii) of Proposed Chapter IX, Section 8 define the term “Order”, with respect to Eligible Securities, to include: (1) Any order received by an Industry Member from any person; (2) any order originated by an Industry Member; or (3) any bid or offer. This is the same definition as set forth in SEC Rule 613(j)(8), except the Exchange proposes to replace the phrase “member of a national securities exchange or national securities association” with the term “Industry Member.” The Exchange notes that Section 1.1 of the CAT NMS Plan defines “Order” by reference to SEC Rule 613(j)(8).
OTC Equity Securities are one of the types of Eligible Securities for the CAT. Therefore, the Exchange proposes to define the term “OTC Equity Security” in Proposed Rule 6810 and paragraph (a)(xxix) of Proposed Chapter IX, Section 8. Specifically, paragraph (cc) of Proposed Rule 6810 and paragraph (a)(xxix) of Proposed Chapter IX, Section 8 define the term “OTC Equity Security” to mean any equity security, other than an NMS Security, subject to prompt last sale reporting rules of a registered national securities association and reported to one of such association's equity trade reporting facilities. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (dd) of Proposed Rule 6810 and paragraph (a)(xxx) of Proposed Chapter IX, Section 8 define the term “Participant” to mean each Person identified as such in Exhibit A of the CAT NMS Plan, as amended, in such Person's capacity as a Participant in CAT NMS, LLC. This is the same definition in substance as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ee) of Proposed Rule 6810 and paragraph (a)(xxxi) of Proposed Chapter IX, Section 8 define the term “Person” to mean any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and any heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (ff) of Proposed Rule 6810 and paragraph (a)(xxxii) of Proposed Chapter IX, Section 8 define the term “Plan Processor” to mean the Initial Plan Processor or any other Person selected by the Operating Committee pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the Initial Plan Processor, the National Market System Plan Governing the Process for Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail, to perform the CAT processing functions required by SEC Rule 613 and set forth in the CAT NMS Plan.
Paragraph (gg) of Proposed Rule 6810 and paragraph (a)(xxxiii) of Proposed Chapter IX, Section 8 state that the term “Received Industry Member Data” has the meaning set forth in Proposed Rule 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter IX, Section 8. This definition has the same substantive meaning as the definition set forth in Section 1.1 of the CAT NMS Plan. The definition of “Received Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter IX, Section 8.
Paragraph (hh) of Proposed Rule 6810 and paragraph (a)(xxxiv) of Proposed Chapter IX, Section 8 state that the term “Recorded Industry Member Data” has the meaning set forth in Proposed Rule 6830(a)(1) and paragraph (c)(i)(1) of Proposed Chapter IX, Section 8. This definition has the same substantive meaning as the definition set forth in in Section 1.1 of the CAT NMS Plan. The definition of “Recorded Industry Member Data” is discussed more fully in the discussion below regarding Proposed Rule 6830(a)(1) and paragraph (c)(i)(1) of Proposed Chapter IX, Section 8.
The Proposed Rules require each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, the Exchange proposes to define the term “Reportable Event” in Proposed Rule 6810 and paragraph (a)(xxxv) of Proposed Chapter IX, Section 8. Specifically, paragraph (ii) of Proposed Rule 6810 and paragraph (a)(xxxv) of Proposed Chapter IX, Section 8 state that the term “Reportable Event” includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution (in whole or in part) and allocation of an order, and receipt of a routed order. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
Paragraph (jj) of Proposed Rule 6810 and paragraph (a)(xxxvi) of Proposed Chapter IX, Section 8 define the term “SRO” to mean any self-regulatory organization within the meaning of Section 3(a)(26) of the Exchange Act. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
The Participants requested and received exemptive relief from SEC Rule 613 so that the CAT NMS Plan may permit the Existing Identifier Approach, which would allow an Industry Member to report an existing SRO-Assigned Market Participant Identifier in lieu of requiring the reporting of a universal CAT-Reporter-ID (that is, a code that uniquely and consistently identifies an Industry Member for purposes of providing data to the Central Repository).
For the Central Repository to link the SRO-Assigned Market Participant Identifier to the CAT-Reporter-ID, each SRO will submit to the Central Repository, on a daily basis, all SRO-Assigned Market Participant Identifiers used by its Industry Members, as well as information to identify each such Industry Member, including CRD number and LEI, if the SRO has collected such LEI of the Industry Member. Additionally, each Industry Member is required to submit to the Central Repository the CRD number of the Industry Member as well as the LEI of the Industry Member (if the Industry Member has an LEI). The Plan Processor will use this information to assign a CAT-Reporter-ID to each Industry Member for internal use within the Central Repository.
To implement the Existing Identifier Approach, the Exchange proposes to define the term “SRO-Assigned Market Participant” in Proposed Rule 6810 and paragraph (a)(xxxvii) of Proposed Chapter IX, Section 8. Specifically, paragraph (kk) of Proposed Rule 6810 and paragraph (a)(xxxvii) of Proposed Chapter IX, Section 8 define the term “SRO-Assigned Market Participant Identifier” to mean an identifier assigned to an Industry Member by an SRO, or an identifier used by a
The requirements of the Proposed Rule 6800 Series differ to some extent for Small Industry Members versus Industry Members other than Small Industry Members. For example, the compliance dates for reporting data to the CAT are different for Small Industry Members versus other Industry Members. Accordingly, to clarify the requirements that apply to which Industry Members, the Exchange proposes to define the term “Small Industry Member” in Proposed Rule 6810 and paragraph (a)(xxxviii) of Proposed Chapter IX, Section 8. Specifically, paragraph (ll) of Proposed Rule 6810 and paragraph (a)(xxxviii) of Proposed Chapter IX, Section 8 define the term “Small Industry Member” to mean an Industry Member that qualifies as a small broker-dealer as defined in Rule 0-10(c) under the Securities Exchange Act of 1934, as amended. This is the same in substance as the definition of “Small Industry Member” as set forth in Section 1.1 of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a “Small Industry Member” as “an Industry Member that qualifies as a small broker-dealer as defined in SEC Rule 613.” The definition of a small broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as defined in SEC Rule 0-10(c).
Proposed Rule 6830(b) and paragraph (c)(ii) of Proposed Chapter IX, Section 8.establishes the deadlines for reporting certain data to the Central Repository using the term “Trading Day.” Accordingly, the Exchange proposes to define the term “Trading Day” in Proposed Rule 6810 and paragraph (a)(xxxix) of Proposed Chapter IX, Section 8. Specifically, Paragraph (mm) of Proposed Rule 6810 and paragraph (a)(xxxix) of Proposed Chapter IX, Section 8 state that the term “Trading Day” shall have the meaning as is determined by the Operating Committee. For the avoidance of doubt, the Operating Committee may establish different Trading Days for NMS Stocks (as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, and any other securities that are included as Eligible Securities from time to time.
SEC Rule 613(d)(1) under Regulation NMS requires Industry Members to synchronize their Business Clocks to the time maintained by NIST, consistent with industry standards. To comply with this provision, Section 6.8 of the Plan sets forth the clock synchronization requirements for Industry Members.
Paragraph (a) of Proposed Rule 6820 and paragraph (b)(i) of Proposed Chapter IX, Section 8 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 6820 and paragraph (b)(i)(1) of Proposed Chapter IX, Section 8 require each Industry Member to synchronize its Business Clocks, other than such Business Clocks used solely for Manual Order Events or used solely for the time of allocation on Allocation Reports, at a minimum to within a fifty (50) millisecond tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 6820 and paragraph (b)(i)(2) of Proposed Chapter IX, Section 8 require each Industry Member to synchronize (1) its Business Clocks used solely for Manual Order Events and (2) its Business Clocks used solely for the time of allocation on Allocation Reports at a minimum to within a one second tolerance of the time maintained by the NIST atomic clock, and maintain such synchronization. This is the same requirement as set forth in Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
Paragraph (a)(3) of Proposed Rule 6820 and paragraph (b)(i)(3) of Proposed Chapter IX, Section 8 clarify that the tolerance described in paragraphs (a)(1) and (2) of Proposed Rule 6820 and paragraph (b)(i)(1) and (b)(i)(2) of Proposed Chapter IX, Section 8 includes all of the following: (1) The time difference between the NIST atomic clock and the Industry Member's Business Clock; (2) the transmission delay from the source; and (3) the amount of drift of the Industry Member's Business Clock. This description of the clock synchronization tolerance is the same as set forth in paragraph (b) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (a)(4) of Proposed Rule 6820 and paragraph (b)(i)(4) of Proposed Chapter IX, Section 8 require Industry Members to synchronize their Business Clocks every business day before market open to ensure that timestamps for Reportable Events are accurate. In addition, to maintain clock synchronization, Business Clocks must be checked against the NIST atomic clock and re-synchronized, as necessary, throughout the day. This description of the required frequency of clock synchronization is the same as set forth in paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (b) of Proposed Rule 6820 and paragraph (b)(ii) of Proposed Chapter IX, Section 8 set forth documentation requirements with regard to clock synchronization. Specifically, those paragraphs require Industry Members to document and maintain their synchronization procedures for their Business Clocks. The Proposed Rule requires Industry Members to keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. This log is required to include notice of any time a Business Clock drifts more than the applicable tolerance specified in paragraph (a) of the Proposed Rule 6820 and paragraph (b)(i) of Proposed Chapter IX, Section 8, respectively. Such logs must include results for a period of not less than five years ending on the then current date, or for the entire period for which the Industry Member has been required to comply with this Rule if less than five years. These documentation requirements are the same as those set forth in the “Sequencing Orders and Clock Synchronization” section of Appendix C of the CAT NMS Plan. Moreover, these documentation requirements regarding clock synchronization are comparable to those set forth in Supplementary Material .01 of FINRA Rule 4590 (Synchronization of Member Business Clocks).
Paragraph (c) of Proposed Rule 6820 and paragraph (b)(iii) of Proposed Chapter IX, Section 8 set forth certification requirements with regard to clock synchronization. Specifically,
Paragraph (d) of Proposed Rule 6820 and paragraph (b)(iv) of Proposed Chapter IX, Section 8 establish reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 6820 and paragraph (b)(iv) of Proposed Chapter IX, Section 8 require Industry Members to report to the Plan Processor and the Exchange violations of paragraph (a) of Proposed Rule 6820 and paragraph (b)(i) of Proposed Chapter IX, Section 8 pursuant to the thresholds set by the Operating Committee pursuant to the CAT NMS Plan. This requirement is the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant thresholds established by the Operating Committee via Circular.
SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to set forth certain provisions requiring Industry Members to record and report data to the CAT. To comply with this provision, Section 6.4 of the CAT NMS Plan sets forth the data reporting requirements for Industry Members. To implement these provisions with regard to its Industry Members, the Exchange proposes Rule 6830 and paragraph (c) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Industry Member Data Reporting) to require its Industry Members to comply with the Industry Member Data reporting requirements of the Plan. Proposed Rule 6830 has six sections covering: (1) Recording and reporting Industry Member Data, (2) timing of the recording and reporting, (3) the applicable securities cover[sic] by the recording and reporting requirements, (4) format, (5) the security symbology to be used in the recording and reporting, and (6) error correction requirements, each of which is described below.
Paragraph (a) of Proposed Rule 6830 and paragraph (c)(i) of Proposed Chapter IX, Section 8 describe the recording and reporting of Industry Member Data to the Central Repository. Paragraph (a) of Proposed Rule 6830 and paragraph (c)(i) of Proposed Chapter IX, Section 8 each consist of three paragraphs, which cover Recorded Industry Member Data, Received Industry Member Data and Options Market Maker data, respectively. Paragraphs (a)(1)—(a)(3) of Proposed Rule 6830 and paragraph (c)(i)(1)—(i)(3) of Proposed Chapter IX, Section 8 set forth the recording and reporting requirements required in Section 6.4(d)(i)—(iii) of the CAT NMS Plan, respectively.
