Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 14447 

not edit comment submissions to 

remove such information before making 

the comment submissions available to 

the public or entering the comment 

submissions into ADAMS. 

II. Background 

The NRC issues LR–ISGs to 

communicate insights and lessons 

learned and to address emergent issues 

not covered in license renewal guidance 

documents, such as the GALL Report 

and SRP–LR. In this way, the NRC staff 

and stakeholders may use the guidance 

in an LR–ISG document before it is 

incorporated into a formal license 

renewal guidance document revision. 

The NRC staff issues LR–ISG in 

accordance with the LR–ISG Process, 

Revision 2 (ADAMS Accession No. 

ML100920158), for which a notice of 

availability was published in the 

Federal Register on June 22, 2010 

(75 FR 35510). 

The NRC staff has developed draft 

LR–ISG–2011–03 to (a) include 

inspection recommendations for plants 

that will not have a cathodic protection 

system in the period of extended 

operation, (b) remove the 

recommendation to volumetrically 

inspect underground piping to detect 

internal corrosion, (c) base further 

increased inspection sample sizes on an 

analysis of extent of cause and extent of 

condition when adverse conditions are 

detected in the initial and subsequent 

doubled sample size rather than 

continuing to double the sample size, 

(d) add a recommendation that where 

damage to the coating is significant and 

the damage was caused by nonconforming backfill, an extent of 

condition evaluation should be 

conducted to ensure that the as-left 

condition of backfill in the vicinity of 

observed damage will not lead to further 

degradation, (e) add specific acceptance 

criteria for cathodic protection surveys, 

(f) add the specific preventive and 

mitigative actions utilized by the AMP 

in the FSAR Supplement description of 

the program as contained in the SRP– 

LR, and (g) make miscellaneous and 

editorial changes. 

Proposed Action 

By this action, the NRC is requesting 

public comments on draft LR–ISG– 

2011–03. This LR–ISG proposes certain 

revisions to NRC guidance on 

implementation of the requirements in 

10 CFR Part 54. The NRC staff will make 

a final determination regarding issuance 

of the LR–ISG after it considers any 

public comments received in response 

to this request. 

Dated at Rockville, Maryland, this 1st day 

of March 2012. 

For the Nuclear Regulatory Commission. 

Melanie A. Galloway, 

Acting Director, Division of License Renewal, 

Office of Nuclear Reactor Regulation. 

[FR Doc. 2012–5743 Filed 3–8–12; 8:45 am] 

BILLING CODE 7590–01–P 

POSTAL SERVICE 

Board of Governors; Sunshine Act 

Meeting 

Board Votes to Close March 1, 2012, 

Meeting 

By telephone vote on March 1, 2012, 

members of the Board of Governors of 

the United States Postal Service met and 

voted unanimously to close to public 

observation its meeting held in 

Washington, DC, via teleconference. The 

Board determined that no earlier public 

notice was possible. 

ITEMS CONSIDERED: 

1. Strategic Issues. 

2. Financial Matters. 

GENERAL COUNSEL CERTIFICATION: The 

General Counsel of the United States 

Postal Service has certified that the 

meeting was properly closed under the 

Government in the Sunshine Act. 

CONTACT PERSON FOR MORE INFORMATION: 

Requests for information about the 

meeting should be addressed to the 

Secretary of the Board, Julie S. Moore, 

at (202) 268–4800. 

Julie S. Moore, 

Secretary. 

[FR Doc. 2012–5850 Filed 3–7–12; 11:15 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29975; File No. 812–13882] 

Kohlberg Capital Corporation; Notice 

of Application 

March 5, 2012. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from section 

12(d)(3) of the Act. 

APPLICANT: Kohlberg Capital 

Corporation (the ‘‘Company’’). 

SUMMARY OF APPLICATION: Applicant 

requests an order (‘‘Order’’) of the 

Commission pursuant to section 6(c) of 

the Act granting an exemption from the 

provisions of section 12(d)(3) of the Act, 

to the extent necessary, in order to 

permit the Company and its whollyowned holding companies Katonah 

Management Holdings LLC (‘‘Katonah 

Management’’) and Commodore 

Holdings, L.L.C. (‘‘Commodore 

Holdings’’ and together with Katonah 

Management, the ‘‘Holding 

Companies’’) to continue to hold a 

greater than 50% equity interest in 

Katonah Debt Advisors, LLC (‘‘KDA’’), 

Trimaran Advisors, L.L.C. (‘‘Trimaran’’ 

and together with KDA, the ‘‘Advisers’’), 

and the Special Purpose Subsidiaries (as 

defined below), each of which is a direct 

or indirect wholly-owned portfolio 

company of the Company, when the 

Advisers and the Special Purpose 

Subsidiaries are required to register as 

investment advisers under the 

Investment Advisers Act of 1940, as 

amended (‘‘Advisers Act’’). 

FILING DATES: The application was filed 

on March 18, 2011, and amended on 

September 12, 2011, and March 1, 2012. 

Applicant has agreed to file an 

amendment during the notice period, 

the substance of which is reflected in 

this notice. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicant with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on March 26, 2012, and 

should be accompanied by proof of 

service on applicant, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Elizabeth M. Murphy, 

Secretary, U.S. Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC, 20549–1090; 

Applicant, 295 Madison Avenue, 6th 

Floor, New York, NY 10017. 

FOR FURTHER INFORMATION CONTACT: 

Barbara T. Heussler, Senior Counsel, at 

(202) 551–6990, or Jennifer Sawin, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 


srobinson on DSK4SPTVN1PROD with NOTICES
14448 Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 

1Section 2(a)(48) of the Act defines a BDC to be 

any closed-end investment company that operates 

for the purpose of making investments in securities 

described in sections 55(a)(1) through 55(a)(3) of the 

Act, makes available significant managerial 

assistance with respect to the issuers of such 

securities, and has elected to be