Paragraph (a)(1) of Proposed Rule 6830 and paragraph (c)(i)(1) of Proposed Chapter IX, Section 8 require, subject to paragraph (a)(3) and paragraph (c)(i)(3) regarding Options Market Makers, each Industry Member to record and electronically report to the Central Repository the following details for each order and each Reportable Event, as applicable (“Recorded Industry Member Data”) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• For original receipt or origination of an order: (1) Firm Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned Market Participant Identifier of the Industry Member receiving or originating the order; (4) date of order receipt or origination; (5) time of order receipt or origination (using timestamps pursuant to Proposed Rule 6860 and paragraph (f) of Proposed Chapter IX, Section 8); and (6) Material Terms of the Order;
• for the routing of an order: (1) CAT-Order-ID; (2) date on which the order is routed; (3) time at which the order is routed (using timestamps pursuant to Proposed Rule 6860 and paragraph (f) of Proposed Chapter IX, Section 8); (4) SRO-Assigned Market Participant Identifier of the Industry Member routing the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant to which the order is being routed; (6) if routed internally at the Industry Member, the identity and nature of the department or desk to which the order is routed; and (7) Material Terms of the Order;
• for the receipt of an order that has been routed, the following information: (1) CAT-Order-ID; (2) date on which the order is received; (3) time at which the order is received (using timestamps pursuant to Proposed Rule 6860 and paragraph (f) of Proposed Chapter IX, Section 8); (4) SRO-Assigned Market Participant Identifier of the Industry Member receiving the order; (5) SRO-Assigned Market Participant Identifier of the Industry Member or Participant routing the order; and (6) Material Terms of the Order;
• if the order is modified or cancelled: (1) CAT-Order-ID; (2) date the modification or cancellation is received or originated; (3) time at which the modification or cancellation is received or originated (using timestamps pursuant to Proposed Rule 6860 and paragraph (f) of Proposed Chapter IX, Section 8); (4) price and remaining size of the order, if modified; (5) other changes in the Material Terms of the Order, if modified; and (6) whether the modification or cancellation instruction was given by the Customer or was initiated by the Industry Member;
• if the order is executed, in whole or in part: (1) CAT-Order-ID; (2) date of execution; (3) time of execution (using timestamps pursuant to Proposed Rule 6860 and paragraph (f) of Proposed Chapter IX, Section 8; (4) execution capacity (principal, agency or riskless principal); (5) execution price and size; (6) SRO-Assigned Market Participant Identifier of the Industry Member executing the order; (7) whether the execution was reported pursuant to an effective transaction reporting plan or the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information; and
• other information or additional events as may be prescribed pursuant to the CAT NMS Plan.
Paragraph (a)(2) of Proposed Rule 6830 and paragraph (c)(i)(2) of Proposed Chapter IX, Section 8 require, subject to paragraph (a)(3) and paragraph (c)(i)(3) regarding Options Market Makers, each Industry Member to record and report to the Central Repository the following, as applicable (“Received Industry Member Data” and collectively with the information referred to in paragraph (c)(i)(1) “Industry Member Data”)) in the manner prescribed by the Operating Committee pursuant to the CAT NMS Plan:
• If the order is executed, in whole or in part: (1) An Allocation Report; (2) SRO-Assigned Market Participant Identifier of the clearing broker or prime broker, if applicable; and (3) CAT-Order-ID of any contra-side order(s);
• if the trade is cancelled, a cancelled trade indicator; and
• for original receipt or origination of an order, the Firm Designated ID for the relevant Customer, and in accordance
Paragraph (a)(3) of Proposed Rule 6830 and paragraph (c)(i)(3) of Proposed Chapter IX, Section 8 state that each Industry Member that is an Options Market Maker is not required to report to the Central Repository the Industry Member Data regarding the routing, modification or cancellation of its quotes in Listed Options. Each Industry Member that is an Options Market Maker, however, is required to report to the Exchange the time at which its quote in a Listed Option is sent to the Exchange (and, if applicable, any subsequent quote modification time and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). This paragraph implements the Options Market Maker Quote Exemption, as discussed above.
Paragraph (b) of Proposed Rule 6830 and paragraph (c)(ii) of Proposed Chapter IX, Section 8 describe the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1)—(b)(3) of Proposed Rule 6830 and paragraph (c)(ii)(1)—(3) of Proposed Chapter IX, Section 8 set forth the requirements related to the timing of the recording and reporting requirements required in Section 6.4(b)(i)—(ii) of the CAT NMS Plan.
Paragraph (b)(1) of Proposed Rule 6830 and paragraph (c)(ii)(1) of Proposed Chapter IX, Section 8 require each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 6830 and paragraph (c)(ii)(2) of Proposed Chapter IX, Section 8 require each Industry Member to report: (1) Recorded Industry Member Data to the Central Repository by 8:00 a.m., Eastern Time, on the Trading Day following the day the Industry Member records such Recorded Industry Member Data; and (2) Received Industry Member Data to the Central Repository by 8:00 a.m., Eastern Time, on the Trading Day following the day the Industry Member receives such Received Industry Member Data. Paragraph (b)(3) and paragraph (c)(ii)(3) of Proposed Chapter IX, Section 8 states that Industry Members may, but are not required to, voluntarily report Industry Member Data prior to the applicable 8:00 a.m., Eastern Time, deadline.
Paragraph (c) of Proposed Rule 6830 and paragraph (c)(iii) of Proposed Chapter IX, Section 8 describe the securities to which the recording and reporting requirements of Proposed Rule 6830 and paragraph (c)(iii) of Proposed Chapter IX, Section 8 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 6830 and paragraph (c)(iii)(1) and (2) of Proposed Chapter IX, Section 8 set forth the description of applicable securities as set forth in Section 6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of Proposed Rule 6830 and paragraph (c)(iii)(1) of Proposed Chapter IX, Section 8 require each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of Proposed Rule 6830 and paragraph (c)(i) of Proposed Chapter IX, Section 8 for each NMS Security registered or listed for trading on such exchange or admitted to unlisted trading privileges on such exchange. Paragraph (c)(2) of Proposed Rule 6830 and paragraph (c)(iii)(2) of Proposed Chapter IX, Section 8 requires each Industry Member to record and report to the Central Repository the Industry Member Data as set forth in paragraph (a) of Proposed Rule 6830 and paragraph (c)(i) of Proposed Chapter IX, Section 8 for each Eligible Security for which transaction reports are required to be submitted to FINRA.
Paragraph (d) of Proposed Rule 6830 and paragraph (c)(iv) of Proposed Chapter IX, Section 8 describe the security symbology that Industry Members are required to use when reporting Industry Member Data to the Central Repository. Paragraph (d)(1) of Proposed Rule 6830 and paragraph (c)(iv)(1) of Proposed Chapter IX, Section 8 require, for each exchange-listed Eligible Security, each Industry Member to report Industry Member Data to the Central Repository using the symbology format of the exchange listing the security. This requirement implements the requirement set forth in Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange symbology when reporting data to the Central Repository for exchange-listed Eligible Securities.
For each Eligible Security that is not exchange-listed, however, there is no listing exchange to provide the symbology format. Moreover, to date, the requisite symbology format has not been determined. Therefore, Paragraph (d)(2) of Proposed Rule 6830 and paragraph (c)(iv)(2) of Proposed Chapter IX, Section 8 require, for each Eligible Security that is not exchange-listed, each Industry Member to report Industry Member Data to the Central Repository using such symbology format as approved by the Operating Committee pursuant to the CAT NMS Plan. The Exchange intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee via Circular.
To ensure that the CAT contains accurate data, the CAT NMS Plan requires Industry Members to correct erroneous data submitted to the Central Repository. Therefore, the Exchange proposes to adopt paragraph (e) of Proposed Rule 6830 and paragraph (c)(v) of Proposed Chapter IX, Section 8, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 6830 and paragraph (c)(v) of Proposed Chapter IX, Section 8 require, for each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, that such Industry Member submit corrected Industry Member Data to the Central Repository by 8:00 a.m., Eastern Time, on T+3. This requirement implements the error correction requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to submit to the Central Repository certain information related to their Customers in accordance with the Customer Information Approach discussed above. The Exchange proposes Rule 6840 and paragraph (d) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Customer Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, paragraph (a) of Proposed Rule 6840 and paragraph (d)(i) of Proposed Chapter IX, Section 8 require each Industry Member to submit to the Central Repository the Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6880 and paragraph (i) of Proposed Chapter IX, Section 8. Paragraph (b) of Proposed Rule 6840 and paragraph (d)(ii) of Proposed
Finally, paragraph (d) of Proposed Rule 6840 and paragraph (d)(iv) of Proposed Chapter IX, Section 8 address the correction of erroneous Customer data reported to the Central Repository to ensure an accurate audit trail. Paragraph (d) and paragraph (d)(iv) require, for each Industry Member for which errors in Firm Designated ID, Customer Account Information and Customer Identifying Information for each of its Customers with an Active Account submitted to the Central Repository have been identified by the Plan Processor or otherwise, such Member to submit corrected data to the Central Repository by 5:00 p.m. Eastern Time on T+3. This requirement implements the error correction requirement set forth in Appendix C of the CAT NMS Plan.
Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, in accordance with the Existing Identifier Approach discussed above. The Exchange proposes Rule 6850 and paragraph (e) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Industry Member Information Reporting) to implement this provision of the CAT NMS Plan with regard to its Industry Members. Specifically, Proposed Rule 6850 and paragraph (e) of Proposed Chapter IX, Section 8 require each Industry Member to submit to the Central Repository information sufficient to identify such Industry Member, including CRD number and LEI, if such LEI has been obtained, prior to such Industry Member's commencement of reporting to the Central Repository and in accordance with the deadlines set forth in Rule 6880 and paragraph (i) of Proposed Chapter IX, Section 8, and keep such information up to date as necessary.
SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for time stamps used by CAT Reporters in recording and reporting data to the CAT.
Paragraph (a) of Proposed Rule 6860 and paragraph (f)(i) of Proposed Chapter IX, Section 8 set forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 6860 and paragraph (f)(i)(1) of Proposed Chapter IX, Section 8 require each Industry Member to record and report Industry Member Data to the Central Repository with time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of Proposed Rule 6860 and subparagraphs (f)(i)(2) and (f)(ii) of Proposed Chapter IX, Section 8. To the extent that any Industry Member's order handling or execution systems utilize time stamps in increments finer than milliseconds, paragraph (a)(2) of Proposed Rule 6860 and paragraph (f)(i)(2) of Proposed Chapter IX, Section 8 require such Industry Member to record and report Industry Member Data to the Central Repository with time stamps in such finer increment, subject to paragraph (b) of Proposed Rule 6860 and paragraph (f)(ii) of Proposed Chapter IX, Section 8 regarding Manual Order Events and Allocation Reports.
Paragraph (b) of Proposed Rule 6860 and paragraph (f)(ii) of Proposed Chapter IX, Section 8 set forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 6860 and paragraph (f)(ii)(1) of Proposed Chapter IX, Section 8 permit each Industry Member to record and report Manual Order Events to the Central Repository in increments up to and including one second, provided that each Industry Member is required to record and report the time when a Manual Order Event has been captured electronically in an order handling and execution system of such Member (“Electronic Capture Time”) in milliseconds. In addition, paragraph (b)(2) of Proposed Rule 6860 and paragraph (f)(ii)(2) of Proposed Chapter IX, Section 8 permit each Industry Member to record and report the time of Allocation Reports in increments up to and including one second.
Proposed Rule 6865 and paragraph (g) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Clock Synchronization Rule Violations) describe potential violations of the clock synchronization time period requirements set forth in the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8. Proposed Rule 6865 and paragraph (g) of Proposed Chapter IX, Section 8 state that an Industry Member that engages in a pattern or practice of reporting Reportable Events outside of the required clock synchronization time period as set forth in this Rule Series without reasonable justification or exceptional circumstances may be considered in violation of this Rule. This provision implements the requirements of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule to provide that a pattern or practice of reporting events outside of the required clock synchronization time period without reasonable justification or exceptional circumstances may be considered a violation of SEC Rule 613 or the CAT NMS Plan.
Proposed Rule 6870 and paragraph (h) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 6870 and paragraph (h)(i) of Proposed Chapter IX, Section 8 describe the format(s) for reporting Industry Member Data to the Central Repository, thereby implementing the formatting requirements as set forth in Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of Proposed Rule 6870 and paragraph (h)(i) of Proposed Chapter IX, Section 8 require
Paragraph (b) of Proposed Rule 6870 and paragraph (h)(ii) of Proposed Chapter IX, Section 8 address connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 6870 and paragraph (h)(ii) of Proposed Chapter IX, Section 8 require each Industry Member to connect to the Central Repository using a secure method(s), including, but not limited to, private line(s) and virtual private network connection(s). This provision implements the connectivity requirements set forth in Section 4 of Appendix D to the CAT NMS Plan.
Paragraph (c) of Proposed Rule 6870 and paragraph (h)(iii) of Proposed Chapter IX, Section 8 permit Industry Members to use CAT Reporting Agents to fulfill their data reporting obligations related to the CAT. Paragraph (c) of Proposed Rule 6870 and paragraph (h)(iii) of Proposed Chapter IX, Section 8 are based on FINRA Rule 7450(c), which permits OATS Reporting Members to enter into agreements with Reporting Agents to fulfill the OATS obligations of the OATS Reporting Member. Specifically, Paragraph (c)(1) of Proposed Rule 6870 and paragraph (h)(iii)(1) of Proposed Chapter IX, Section 8 state that any Industry Member may enter into an agreement with a CAT Reporting Agent pursuant to which the CAT Reporting Agent agrees to fulfill the obligations of such Industry Member under the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8. Any such agreement must be evidenced in writing, which specifies the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable. The Exchange notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 6870 and paragraph (h)(iii)(2) of Proposed Chapter IX, Section 8 require that all written documents evidencing an agreement with a CAT Reporting Agent be maintained by each party to the agreement. Paragraph (c)(3) of Proposed Rule 6870 and paragraph (h)(iii)(3) of Proposed Chapter IX, Section 8 state that each Industry Member remains primarily responsible for compliance with the requirements of the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 6870 and paragraph (h)(iii) of Proposed Chapter IX, Section 8.
The Exchange proposes Rule 6880 and paragraph (i) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 6880 and paragraph (i)(i) of Proposed Chapter IX, Section 8 set forth the testing requirements and deadlines for Industry Members to develop and commence reporting to the Central Repository. These requirements are set forth in Appendix C to the CAT NMS Plan.
Paragraph (a)(1) of Proposed Rule 6880 and paragraph (i)(i)(1) of Proposed Chapter IX, Section 8 set forth the deadlines related to connectivity and acceptance testing. Industry Members (other than Small Industry Members) are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2018, and Small Industry Members are required to begin connectivity and acceptance testing with the Central Repository no later than August 15, 2019.
Paragraph (a)(2) of Proposed Rule 6880 and paragraph (i)(i)(2) of Proposed Chapter IX, Section 8 set forth the deadlines related to reporting Customer and Industry Member information. Paragraph (a)(2)(i) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8 requires Industry Members (other than Small Industry Members) to begin reporting Customer and Industry Member information, as required by Proposed Rules 6840(a) and 6850 and paragraphs (d)(i) and (e) of Proposed Chapter IX, Section 8, respectively, to the Central Repository for processing no later than October 15, 2018. Paragraph (a)(2)(ii) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8 require Small Industry Members to begin reporting Customer and Industry Member information, as required by Rules 6840(a) and 6850 and paragraphs (d)(i) and (e) of Proposed Chapter IX, Section 8, respectively, to the Central Repository for processing no later than October 15, 2019.
Paragraph (a)(3) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8 sets forth the deadlines related to the submission of order data. Under paragraph (a)(3)(i) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8, Industry Members (other than Small Industry Members) are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2018. In addition, Industry Members (other than Small Industry Members) are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2018. Under paragraph (a)(3)(ii) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8, Small Industry Members are permitted, but not required, to submit order data for testing purposes beginning no later than May 15, 2019. In addition, Small Industry Members are required to participate in the coordinated and structured testing of order submission, which will begin no later than August 15, 2019.
Paragraph (a)(4) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8 state that Industry Members are permitted, but not required to, submit Quote Sent Times on Options Market Maker quotes, beginning no later than October 15, 2018.
Paragraph (b) of Proposed Rule 6880 and paragraph (i)(ii) of Proposed Chapter IX, Section 8 implement the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.
Proposed Rule 6890 and paragraph (j) of Proposed Chapter IX, Section 8 (Consolidated Audit Trail—Recordkeeping) set forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 6890 and paragraph (j) of Proposed Chapter IX, Section 8 require each Industry Member to maintain and preserve records of the information required to be recorded under the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable, for the period of time and
SEC Rule 613 and the CAT NMS Plan emphasize the importance of the timeliness, accuracy, completeness and integrity of the data submitted to the CAT.
In addition, without limiting the general requirement as set forth in paragraph (a) of Proposed Rule 6893 and paragraph (k)(i) of Proposed Chapter IX, Section 8, paragraph (b) of Proposed Rule 6893 and paragraph (k)(ii) of Proposed Chapter IX, Section 8 require Industry Members to accurately provide the LEIs in their records as required by the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable, and state that Industry Members may not knowingly submit inaccurate LEIs to the Central Repository. Paragraph (b) of Proposed Rule 6893 and paragraph (k)(ii) of Proposed Chapter IX, Section 8 note, however, that this requirement does not impose any additional due diligence obligations on Industry Members with regard to LEIs for CAT purposes. Accordingly, this provision does not impose any due diligence obligations beyond those that may exist today with respect to information associated with an LEI. Although Industry Members will not be required to perform additional due diligence with regard to the LEIs for CAT purposes, Industry Members will be required to accurately provide the LEIs in their records and may not knowingly submit inaccurate LEIs to the CAT. Paragraph (b) of Proposed Rule 6893 and paragraph (k)(ii) of Proposed Chapter IX, Section 8 are consistent with the SEC's statements in the Approval Order for the CAT NMS Plan regarding an Industry Member's obligations regarding LEIs.
Paragraph (c) of Proposed Rule 6893 and paragraph (k)(iii) of Proposed Chapter IX, Section 8 state that, if an Industry Member reports data to the Central Repository with errors such that its error percentage exceeds the maximum Error Rate established by the Operating Committee pursuant to the CAT NMS Plan, then such Industry Member would not be in compliance with the Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. The Exchange intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan via Circular.
Furthermore, paragraph (d) of Proposed Rule 6893 and paragraph (k)(iv) of Proposed Chapter IX, Section 8 address Compliance Thresholds related to reporting data to the CAT. Proposed Rule 6893(d) and paragraph (k)(iv) of Proposed Chapter IX, Section 8 state that each Industry Member is required to meet a separate compliance threshold which will be an Industry Member-specific rate that may be used as the basis for further review or investigation into the Industry Member's performance with regard to the CAT (the “Compliance Thresholds”). Compliance Thresholds will compare an Industry Member's error rate to the aggregate Error Rate over a period of time to be defined by the Operating Committee. Compliance Thresholds will be set by the Operating Committee, and will be calculated at intervals to be set by the Operating Committee.
Proposed Rule 6895 and paragraph (l) of Proposed Chapter IX, Section 8 (Consolidated Audi Trail—Compliance Dates) sets forth the compliance dates for the various provisions of the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as applicable. Paragraph (a) of Proposed Rule 6895 and paragraph (l)(i) of Proposed Chapter IX, Section 8 state that, except as set forth in paragraphs (b) and (c) of Proposed Rule 6895 and paragraph (l)(ii) and (l)(iii) of Proposed Chapter IX, Section 8, as applicable, or otherwise set forth in the Proposed Rules, these rules are fully effective and members must comply with their terms.
Paragraph (b) of Proposed Rule 6895 and paragraph (l)(ii) of Proposed Chapter IX, Section 8 establish the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 6820 and paragraph (b) of Proposed Chapter IX, Section 8. Paragraph (b)(1) of Proposed Rule 6895 and paragraph (l)(ii)(1) of Proposed Chapter IX, Section 8 state that each Industry Member shall comply with Proposed Rule 6820 and paragraph (b) of Proposed Chapter IX, Section 8, as applicable, with regard to Business Clocks that capture time in milliseconds commencing on or before March 15, 2017. Paragraph (b)(2) of Proposed Rule 6895 and paragraph (l)(ii)(2) of Proposed Chapter IX, Section 8 state that each Industry Member shall comply with Proposed Rule 6820 and paragraph (b) of Proposed Chapter IX, Section 8, as applicable, with regard to Business Clocks that do not capture time in milliseconds commencing on or before February 19, 2018. The compliance date set forth in paragraph (b)(1) of Proposed Rule 6895 and paragraph (l)(ii)(1) of Proposed Chapter IX, Section 8 reflect the exemptive relief requested by the Participants with regard to the clock synchronization requirements related to Business Clocks that do not capture time in milliseconds.
Paragraph (c) of Proposed Rule 6895 and paragraph (l)(iii) of Proposed Chapter IX, Section 8 establish the compliance dates for the data recording and reporting requirements for Industry Members. Paragraph (c)(1) of Proposed Rule 6895 and paragraph (l)(iii)(1) of Proposed Chapter IX, Section 8 require each Industry Member (other than Small Industry Members) to record and report
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,
The Exchange believes that this proposal is consistent with the Act because it implements, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan “is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.”
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that the Proposed Rule Series implementing provisions of the CAT NMS Plan will apply equally to all firms that trade NMS Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing the rules reflected in the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition.
No written comments were either solicited or received.
Within 45 days of the date of publication of this notice in the
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:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
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-BX-2017-007 and should be submitted on or before March 2, 2017.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the State of California dated 02/01/2017.
02/01/2017.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 15037 5 and for economic injury is 15038 0.
The State which received an EIDL Declaration # is California.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The Department of State will conduct an open meeting at 9:30 a.m. on Wednesday, March 1, 2017, at the headquarters of the Radio Technical Commission for Maritime Services (RTCM) in Suite 605, 1611 N. Kent Street, Arlington, Virginia 22209. The primary purpose of the meeting is to prepare for the 4th Session of the International Maritime Organization's (IMO) Sub-Committee on Navigation, Communication, and Search and Rescue to be held at the IMO Headquarters, United Kingdom, from March 6-10, 2017.
The agenda items to be considered include:
Members of the public may attend this meeting up to the seating capacity of the room. To facilitate the building security process, and to request reasonable accommodation, those who plan to attend should contact the meeting coordinator, George Detweiler, by email at
The Department of State will conduct an open meeting at 10:00 a.m. on Thursday, March 2, 2017 at the offices of the Radio Technical Commission for Maritime Services (RTCM), 1611 N. Kent Street Suite 605, Arlington, VA 22209. The primary purpose of the meeting is to prepare for the fourth session of the International Maritime Organization's (IMO) Sub-Committee on Ship Systems and Equipment to be held at the IMO Headquarters, United Kingdom, March 20-24, 2017.
The agenda items to be considered include:
Members of the public may attend this meeting up to the seating capacity of the room. Upon request to the meeting coordinator, members of the public may also participate via teleconference, up to the capacity of the teleconference phone line. To access the teleconference line, participants should call (202) 475-4000 and use Participant Code: 887 809 72. In order to ensure reasonable accommodation for the full number of meeting participants, those who plan to attend should contact the meeting coordinator, LT Chris Briggs, by email at
In the case of inclement weather where the Federal Government is closed or delayed, a public meeting may be conducted virtually by calling (202) 475-4000 or 1 (855) 475-2447, Participant code: 887 809 72. The meeting coordinator will confirm whether the virtual public meeting will be utilized at:
Jacksonville Port Terminal Railroad (JXPT), a noncarrier, has filed a verified notice of exemption under 49 CFR 1150.31 to operate approximately 10.0 miles of rail line owned by the Jacksonville Port Authority (Authority) at the Talleyrand Docks and Terminal, in Jacksonville, Duval County, Fla. (the Line), pursuant to an operating agreement with the Authority. The Line runs from F&J Junction (between Norfolk Southern Railway milepost 5-C and CSX Transportation milepost 632.08) in an easterly direction to Municipal Docks Railway milepost 10.33 within the Talleyrand Marine Terminal.
This transaction is related to a concurrently filed verified notice of exemption in
The transaction may be consummated on or after February 23, 2017, the effective date of the exemption (30 days after the verified notice was filed).
JXPT certifies that, as a result of this transaction, its projected revenues will not result in the creation of a Class II or Class I rail carrier and will not exceed $5 million.
JXPT states that the operating agreement does not involve a provision or agreement which may limit future interchange with a third party connecting carrier.
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions to stay must be filed no later than February 16, 2017 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36089, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, a copy must be served on Karl Morell, Karl Morell & Associates, Suite 225, 655 Fifteenth St. NW., Washington, DC 20005.
Board decisions and notices are available on our Web site at “
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
On September 29, 2016, The Indiana Rail Road Company (INRD) filed a verified notice of exemption in Docket No. FD 36068 for trackage rights under the class exemption at 49 CFR 1180.2(d)(7) and simultaneously filed a petition in this sub-docket to partially revoke the exemption to allow the trackage rights to expire on December 31, 2017. Notice of the exemption in Docket No. FD 36068 was served and published in the
As explained by INRD in its notice of exemption in Docket No. FD 36068, pursuant to a May 15, 2008 trackage rights agreement and two subsequent supplements to that agreement dated as of August 1, 2009, and November 20, 2009, INRD holds trackage rights over a line of railroad of CSX Transportation, Inc. (CSXT) from Sullivan to Carlisle and Oaktown, Ind.
INRD states in its petition in this sub-docket that CSXT agreed to temporarily expand the existing trackage rights to allow INRD to handle loaded and empty coal trains between the Oaktown Mine and the Kentucky Utilities Generating Station in Harrodsburg, Ky., in interline service with other rail carriers.
Although INRD and CSXT have expressly agreed on the duration of the proposed Agreement, trackage rights approved under the class exemption at 49 CFR 1180.2(d)(7) typically remain effective indefinitely, regardless of any contract provisions. Occasionally, however, trackage rights exemptions have been granted for a limited time period rather than in perpetuity.
Under 49 U.S.C. 10502, the Board may exempt a person, class of persons, or a transaction or service, in whole or in part, when it finds that: (1) Continued regulation is not necessary to carry out the rail transportation policy of 49 U.S.C. 10101; and (2) either the transaction or service is of limited scope, or regulation is not necessary to protect shippers from the abuse of market power.
INRD's trackage rights were already authorized under the class exemption at 49 CFR 1180.2(d)(7). Granting partial revocation in these circumstances would promote the rail transportation policy by eliminating the need to file a second pleading seeking discontinuance when the agreement expires, thereby promoting rail transportation policy goals at 49 U.S.C. 10101(2), (7), and (15). Moreover, limiting the term of the trackage rights is consistent with the limited scope of the transaction previously exempted. Therefore, the Board will grant the petition and permit the trackage rights exempted in Docket No. FD 36068 to expire on December 31, 2017.
To provide the statutorily mandated protection to any employee adversely affected by the discontinuance of trackage rights, the Board will impose the employee protective conditions set forth in
This action is categorically excluded from environmental review under 49 CFR 1105.6(c).
1. The petition for partial revocation is granted.
2. Under 49 U.S.C. 10502, the trackage rights described in Docket No. FD 36068 are exempted, as discussed above, to permit the trackage rights to expire on December 31, 2017, subject to the employee protective conditions set forth in
3. Notice will be published in the
4. This decision is effective on March 11, 2017. Petitions to stay must be filed by February 21, 2017. Petitions for reconsideration must be filed by March 1, 2017.
By the Board, Acting Chairman Begeman, Vice Chairman Elliott, and Commissioner Miller.
Watco Holdings, Inc. (Watco), a noncarrier, has filed a verified notice of exemption pursuant to 49 CFR 1180.2(d)(2) to continue in control of Jacksonville Port Terminal Railroad, L.L.C. (JXPT), upon JXPT's becoming a Class III rail carrier. Watco owns, indirectly, 100% of the issued and outstanding stock of JXPT, a limited liability company.
This transaction is related to a concurrently filed verified notice of exemption in
The transaction may be consummated on or after February 23, 2017, the effective date of the exemption.
Watco currently controls, indirectly, 34 Class III rail carriers and one Class II rail carrier, collectively operating in 24 states. For a complete list of these rail carriers and the states in which they operate, see Watco's notice of exemption filed on January 24, 2017. The notice is available on the Board's Web site at “
Watco represents that: (1) The rail line to be operated by JXPT does not connect with any other railroads operated by the carrier in the Watco's corporate family; (2) the continuance in control is not part of a series of anticipated transactions that would connect the rail line to be operated by JXPT with any other railroad in applicant's corporate family; and (3) the transaction does not involve a Class I rail carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. Because the transaction involves control of one Class II and one or more Class III rail carriers, the transaction is subject to the labor protection requirements of Section 11326(b) and
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Stay petitions must be filed no later than February 16, 2017 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36090, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, one copy of each pleading must be served on Karl Morell, Karl Morell & Associates, Suite 225, 655 Fifteenth St. NW., Washington, DC 20005.
Board decisions and notices are available on our Web site at “
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Susquehanna River Basin Commission.
Notice.
This notice lists the approved by rule projects rescinded by the Susquehanna River Basin Commission during the period set forth in
January 1-31, 2017.
Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel, telephone: (717) 238-0423, ext. 1312; fax: (717) 238-2436; email:
This notice lists the projects, described below, being rescinded for the consumptive use of water pursuant to the Commission's approval by rule process set forth in 18 CFR 806.22(e) and 806.22(f) for the time period specified above:
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Pub. L. 91-575, 84 Stat. 1509
Susquehanna River Basin Commission.
Notice.
This notice lists the projects approved by rule by the Susquehanna River Basin Commission during the period set forth in
January 1-31, 2017.
Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel, telephone: (717) 238-0423, ext. 1312; fax: (717) 238-2436; email:
This notice lists the projects, described below, receiving approval for the consumptive use of water pursuant to the Commission's approval by rule process set forth in 18 CFR 806.22(f) for the time period specified above:
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Pub. L. 91-575, 84 Stat. 1509
Federal Transit Administration (FTA), DOT.
Notice; delay of effective dates.
In accordance with the White House memorandum issued on January 20, 2017 regarding a “Regulatory Freeze Pending Review,” this notice delays the effective dates of the Award Management Requirements Circular and the Buy America Handbook until March 21, 2017.
The effective date of each guidance document is delayed, with a new effective date of March 21, 2017.
Chaya Koffman, Assistant Chief Counsel, Legislation and Regulations, (202) 366-3101,
On January 20, 2017, the White House issued a memorandum regarding a “Regulatory Freeze Pending Review.” (
In addition to regulations, the White House memorandum applies to any agency statement of general
FTA's implementation of the White House memorandum without opportunity for public comment is based in the good cause exceptions in 5 U.S.C. 553(b)(3)(B) and 553(d)(3), in that seeking public comment is impracticable, unnecessary, and contrary to public interest. Given the imminence of the effective date, seeking public comment on this temporary delay is impractical, as well as contrary to the public interest in the orderly promulgation and implementation of guidance documents. The imminence of the effective date also is good cause for making this action effective immediately upon publication. The temporary delay in effective dates until March 21, 2017, is necessary to give administration officials the opportunity for further review and consideration of these guidance documents.
Office of Small and Disadvantaged Business Utilization (OSDBU), Office of the Secretary of Transportation (OST), Department of Transportation (DOT).
Notice of funding availability for the South Atlantic Region SBTRC.
The Department of Transportation (DOT), Office of the Secretary (OST), Office of Small and Disadvantaged Business Utilization (OSDBU) announces the opportunity for business centered community-based organizations, transportation-related trade associations, colleges and universities, community colleges, or chambers of commerce, registered with the Internal Revenue Service as 501 C(6) or 501 C(3) tax-exempt organizations, to compete for participation in OSDBU's Small Business Transportation Resource Center (SBTRC) program in the South Atlantic Region (Virginia, West Virginia, North Carolina and Kentucky).
Complete Proposals must be received on or before March 3, 2017, 6:00 p.m. Eastern Standard Time (EST). Proposals received after the deadline will be considered non-responsive and will not be reviewed.
Applications must be electronically submitted through
For further information concerning this notice, contact Ms. Steronica Mattocks, U.S. Department of Transportation, Office of Small and Disadvantaged Business Utilization, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-0658. Email:
OSDBU will enter into Cooperative Agreements with these organizations to provide outreach to the small business community in their designated region and provide financial and technical assistance, business training programs, business assessment, management training, counseling, marketing and outreach, and the dissemination of information, to encourage and assist small businesses to become better prepared to compete for, obtain, and manage DOT funded transportation-related contracts and subcontracts at the federal, state and local levels. Throughout this notice, the term “small business” will refer to: 8(a), small disadvantaged businesses (SDB), disadvantaged business enterprises (DBE), women owned small businesses (WOSB), HubZone, service disabled veteran owned businesses (SDVOB), and veteran owned small businesses (VOSB). Throughout this notice, “transportation-related” is defined as the maintenance, rehabilitation, restructuring, improvement, or revitalization of any of the nation's modes of transportation.
The national SBTRC program utilizes Cooperative Agreements with chambers of commerce, trade associations, educational institutions and business-centered community based organizations to establish SBTRCs to provide business training, technical assistance and information to DOT grantees and recipients, prime contractors and subcontractors. In order to be effective and serve their target audience, the SBTRCs must be active in the local transportation community in order to identify and communicate opportunities and provide the required technical assistance. SBTRCs must already have, or demonstrate the ability to, establish working relationships with the state and local transportation agencies and technical assistance agencies (
Effective outreach is critical to the success of the SBTRC program. In order for their outreach efforts to be effective, SBTRCs must be familiar with DOT's Operating Administrations, its funding sources, and how funding is awarded to DOT grantees, recipients, contractors, subcontractors, and its: Financial assistance programs. SBTRCs must provide outreach to the regional small business transportation community to disseminate information and distribute DOT-published marketing materials, such as Short Term Lending Program (STLP) Information, Bonding Education Program (BEP) information, SBTRC brochures and literature, DOT Procurement Forecasts; Contracting with DOT booklets, Women and Girls in Transportation Initiative (WITI) information, and any other materials or resources that DOT or OSDBU may develop for this purpose. To maximize outreach, the SBTRC may be called upon to participate in regional and national conferences and seminars. Quantities of DOT publications for on-hand inventory and dissemination at conferences and seminars will be available upon request from the OSDBU office.
The DOT established OSDBU in accordance with Public Law 95-507, an amendment to the Small Business Act and the Small Business Investment Act of 1958. The mission of OSDBU at DOT is to ensure that the small and disadvantaged business policies and goals of the Secretary of Transportation are developed and implemented in a fair, efficient and effective manner to serve small and disadvantaged businesses throughout the country.
The OSDBU also administers the provisions of Title 49, Section, 332, the Minority Resource Center (MRC) which includes the duties of advocacy, outreach and: Financial services on behalf of small and disadvantaged business and those certified under 49 CFR parts 23 and 26 as Disadvantaged Business Enterprises (DBE) and the development of programs to encourage, stimulate, promote and assist small businesses to become better prepared to compete for, obtain and manage transportation-related contracts and subcontracts.
The Regional Assistance Division of OSDBU, through the SBTRC program, allows OSDBU to partner with local organizations to offer a comprehensive delivery system of business training, technical assistance and dissemination of information, targeted towards small business transportation enterprises in their regions. The SBTRCs are established and funded through Cooperative Agreements between eligible applicants and OSDBU. The SBTRCs function as regional offices of OSDBU and fully execute the mission of the OSDBU nationally.
OSDBU enters into Cooperative Agreements with recipients to establish and fund a regional SBTRC. Under the Cooperative Agreement OSDBU will be “substantially involved” with the overall operations of the SBTRC. This involvement includes directing SBTRC staff to travel and represent OSDBU on panels and events. OSDBU will make one award under this announcement. Award ceiling for this announcement is $150,000. The recipient will begin performing on the award on April 1, 2017 and the period of performance (POP) will be April 1, 2017 to March 30, 2018. This is a 1 year grant with an option to renew for 2 additional years at the discretion of U.S. DOT.
Cooperative agreement awards will be distributed to the region(s) as follows:
Cooperative agreement awards by region are based upon an analysis of DBEs, Certified Small Businesses, and U.S. DOT transportation dollars in each region.
It is OSDBU's intent to maximize the benefits received by the small business transportation community through the SBTRC. Funding will reimburse an on-site Project Director for
To be eligible, an organization must be an established, nonprofit, community-based organization, transportation-related trade association, chamber of commerce, college or university, community college, and any other qualifying transportation-related non-profit organization which has the documented experience and capacity necessary to successfully operate and administer a coordinated delivery system that provides access for small businesses to prepare and compete for transportation-related contracts.
In addition, to be eligible, the applicant organization must:
(a) Be an established 501 C (3) or 501 C (6) tax-exempt organization and provide documentation as verification. No application will be accepted without proof of tax-exempt status;
(b) Have at least one year of documented and continuous experience prior to the date of application in providing advocacy, outreach, and technical assistance to small businesses within the region in which proposed services will be provided. Prior performance providing services to the transportation community is preferable, but not required; and
(c) Have an office physically located within the proposed city in the designated headquarters state in the
Conduct an assessment of small businesses in the SBTRC region to determine their training and technical assistance needs, and use information that is available at no cost to structure programs and services that will enable small businesses to become better prepared to compete for and receive transportation-related contract awards.
Utilize OSDBU's Intake Form to document each small business assisted by the SBTRC and type of service(s) provided. A complete list of businesses that have filled out the form shall be submitted as part of the SBTRC report, submitted via email to the Regional Assistance Division on a regular basis (using the SBTRC report). This report will detail SBTRC activities and performance results. The data provided must be supported by the narrative (if asked).
Ensure that an array of information is made available for distribution to the small business transportation community that is designed to inform and educate the community on DOT/OSDBU services and opportunities.
Coordinate efforts with OSDBU in order to maintain an on-hand inventory of DOT/OSDBU informational materials for general dissemination and for distribution at transportation-related conferences and other events.
Collaborate with agencies, such as State, Regional, and Local Transportation Government Agencies, SBA, U.S. Department of Commerce's Minority Business Development Centers (MBDCs), Service Corps of Retired Executives (SCORE), Procurement Technical Assistance Centers (PTACs), and Small Business Development Centers (SBDCs), to offer a broad range of counseling services to transportation-related small business enterprises.
Create a technical assistance plan that will provide each counseled participant with the knowledge and skills necessary to improve the management of their own small business to expand their transportation-related contracts and subcontracts portfolio.
Provide a minimum of 20 hours of individual or group counseling sessions to small businesses per month. This counseling includes in-person meetings or over the phone, and does not include any time taken to do email correspondence.
Establish a Regional Planning Committee consisting of at least 10 members that includes representatives from the regional community and federal, state, and local agencies. The highway, airport, and transit authorities for the SBTRCs region; additionally, the state DOT must have representation on the planning committee. The committee shall be established no later than 60 days after the execution of the Cooperative Agreement between the OSDBU and the selected SBTRC.
Provide a forum for the federal, state, and local agencies to disseminate information about upcoming DOT procurements and SBTRC activities. Hold either monthly or quarterly meetings at a time and place agreed upon by SBTRC and planning committee members (conference calls and/or video conferences are acceptable).
Use the initial session hosted by the SBTRC to explain the mission of the committee and identify roles of staff and the members of the group. Responsibility for the agenda and direction of the Planning Committee should be handled by the SBTRC Project Director or his/her designee.
Utilize the services of the System for Award Management (SAM) and other sources to construct a database of regional small businesses that currently are or may in the future participate in DOT direct and DOT funded transportation related contracts, and make this database available to OSDBU upon request.
Utilize a database of regional transportation-related small businesses to match opportunities identified through the planning committee forum, FedBiz Opps (a web-based system for posting solicitations and other Federal procurement related documents on the Internet), and other sources to eligible small businesses and inform the small business community about those opportunities.
Develop a “targeted” database of firms (100-150) that have the capacity and capabilities, and are ready, willing and able to participate in DOT contracts and subcontracts immediately. This control group will receive ample resources from the SBTRC,
Identify regional, state and local conferences where a significant number of small businesses, with transportation related capabilities, are expected to be in attendance. Maintain and submit a list of those events to the regional Assistance Division for review and posting on the OSDBU Web site on a regular basis. Clearly identity the events designated for SBTRC participation and include recommendations for OSDBU participation. This information can be submitted as part of the SBTRC report.
Conduct outreach and disseminate information to small businesses at Regional transportation-related conferences, seminars, and workshops. In the event that the SBTRC is requested to participate in an event, the OSDBU will provide DOT materials, the OSDBU banner and other information that is deemed necessary for the event.
Submit a conference summary report within the “Events” section of the SBTRC Report. The conference summary report should summarize the activity, contacts made, outreach results, and recommendations for continued or discontinued participation in future similar events sponsored by that organization.
Upon request by OSDBU, coordinate efforts with DOT's grantees and recipients at the state and/or local levels to sponsor or cosponsor and OSDBU transportation related conference in the region (commonly referred to as “Small Business Summits”).
Participate in the SBTRC Monthly teleconference call, hosted by the OSDBU Regional Assistance Division.
Work with STLP participating banks and if not available, other institutions to deliver a minimum of five (5) seminars/workshops per year on the STLP, and/or other financial assistance programs, to the transportation related small business community. Seminars/workshops must cover the entire STLP/loan process, form completion of STLP/loan applications and preparation of the loan package.
Provide direct support, technical support, and advocacy services to potential STLP applicants to increase the probability of STLP loan approval and generate a minimum of four (4) completed STLP applications per year. Provide direct support, technical support, and advocacy services to Small and Disadvantaged Businesses interested in obtaining a loan from another type of Government Lending
Work with OSDBU, bonding industry partners, local small business transportation stakeholders, and local bond producers/agents in your region to deliver a minimum of two (2) complete Bonding Education Programs and secure 3% of the total DBE contract value for each transportation project. The BEP consists of the following components; (1) the stakeholder's meeting; (2) the educational workshops component; (3) the bond readiness component; and (4) follow-on assistance to BEP participants to provide technical and procurement assistance based on the prescriptive plan determined by the BEP. For each BEP event, work with the local bond producers/agents in your region and the disadvantaged business participants to deliver a minimum of ten (10) disadvantaged business participants in the BEP with either access to bonding or an increase in the bonding capacity. The programs will be funded separately and in addition to the amount listed in 1.3 of the solicitation.
The SBTRC shall implement the WITI program as defined in the WITI Policy. The WITI program is designed to identify, educate, attract, and retain women and girls from a variety of disciplines in the transportation industry.
The SBTRC shall also be responsible for outreach activities in the implementation of this program and advertising the WITI program to all colleges and universities and transportation enemies in their region. The WITI program shall be developed in conjunction with the skill needs of the U.S. DOT, state and local transportation agencies and appropriate private sector transportation-related participants including, S/WOBs/DBEs, and women organizations involved in transportation. Emphasis shall be placed on establishing partnerships with transportation-related businesses. The SBTRC will be required to host 1 WITI event and attend at least
Each region will establish a Women In Transportation Advisory Committee. The committee will provide a forum to identify and provide workable solutions to barriers that women-owned businesses encounter in transportation-related careers. The committee will have
(a) Provide consultation and technical assistance in planning, implementing, and evaluating activities under this announcement.
(b) Provide orientation and training to the applicant organization.
(c) Monitor SBTRC activities, cooperative agreement compliance, and overall SBTRC performance.
(d) Assist SBTRC to develop or strengthen its relationships with federal, state, and local transportation authorities, other technical assistance organizations, and DOT grantees.
(e) Facilitate the exchange and transfer of successful program activities and information among all SBTRC regions.
(f) Provide the SBTRC with DOT/OSDBU materials and other relevant transportation related information for dissemination.
(g) Maintain effective communication with the SBTRC and inform them of transportation news and contracting opportunities to share with small businesses in their region.
(h) Provide all required forms to be used by the SBTRC for reporting purposes under the program.
(i) Perform an annual performance evaluation of the SBTRC. Satisfactory performance is a condition of continued participation of the organization as an SBTRC and execution of all option years.
(a) Format for Proposals
Each proposal must be submitted to
(b) Address; Number of Copies; Deadlines for Submission
Any eligible organization, as defined in Section C of this announcement, will submit only one proposal per region for consideration by OSDBU. Applications must be double spaced, and printed in a font size not smaller than 12 points. Applications will not exceed 35 single-sided pages, not including any requested attachments. All pages should be numbered at the top of each page. All documentation, attachments, or other information pertinent to the application must be included in a single submission. Proposal packages must be submitted electronically to
(c) Each applicant must be registered in System for Award Management (SAM) and provide their unique Entity Identifier with the proposal.
(d) Each application must include the most recent two years of the applying organization's financial statements. We prefer to receive audited, but reviewed financial statements are acceptable.
(e) Applications will not be accepted if they do not include all required information.
(f) Proposals must be received in
OSDBU will award the cooperative agreement on a best value basis, using the following criteria to rate and rank applications:
Applications will be evaluated using a point system (maximum number of points = 100);
The applicant must describe their strategy to achieve the overall mission of the SBTRC as described in this solicitation and service the small business community in their entire geographic regional area. The applicant must also describe how the specific activities outlined in Section C will be implemented and executed in the organization's regional area. OSDBU will consider the extent to which the proposed objectives are specific, measurable, time specific, and consistent with OSDBU goals and the applicant organization's overall mission. OSDBU will give priority consideration to applicants that demonstrate innovation and creativity in their approach to assist small businesses to become successful transportation contractors and increase their ability to access DOT contracting opportunities and financial assistance programs. Applicants must also submit the estimated direct costs, other than labor, to execute their proposed strategy. OSDBU will consider the quality of the applicant's plan for conducting program activities and the likelihood that the proposed methods will be successful in achieving proposed objectives at the proposed cost.
The applicant must describe their established relationships within their geographic region and demonstrate their ability to coordinate and establish effective networks with DOT grant recipients and local/regional technical assistance agencies to maximize resources. OSDBU will consider innovative aspects of the applicant's approach and strategy to build upon their existing relationships and establish networks with existing resources in their geographical area. The applicant should describe their strategy to obtain and collaboration on SBTRC from DOT grantees and recipients, transportation prime contractors and subcontractors, the SBA, U.S. Department of Commerce's Minority Business Development Centers (MBDCs), Service Corps of Retired Executives (SCORE), State DOTs, and State Highway supportive services contractors. In rating this factor, OSDBU will consider the extent to which the applicant demonstrates ability to multidimensional. The applicant must demonstrate that they have the ability to access a broad range of supportive services to effectively serve a broad range of transportation-related small businesses within their respective geographical region. Emphasis will also be placed on the extent to which the applicant identifies a clear outreach strategy related to the identified needs that can be successfully carried out within the period of this agreement and a plan for involving the Planning Committee in the execution of that strategy.
The applicant must demonstrate that they have the organizational capability to meet the program requirements set forth in Section C. The applicant organization must have sufficient resources and past performance experience to successfully provide outreach to transportation-related small businesses in their geographical area and carry out the mission of the SBTRC. In rating this factor, OSDBU will consider the extent to which the applicant's organization has recent, relevant and successful experience in advocating for and addressing the needs of small businesses. Applicants will be given points for demonstrated past transportation-related performance. The applicant must also describe technical and administrative resources it plans to use in achieving proposed objectives. In their description, the applicant must describe their facilities, computer and technical facilities, ability to tap into volunteer staff time, and a plan for sufficient matching alternative financial resources to fund the general and administrative costs of the SBTRC. The applicant must also describe their administrative and financial staff. It will be the responsibility of the successful candidate to not only provide the services outlined herein to small business in the transportation industry, but to also successfully manage and maintain their internal financial, payment, and invoicing process with their financial management offices. OSDBU will place an emphasis on capabilities of the applicant's financial management staff. Additionally, a site visit will be required prior to award for those candidates that are being strongly considered. A member of the OSDBU team will contact those candidates to schedule the site visits prior to the award of the agreement.
The applicant organization must provide a list of proposed personnel for the project, with salaries, fringe benefit burden factors, education levels and previous experience clearly delineated. The applicant's project team must be well-qualified, knowledgeable, and able to effectively serve the diverse and broad range of small businesses in their geographical region. The Executive Director and the Project Director shall be deemed key personnel. Detailed resumes must be submitted for all proposed key personnel and outside consultants and subcontractors. Proposed key personnel must have detailed demonstrated experience providing services similar in scope and nature to the proposed effort. The proposed Project Director will serve as the responsible individual for the program. 100% of the Project Director's time must be dedicated to the SBTRC. Both the Executive and Project Directors must be located on-site. In this element, OSDBU will consider the extent to which the applicant's proposed Staffing Plan; (a) clearly meets the education and experience requirements to accomplish the objectives of the cooperative agreement; (b) delineates staff responsibilities and accountability for all work required and; (c) presents a clear and feasible ability to execute the applicant's proposed approach and strategy.
Applicants must submit the total proposed cost of establishing and administering the SBTRC in the applicant's geographical region for a 12 month period, inclusive of costs funded through alternative matching resources. The applicant's budget must be adequate to support the proposed strategy and costs must be reasonable in relation to project objectives. The portion of the submitted budget funded by OSDBU cannot exceed the ceiling outlined in Section B. Applicants are encouraged to provide in-kind costs and other innovative cost approaches.
A review panel will score each application based upon the evaluation criteria listed above. Points will be given for each evaluation criteria category, not to exceed the maximum number of points allowed for each category. Proposals which are deemed non-responsive, do not meet the established criteria, or incomplete at the time of submission will be disqualified. OSDBU will perform a responsibility determination of the prospective awardee in the region, which will include a site visit, before awarding the cooperative agreement.
Applicants must submit signed statements by key personnel and all organization principals indicating that they, or members of their immediate funded transportation project, nor any relationships with local or state transportation agencies that may have the appearance of a conflict of interest.
A team of people will evaluate the proposals. Those proposals meeting the mandatory criteria will be assessed based on the above mentioned criteria. The proposals demonstrating the organization's capacity to fully execute the requirements of this grant will be considered. The proposal receiving the highest overall score will be awarded.
Following the evaluation outlined in Section E, the OSDBU will announce the awarded applicant with a written Notice of Funding Award. The NOFA will also include the cooperative agreement for signature.
All awards will be administered pursuant to the Uniform Administrative Cost Principles and Audit Requirements for Federal Awards found in
Performance Reporting—The recipient of this cooperative agreement
Progress Reporting—The recipient for this cooperative agreement funding must submit quarterly progress reports and annual Federal Financial Report (SF-425) on the financial condition of the cooperative agreement and its progress, as well as an Annual Budget Review and Implementation Plan to monitor the use of Federal funds and ensure accountability and financial transparency in the program.
For further information this notice please contact the OSDBU program staff via email at
All information submitted as part of or in support of any application shall use publicly available data or data that can be made public and methodologies that are accepted by industry practice and standards, to the extent possible. If the application includes information you consider to be a trade secret or confidential commercial or financial information, the applicant should do the following: (1) Note on the front cover that the submission “Contains Confidential Business Information (CBI)”; (2) mark each affected page “CBI”; and (3) highlight or otherwise denote the CBI portions. DOT protects such information from disclosure to the extent allowed under applicable law. In the event DOT received a Freedom of Information Act (FOIA) request for the information, DOT will follow the procedures described in its FOIA regulation as
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning an existing final regulation, CO-99-91 (TD 8490), Limitations on Corporate Net Operating Loss (section 1.382-3).
Written comments should be received on or before April 10, 2017 to be assured of consideration.
Direct all written comments to Gerald J. Shields, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulations should be directed to Tuawana Pinkston at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Currently, the IRS is soliciting comments concerning existing regulations, 26 CFR 31.6001-1, Records in general; 26 CFR 31.6001-2 Additional Records under FICA; 26 CFR 31.6001-3, Additional records under Railroad Retirement Tax Act; 26 CFR 31.6001-5, Additional records in connection with collection of income tax at source on wages; 26 CFR 31.6001-6, Notice by District Director requiring returns, statements, or the keeping of records.
Written comments should be received on or before April 10, 2017 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of regulation sections should be directed to Lanita Van Dyke, at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington DC 20224, or through the internet,at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice.
This notice is provided in accordance with IRC section 6039G of the Health Insurance Portability and Accountability Act (HIPPA) of 1996, as amended. This listing contains the name of each individual losing United States citizenship (within the meaning of section 877(a) or 877A) with respect to whom the Secretary received information during the quarter ending December 31, 2016. For purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Currently, the IRS is soliciting comments concerning an optional 10-Year write-off of certain tax preferences.
Written comments should be received on or before April 10, 2017 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the for and instructions should be directed to LaNita Van Dyke, at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet, at
The following paragraph applies to all of the collections of information covered by this notice.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Departmental Offices, U.S. Department of the Treasury.
Notice.
The Department of the Treasury will submit the following information collection requests to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice.
Comments should be received on or before March 13, 2017 to be assured of consideration.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submissions may be obtained by emailing
44 U.S.C. 3501
Departmental Offices, U.S. Department of the Treasury.
Notice.
The Department of the Treasury will submit the following information collection requests to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice.
Comments should be received on or before March 13, 2017 to be assured of consideration.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submissions may be obtained by emailing
44 U.S.C. 3501
Fish and Wildlife Service, Interior.
Proposed rule; supplemental.
The U.S. Fish and Wildlife Service (hereinafter Service or we) is proposing to establish the 2017-18 hunting regulations for certain migratory game birds. We annually prescribe frameworks, or outer limits, for dates and times when hunting may occur and the number of birds that may be taken and possessed in hunting seasons. These frameworks are necessary to allow State selections of seasons and limits and to allow recreational harvest at levels compatible with population and habitat conditions.
You must submit comments on the proposed migratory bird hunting frameworks by March 13, 2017.
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We will post all comments on
Ron W. Kokel, U.S. Fish and Wildlife Service, Department of the Interior, MS: MB, 5275 Leesburg Pike, Falls Church, VA 22041-3803; (703) 358-1967.
As part of DOI's retrospective regulatory review, we developed a schedule for migratory game bird hunting regulations that is more efficient and will provide dates much earlier than was possible under the old process. This will facilitate planning for the States and all parties interested in migratory bird hunting. With the 2016-17 hunting season, we began using a new schedule for establishing our annual migratory game bird hunting regulations. We combined the then current early- and late-season regulatory actions into a single process, based on predictions derived from long-term biological information and harvest strategies, to establish migratory bird hunting seasons much earlier than the system we have used for many years. Under the new process, we will develop proposed hunting season frameworks for a given year in the fall of the prior year. We will finalize those frameworks a few months later, thereby enabling the State agencies to select and publish their season dates in early summer.
On June 10, 2016, we published a proposal to amend title 50 of the Code of Federal Regulations (CFR) at part 20 (81 FR 38050). The proposal provided a background and overview of the migratory bird hunting regulations process, and addressed the establishment of seasons, limits, and other regulations for hunting migratory game birds under §§ 20.101 through 20.107, 20.109, and 20.110 of subpart K. Major steps in the 2017-18 regulatory cycle relating to open public meetings and
Subsequent documents will refer only to numbered items requiring attention. Therefore, it is important to note that we will omit those items requiring no attention, and remaining numbered items will be discontinuous and appear incomplete.
The June 10 proposed rule also provided detailed information on the proposed 2017-18 regulatory schedule and announced the Service Regulations Committee (SRC) and Flyway Council meetings.
On August 12, 2016, we published in the
On October 25-26, 2016, we held open meetings with the Flyway Council Consultants, at which the participants reviewed information on the current status of migratory game birds and developed recommendations for the 2017-18 regulations for these species.
This document deals specifically with proposed frameworks for the migratory bird hunting regulations. It will lead to final frameworks from which States may select season dates, shooting hours, areas, and limits.
We have considered all pertinent comments received through November 1, 2016, on the June 10 and August 12, 2016, proposed rulemaking documents in developing this document. In addition, new proposals for certain regulations are provided for public comment. The comment period is specified above under
Each year we publish various species status reports that provide detailed information on the status and harvest of migratory game birds, including information on the methodologies and results. These reports are available at the address indicated under
The preliminary proposed rulemaking, which appeared in the June 10, 2016,
We received recommendations from all four Flyway Councils. Some recommendations supported continuation of last year's frameworks. Due to the comprehensive nature of the annual review of the frameworks performed by the Councils, support for continuation of last year's frameworks is assumed for items for which no recommendations were received. Council recommendations for changes in the frameworks are summarized below. We have included only the numbered items pertaining to issues for which we received recommendations. Consequently, the issues do not follow in successive numerical order.
We seek additional information and comments on the recommendations in this supplemental proposed rule. New proposals and modifications to previously described proposals are discussed below. Wherever possible, they are discussed under headings corresponding to the numbered items in the June 10, 2016, proposed rule.
The Mississippi Flyway Council recommended that regulation changes be restricted to one step per year, both when restricting as well as liberalizing hunting regulations.
The prescribed regulatory alternative for the Atlantic, Mississippi, Central, and Pacific Flyways is based on the status of mallard populations that contribute primarily to each Flyway. In the Atlantic Flyway, we set hunting regulations based on the population status of mallards breeding in eastern North America (Federal survey strata 51-54 and 56, and State surveys in New England and the mid-Atlantic region). In the Central and Mississippi Flyways, we set hunting regulations based on the status and dynamics of mid-continent mallards. Mid-continent mallards are those breeding in central North America (Federal survey strata 13-18, 20-50, and 75-77, and State surveys in Minnesota, Wisconsin, and Michigan). In the Pacific Flyway, we set hunting regulations based on the status and dynamics of western mallards. Western mallards are those breeding in Alaska and the northern Yukon Territory (as based on Federal surveys in strata 1-12), and in British Columbia, Washington, Oregon, and California (as based on Canadian Wildlife Service and State-conducted surveys).
For the 2017-18 season, we recommend continuing to use independent optimization to determine the optimal regulatory choice for each mallard stock. This means that we would develop regulations for eastern mallards, mid-continent mallards, and western mallards independently, based upon the breeding stock that contributes primarily to each Flyway. We detailed implementation of this AHM decision framework for western and mid-continent mallards in the July 24, 2008,
As we stated in the August 12, 2016, proposed rule, for the 2017-18 hunting season, we are continuing to consider the same regulatory alternatives as those used last year. The nature of the “restrictive,” “moderate,” and “liberal” alternatives has remained essentially unchanged since 1997, except that extended framework dates have been offered in the “moderate” and “liberal” regulatory alternatives since 2002 (67 FR 47224; July 17, 2002).
The optimal AHM strategies for mid-continent, eastern, and western mallards for the 2017-18 hunting season were calculated using: (1) Harvest-management objectives specific to each mallard stock; (2) the 2017-18 regulatory alternatives (see further discussion below under B. Regulatory Alternatives); and (3) current population models and associated weights. Based on “liberal” regulatory alternatives selected for the 2016 hunting season, the 2016 survey results of 11.89 million mid-continent mallards (traditional survey area minus Alaska and the Old
Regarding the Mississippi Flyway Council recommendation to limit regulatory changes to one step per year, as we stated in the August 12, 2016,
The Mississippi Flyway Council recommended that States with ongoing experimental teal seasons in the Mississippi Flyway be allowed an additional year (2017-18 seasons) to evaluate impacts to non-target species.
The Central Flyway Council recommended that we allow an experimental September teal season in the northern portion of Nebraska to continue for the 2017-18 hunting season.
We agree with the Atlantic Flyway's request to grant operation status to Maryland's pre-sunrise portion of their season. Available information collected during the 2013-16 seasons indicates that both non-target harvest and attempt rates were well below the maximum allowed rates.
We also agree with the Councils' requests to extend the current experimental seasons for another season in order to collect additional data. Sample size requirement criteria is specified in the memorandums of agreement (MOAs) between the various States and the Service, and the MOAs allow for an extension of the experimental seasons to meet these data needs, with concurrence by both the Service and the State.
A copy of the strategy is available at the address indicated under
For the 2017-18 season, the optimal country-specific regulatory strategies were calculated using: (1) The black duck harvest objective (98 percent of long-term cumulative harvest); (2) 2017-18 country-specific regulatory alternatives; (3) current parameter estimates for mallard competition and additive mortality; and (4) 2016 survey results of 0.61 million breeding black ducks and 0.41 million breeding mallards in the core survey area. The optimal regulatory choices for the 2017-18 season are the “liberal” package in
For scaup, optimal regulatory strategies for the 2017-18 season were calculated using: (1) An objective to achieve 95 percent of long-term cumulative harvest, (2) current scaup regulatory alternatives, and (3) updated model parameters and weights. Based on a “moderate” regulatory alternative selected in 2016, and the 2016 survey results of 4.99 million scaup, the optimal regulatory choice for the 2017-18 season for all four Flyways is the “moderate” regulatory alternative.
In the Mississippi Flyway, we note that during the past several years the Mississippi Flyway has moved from State-specific frameworks to a general flyway-wide framework for Canada goose regulations. At the same time, population monitoring programs have been modified to become more cost-efficient and have focused on obtaining general subarctic goose population estimates rather than separate estimates for the Mississippi Valley Population (MVP), the Eastern Prairie Population (EPP), and the Southern James Bay Population (SJBP). We have allowed changes to Mississippi Flyway Canada goose frameworks with the expectation that a new Canada goose management plan would be developed. Because the Atlantic and Mississippi Flyway Councils currently share a joint management plan for the SJBP population, we believe the Atlantic Flyway must be included in the development of the new Canada goose management plan in the Mississippi Flyway. Thus, we urge the Mississippi Flyway to complete the Canada goose management plan this winter and collaborate with the Atlantic Flyway where appropriate. The final plan should be presented at the June 2017 SRC meeting. We will not entertain further changes to Mississippi Flyway
The Pacific Flyway Council recommended allowing a 3-segment split hunting season for white-fronted geese in the Northeast Zone of California.
We agree with the Pacific Flyway Council's recommendation to allow a 3-segment split hunting season for white-fronted geese in the Northeast Zone of California. Current frameworks allow a 3-segment split for Canada geese and greater white-fronted geese; but this requires Pacific Flyway Council and Service approval and a 3-year evaluation by each participating State. The current 3-year average predicted fall population estimate (2014-16) for the Pacific Population of greater white-fronted geese is 600,592, which is substantially above the Flyway population objective of 300,000. Agricultural complaints have increased in the Northeastern Zone of California and there have been requests to allow more days during the late part of the season, in addition to days during the early part of the season. White-fronted geese use the Northeastern Zone as a fall and spring staging area, but otherwise winter primarily in the Sacramento Valley. A 3-segment season would allow hunting to coincide with white-fronted goose occurrence in this zone, and would be consistent with the frameworks for splitting the light goose season in the same zone. California proposed to evaluate the three-segment split season for greater white-fronted geese in the Northeastern Zone by monitoring the harvest of Tule greater white-fronted geese that are known to occur in that zone in late winter and early spring. Morphometric measurements will be obtained from hunters who allow their harvested birds to be measured, and band recovery data will be reviewed to identify subspecies harvest of white-fronted geese.
The Mississippi Flyway Council recommended that the number of segments available for non-Canada geese should be increased from 3 to 4 for the Mississippi Flyway.
The Pacific Flyway Council recommended increasing the daily bag limit from 3 to 4 for Canada geese and brant in the aggregate in Wyoming and New Mexico.
Under the new regulatory schedule, neither the expected 2017 brant production information (available summer 2017) nor the 2017 MWS count (conducted in January 2017) is yet available. However, the 2017 MWS will be completed and winter brant data will be available by the expected publication of the final frameworks (late February 2017). Therefore, in the September 24, 2015,
• If the mid-winter waterfowl survey (MWS) count is <100,000 Atlantic brant, the season would be closed.
• If the MWS count is between 100,000 and 115,000 brant, States could select a 30-day season with a 1-bird daily bag limit.
• If the MWS count is between 115,000 and 130,000 brant, States could select a 30-day season with a 2-bird daily bag limit.
• If the MWS count is between 130,000 and 150,000 brant, States could select a 50-day season with a 2-bird daily bag limit.
• If the MWS count is between 150,000 and 200,000 brant, States could select a 60-day season with a 2-bird daily bag limit.
• If the MWS count is >200,000 brant, States could select a 60-day season with a 3-bird daily bag limit.
Under all the above open-season alternatives, seasons would be between the Saturday nearest September 24 and January 31. Further, States could split their seasons into 2 segments.
When we acquire the 2017 MWS brant count in January 2017, we will select the appropriate Atlantic brant hunting season for 2017-18 from the above Atlantic brant hunt strategies and publish the result in the final frameworks rule.
As we stated above under 5. White-fronted Geese, we agree with the Mississippi Flyway Council's recommendation request to increase the number of segments available for non-Canada geese from 3 to 4 for the Mississippi Flyway. Increasing the number of segments for other geese (snow geese, white-fronted geese, and brant) will allow States flexibility to open and/or close all goose seasons on the same date. Since the numbers of brant present in the Mississippi Flyway in September are low, we expect no impacts from this change.
As we stated above under 4. Canada Geese, B. Regular Seasons, we agree with the Pacific Flyway Council's recommendation request to increase the daily bag limit from 3 to 4 for Canada geese and brant in the aggregate in Wyoming and New Mexico. We expect no impacts to brant from this proposed change.
The Pacific Flyway Council recommended two changes to the light goose season frameworks. Specifically, the Council recommended:
1. In Washington, removing the daily bag limit restriction of not more than 4 geese per day, and adding that the daily bag limit for light geese is 6.
2. In Idaho, eliminating the requirement to monitor the snow goose hunt that occurs after the last Sunday in January in the American Falls Reservoir/Fort Hall Bottoms and surrounding areas at 3-year intervals.
We agree with the Pacific Flyway Council's recommendation to remove the daily bag limit restriction of not more than 4 geese per day, and add that the daily bag limit for light geese is 6 in Washington. Current frameworks already limit the daily bag limit to 4 Canada geese for States within the western Pacific Flyway, but do allow a daily bag limit of 10 greater white-fronted geese for States within the Pacific Flyway except Washington. The current 3-year average predicted fall population estimate (2014-16) for the Pacific Population of greater white-fronted geese is 600,592, which is substantially above the Flyway population objective of 300,000. This change would allow a daily bag limit of 10 greater white-fronted geese in Washington similar to other States in the Pacific Flyway. In regard to light geese, three populations occur in the Pacific Flyway, and all are above Flyway management plan objectives based on the most recent breeding population indices. The population estimate for the Western Arctic Population (WAP) of lesser snow geese was 419,000 in 2013 (most recent estimate) on Banks Island, which is above the objective of 200,000 geese. Ross's geese were estimated at 625,100 in 2015 (most recent estimate) at Karrak Lake and are above the objective of 100,000 geese. The 2016 population estimate for Wrangel Island snow geese is 300,000, which is above the objective of 120,000 geese. Current evidence suggests most light geese in Washington during fall and early winter are primarily Wrangel Island snow geese, but an influx of WAP lesser snow and Ross's geese may occur during late winter as birds begin to move north toward breeding areas. The current 4-bird daily bag limit for geese in Washington was intended to minimize harvest of Wrangel Island snow geese when Wrangel Island geese were below the population objective. A 6-bird daily bag limit for light geese in Washington will simplify regulations by matching the 6-bird bag limit currently allowed for light geese in Oregon on or before the last Sunday in January.
We also agree with the Pacific Flyway Council's recommendation to eliminate the requirement that Idaho monitor the snow goose hunt that occurs after the last Sunday in January in the American Falls Reservoir/Fort Hall Bottoms and surrounding areas at 3-year intervals. Since the inception of the late winter light goose hunt in 2010, Idaho has conducted ground surveys in 2010, 2011, 2012, and 2015, to evaluate the effects of light goose hunting on trumpeter swans. To date, no obvious negative trends in trumpeter swan use, distribution, or abundance have been documented. We note that this program was designed to identify changes in swan distribution and swan field-feeding during the late winter light goose hunt in order to help assess if changes in that hunt were warranted. The importance of the Fort Hall Reservation to swans for field-feeding was unknown prior to the surveys conducted in 2011 and 2012. Previously, it was assumed that a majority of the field-feeding occurred on the northwest side of the American Falls Reservoir. However, surveys indicate that the Fort Hall Reservation is an important and viable site for field-feeding swans in late winter. While there is no definitive evidence indicating that swans are disturbed and displaced by hunting pressure, if negative interactions between hunting activities and swan behavior occur, the Fort Hall Reservation provides ample field-feeding opportunities where hunting is prohibited. Thus, given no compelling concerns or issues associated with trumpeter swans wintering in eastern Idaho, and no negative impacts associated with the current late winter light goose hunt, we see no reason to repeat monitoring efforts annually or every 3 years.
The Central and Pacific Flyway Councils recommended (1) expansion of the existing sandhill crane hunting unit in southwestern Montana (Gallatin and Madison Counties and the Dillon/Twin Bridges/Cardwell hunt area to include all of Beaverhead and Jefferson Counties, and (2) that allowable harvest be determined based on the formula described in the Pacific and Central Flyway Management Plan for the Rocky
Regarding the RMP crane harvest, we agree with the Central and Pacific Flyway Council's recommendation for expanding the RMP sandhill crane hunting areas in Montana to include all of Beaverhead and Jefferson Counties. The new hunt areas are consistent with the Pacific and Central Flyway Council's RMP sandhill crane management plan hunting area requirements.
Regarding the RMP crane harvest, as we discussed in the March 28, 2016, final rule (81 FR 17302), the current harvest strategy used to calculate the allowable harvest of the RMP of sandhill cranes does not fit well within the new regulatory process, similar to the Atlantic brant issue discussed above under 6. Brant. Currently, results of the fall abundance and recruitment surveys of RMP sandhill cranes, upon which the annual allowable harvest is based, will continue to be released between December 1 and January 31 each year, which is after the date for which proposed frameworks will be formulated in the new regulatory process. If the usual procedures for determining allowable harvest were used, data 2 to 4 years old would be used to determine the annual allocation for RMP sandhill cranes. Due to the variability in fall abundance and recruitment for this population, and their impact on the annual harvest allocations, we agree that relying on data that is 2 to 4 years old is not ideal. Thus, we agree that the formula to determine the annual allowable harvest for RMP sandhill cranes published in the March 28, 2016, final rule should be used under the new regulatory schedule and propose to utilize it as such.
A final estimate for the allowable harvest would be available to publish in the final rule, allowing us to use data that is 1 to 3 years old, as is currently practiced.
In 2011, we implemented a harvest strategy for woodcock (76 FR 19876, April 8, 2011). The harvest strategy provides a transparent framework for making regulatory decisions for woodcock season length and bag limit while we work to improve monitoring and assessment protocols for this species. Utilizing the criteria developed for the strategy, the 3-year average for the Singing Ground Survey indices and associated confidence intervals fall within the “moderate package” for both the Eastern and Central Management Regions. As such, a “moderate season” for both management regions for the 2017-18 season is appropriate.
Specifics of the harvest strategy can be found at
The Mississippi and Central Flyway Councils recommended the use of the “standard” season package of a 15-bird daily bag limit and a 90-day season for the 2017-18 mourning dove season in the States within the Central Management Unit. They further recommended that the South Zone in Texas opening framework date be changed from “the Friday nearest September 20th, but no earlier than September 17th” to a fixed date of September 14 and that the Special White-winged Dove Area boundary be expanded from its current boundary to include the entire South Zone.
The Pacific Flyway Council recommended use of the “standard” season framework for States in the Western Management Unit (WMU) population of mourning doves. In Idaho, Nevada, Oregon, Utah, and Washington, the season length would be no more than 60 consecutive days with a daily bag limit of 15 mourning and white-winged doves in the aggregate. In Arizona and California, the season length would be no more than 60 consecutive days, which could be split between two periods, September 1-15 and November 1-January 15. In Arizona, during the first segment of the season, the daily bag limit would be 15 mourning and white-winged doves in the aggregate, of which no more than 10 could be white-winged doves. During the remainder of the season, the daily bag limit would be 15 mourning doves. In California, the daily bag limit would be 15 mourning and white-winged doves in the aggregate, of which no more than 10 could be white-winged doves. The Pacific Flyway Council also recommended allowing a 2-segment split season in Idaho, Nevada, Oregon, Utah, and Washington.
We do not support the recommendation from the Atlantic and Mississippi Flyways to change the closing framework date for dove seasons in the EMU to January 31. We note that when this recommendation was presented to us in June, we requested information on the expected biological impacts of this change. That information has not been provided. We are also unclear as to what the EMU is trying to achieve with this recommendation, given that no additional harvest is expected. While we recognize that conducting a study to evaluate the biological impacts would be prohibitively expensive, we will work with the EMU to develop a feasible biological assessment.
We support the Central and Mississippi Flyways' recommendations to change the opening framework date
We agree with the Central and Mississippi Flyways' recommendations to expand the boundary of Texas' Special White-winged Dove Area to match that of the South Dove Zone for the 2017-18 season. Available evidence indicates that white-winged dove abundance continues to increase, and this change will allow additional harvest opportunities on this species, with minimal impacts to mourning and white-tipped doves.
We also agree with the Pacific Flyway Council's recommendation to allow a 2-segment split season in Idaho, Nevada, Oregon, Utah, and Washington. Estimated abundance of the Western Management Unit Population (WMU) of mourning doves was 37,044,000 in 2015, and was predicted to be 45,220,000 in 2016 (2016 actual abundance estimates are not yet available). The 2015 observed and 2016 predicted abundance estimates are well above the thresholds that would result in a closed (<11,600,000 doves) or restrictive (<19,300,000 doves) hunting season as prescribed in the National Mourning Dove Harvest Strategy. The estimated annual harvest rates during 2003-2015 for WMU hatch-year and after-hatch-year doves was 4.4 percent and 3.7 percent, respectively. Mourning dove harvest may increase under this proposal; however, any increase is expected to constitute a small percentage of the overall mourning dove harvest among the northern States in the WMU. Harvest Information Program data indicate 85 percent of the mourning dove harvest in the northern States of the WMU occurs during the first two weeks of September, a pattern which is similar to most other States in the United States. The option to split the dove season in Idaho, Nevada, Oregon, Utah, and Washington provides more flexibility to the States in setting doves seasons considering that dove season length increased to 60 days starting in 2015, compared to 30 days during 1987-2014. Currently, all States in the Eastern Management Unit, the Central Management Unit, and southern States in the Western Management Unit are allowed to split their dove seasons into two or three segments. Thus, this change will make regulations regarding split dove seasons similar in all States within the Pacific Flyway, and result in greater consistency throughout all 3 dove management units.
We have prepared a draft environmental assessment on the proposed emperor goose season in Alaska. It is available at either
The Department of the Interior's policy is, whenever possible, to afford the public an opportunity to participate in the rulemaking process. Accordingly, we invite interested persons to submit written comments, suggestions, or recommendations regarding the proposed regulations. Before promulgating final migratory game bird hunting regulations, we will consider all comments we receive. These comments, and any additional information we receive, may lead to final regulations that differ from these proposals.
You may submit your comments and materials concerning this proposed rule by one of the methods listed in
We will post all comments in their entirety—including your personal identifying information—on
Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, will be available for public inspection on
We will consider, but possibly may not respond in detail to, each comment. As in the past, we will summarize all comments we receive during the comment period and respond to them after the closing date in the preambles of any final rules.
Based on our most current data, we are affirming our required determinations made in the June 10 and August 12 proposed rules; for descriptions of our actions to ensure compliance with the following statutes and Executive Orders, see our June 10, 2016, proposed rule (81 FR 38050):
• National Environmental Policy Act (NEPA) Consideration;
• Endangered Species Act Consideration;
• Regulatory Flexibility Act;
• Small Business Regulatory Enforcement Fairness Act;
• Paperwork Reduction Act of 1995;
• Unfunded Mandates Reform Act;
• Executive Orders 12630, 12866, 12988, 13132, 13175, 13211, and 13563.
Exports, Hunting, Imports, Reporting and recordkeeping requirements, Transportation, Wildlife.
The rules that eventually will be promulgated for the 2017-18 hunting season are authorized under 16 U.S.C. 703-712 and 16 U.S.C. 742 a-j.
Pursuant to the Migratory Bird Treaty Act and delegated authorities, the Department of the Interior approved the following proposals for season lengths, shooting hours, bag and possession limits, and outside dates within which States may select seasons for hunting migratory game birds between the dates of September 1, 2017, and March 10, 2018. These frameworks are summarized below.
These Federally authorized, State-issued permits are issued to individuals, and only the individual whose name and address appears on the permit at the time of issuance is authorized to take migratory birds at levels specified in the permit, in accordance with provisions of both Federal and State regulations governing the hunting season. The permit must be carried by the permittee when exercising its provisions and must be presented to any law enforcement officer upon request. The permit is not transferrable or assignable to another individual, and may not be sold, bartered, traded, or otherwise provided to another person. If the permit is altered or defaced in any way, the permit becomes invalid.
Other geographic descriptions are contained in a later portion of this document.
For the purpose of hunting regulations listed below, the collective terms “dark” and “light” geese include the following species:
In the Atlantic Flyway States of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, North Carolina, and Pennsylvania, where Sunday hunting is prohibited Statewide by State law, all Sundays are closed to all take of migratory waterfowl (including mergansers and coots).
Connecticut, Delaware, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia may select a Special Sea Duck Season in designated Special Sea Duck Areas. If a Special Sea Duck Season is selected, scoters, eiders, and long-tailed ducks may be taken in the designated Special Sea Duck Area(s) only during the Special Sea Duck Season dates; scoter, eiders, and long-tailed ducks may be taken outside of Special Sea Duck Area(s) during the regular duck season, in accordance with the frameworks for ducks, mergansers, and coots specified above.
A Canada goose season of up to 15 days during September 1-15 may be selected for the Eastern Unit of Maryland. Seasons not to exceed 30 days during September 1-30 may be selected for Connecticut, Florida, Georgia, New Jersey, New York (Long Island Zone only), North Carolina, Rhode Island, and South Carolina. Seasons may not exceed 25 days during September 1-25 in the remainder of the Flyway. Areas open to the hunting of Canada geese must be described, delineated, and designated as such in each State's hunting regulations.
In Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Missouri, Ohio, Tennessee, and Wisconsin, the season may be split into two segments in each zone.
In Alabama, Arkansas and Mississippi, the season may be split into three segments.
In Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming, the regular season may be split into two segments.
In Kansas, Nebraska, Oklahoma, South Dakota, and Texas, Canada goose seasons of up to 30 days during September 1-30 may be selected. In Colorado, New Mexico, Montana, and Wyoming, Canada goose seasons of up to 15 days during September 1-15 may be selected. In North Dakota, Canada goose seasons of up to 22 days during September 1-22 may be selected. The daily bag limit may not exceed 5 Canada geese, except in Kansas, Nebraska, and Oklahoma, where the daily bag limit may not exceed 8 Canada geese and in North Dakota and South Dakota, where the daily bag limit may not exceed 15 Canada geese. Areas open to the hunting of Canada geese must be described, delineated, and designated as such in each State's hunting regulations.
In Colorado, Montana, New Mexico, and Wyoming, States may select seasons not to exceed 107 days. The daily bag limit for dark geese is 5 in the aggregate.
In the Western Goose Zone of Texas, the season may not exceed 95 days. The daily bag limit for Canada geese (or any other dark goose species except white-fronted geese) is 5. The daily bag limit for white-fronted geese is 2.
Montana and New Mexico may split their seasons into three segments.
A Canada goose season of up to 15 days during September 1-20 may be selected. The daily bag limit may not exceed 5 Canada geese, except in Pacific County, Washington, where the daily bag limit may not exceed 15 Canada geese. Areas open to hunting of Canada geese in each State must be described, delineated, and designated as such in each State's hunting regulations.
In Oregon and Washington permit zones, the hunting season is closed on dusky Canada geese. A dusky Canada goose is any dark-breasted Canada goose (Munsell 10 YR color value five or less) with a bill length between 40 and 50 millimeters. Hunting of geese will only
In portions of the Pacific Flyway (Montana, Nevada, and Utah), an open season for taking a limited number of swans may be selected. Permits will be issued by the State and will authorize each permittee to take no more than 1 swan per season with each permit. Nevada may issue up to 2 permits per hunter. Montana and Utah may issue only 1 permit per hunter. Each State's season may open no earlier than the Saturday nearest October 1 (September 30). These seasons are also subject to the following conditions:
In addition, the States of Utah and Nevada must implement a harvest-monitoring program to measure the species composition of the swan harvest. The harvest-monitoring program must require that all harvested swans or their species-determinant parts be examined by either State or Federal biologists for the purpose of species classification. The States should use appropriate measures to maximize hunter compliance in providing bagged swans for examination. Further, the States of Montana, Nevada, and Utah must achieve at least an 80-percent hunter compliance rate, or subsequent permits will be reduced by 10 percent. All three States must provide to the Service by June 30, 2018, a report detailing harvest, hunter participation, reporting compliance, and monitoring of swan populations in the designated hunt areas.
In portions of the Atlantic Flyway (North Carolina and Virginia) and the Central Flyway (North Dakota, South Dakota [east of the Missouri River], and that portion of Montana in the Central Flyway), an open season for taking a limited number of tundra swans may be selected. Permits will be issued by the States that authorize the take of no more than 1 tundra swan per permit. A second permit may be issued to hunters from unused permits remaining after the first drawing. The States must obtain harvest and hunter participation data. These seasons are also subject to the following conditions:
Arizona, Colorado, Idaho, Montana, New Mexico, Utah, and Wyoming may select seasons for hunting sandhill cranes within the range of the Rocky Mountain Population (RMP) subject to the following conditions:
A. In Utah, 100 percent of the harvest will be assigned to the RMP quota;
B. In Arizona, monitoring the racial composition of the harvest must be conducted at 3-year intervals;
C. In Idaho, 100 percent of the harvest will be assigned to the RMP quota; and
D. In New Mexico, the season in the Estancia Valley is experimental, with a requirement to monitor the level and racial composition of the harvest; greater sandhill cranes in the harvest will be assigned to the RMP quota.
A. The hunting season may be split into not more than two periods, except in that portion of Texas in which the special white-winged dove season is allowed, where a limited take of mourning and white-tipped doves may also occur during that special season (see Special White-winged Dove Area).
B. A season may be selected for the North and Central Zones between September 1 and January 25; and for the South Zone between the Friday nearest September 20 (September 22), but not earlier than September 17, and January 25.
C. Except as noted above, regulations for bag and possession limits, season length, and shooting hours must be uniform within each hunting zone.
In addition, Texas may select a hunting season of not more than 4 days for the Special White-winged Dove Area of the South Zone between September 1 and September 19. The daily bag limit may not exceed 15 white-winged, mourning, and white-tipped doves in the aggregate, of which no more than 2 may be mourning doves and no more than 2 may be white-tipped doves.
In addition to the basic duck limits, Alaska may select sea duck limits of 10 daily, singly or in the aggregate, including no more than 6 each of either harlequin or long-tailed ducks. Sea ducks include scoters, common and king eiders, harlequin ducks, long-tailed ducks, and common and red-breasted mergansers.
A. In Units 5 and 6, the taking of Canada geese is permitted from September 28 through December 16.
B. On Middleton Island in Unit 6, a special, permit-only Canada goose season may be offered. A mandatory goose identification class is required. Hunters must check in and check out. The bag limit is 1 daily and 1 in possession. The season will close if incidental harvest includes 5 dusky Canada geese. A dusky Canada goose is any dark-breasted Canada goose (Munsell 10 YR color value five or less) with a bill length between 40 and 50 millimeters.
C. In Units 9, 10, 17, and 18, the daily bag limit is 6 Canada geese.
A. In Units 9, 10, and 17, the daily bag limit is 6 white-fronted geese.
B. In Unit 18, the daily bag limit is 10 white-fronted geese.
A. All seasons are by permit only.
B. No more than 1 emperor goose may be authorized per permit.
C. Total harvest may not exceed 1,000 emperor geese.
D. In State Game Management Unit 18, the Kodiak Island Road Area is closed to hunting. The Kodiak Island Road Area consists of all lands and water (including exposed tidelands) east of a line extending from Crag Point in the north to the west end of Saltery Cove in the south and all lands and water south of a line extending from Termination Point along the north side of Cascade Lake extending to Anton Larsen Bay. Marine waters adjacent to the closed area are closed to harvest within 500 feet from the water's edge. The offshore islands are open to harvest, for example: Woody, Long, Gull and Puffin islands.
A. All seasons are by permit only.
B. All season framework dates are September 1-October 31.
C. In Unit 17, no more than 200 permits may be issued during this operational season. No more than 3 tundra swans may be authorized per permit, with no more than 1 permit issued per hunter per season.
D. In Unit 18, no more than 500 permits may be issued during the operational season. No more than 3 tundra swans may be authorized per permit. No more than 1 permit may be issued per hunter per season.
E. In Unit 22, no more than 300 permits may be issued during the operational season. No more than 3 tundra swans may be authorized per permit. No more than 1 permit may be issued per hunter per season.
F. In Unit 23, no more than 300 permits may be issued during the operational season. No more than 3 tundra swans may be authorized per permit. No more than 1 permit may be issued per hunter per season.
Mourning doves may be taken in Hawaii in accordance with shooting hours and other regulations set by the State of Hawaii, and subject to the applicable provisions of 50 CFR part 20.
Falconry is a permitted means of taking migratory game birds in any State meeting Federal falconry standards in 50 CFR 21.29. These States may select an extended season for taking migratory game birds in accordance with the following:
South
Middle Zone: That portion of the Lower Peninsula north of a line beginning at the Wisconsin State line in Lake Michigan due west of the mouth of Stony Creek in Oceana County; then due east to, and easterly and southerly along the south shore of Stony Creek to Scenic Drive, easterly and southerly along Scenic Drive to Stony Lake Road, easterly along Stony Lake and Garfield Roads to Michigan Highway 20, east along Michigan 20 to U.S. Highway 10 Business Route (BR) in the city of Midland, easterly along U.S. 10 BR to U.S. 10, easterly along U.S. 10 to Interstate Highway 75/U.S. Highway 23, northerly along I-75/U.S. 23 to the U.S. 23 exit at Standish, easterly along U.S. 23 to the centerline of the Au Gres River, then southerly along the centerline of the Au Gres River to Saginaw Bay, then on a line directly east 10 miles into Saginaw Bay, and from that point on a line directly northeast to the Canadian border.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
Same zones as for ducks.
(B) That portion of the State lying within the boundaries of a line beginning at the Kleberg-Nueces County line and the shore of the Gulf of Mexico, then west along the County line to Park Road 22 in Nueces County, then north and west along Park Road 22 to its junction with State Highway 358 in Corpus Christi, then west and north along State Highway 358 to its junction with State Highway 286, then north along State Highway 286 to its junction with Interstate Highway 37, then east along Interstate Highway 37 to its junction with U.S. Highway 181, then north and west along U.S. Highway 181 to its junction with U.S. Highway 77 in Sinton, then north and east along U.S. Highway 77 to its junction with U.S. Highway 87 in Victoria, then south and east along U.S. Highway 87 to its junction with State Highway 35 at Port Lavaca, then north and east along State Highway 35 to the south end of the Lavaca Bay Causeway, then south and east along the shore of Lavaca Bay to its junction with the Port Lavaca Ship Channel, then south and east along the Lavaca Bay Ship Channel to the Gulf of Mexico, and then south and west along the shore of the Gulf of Mexico to the Kleberg-Nueces County line.
| 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 |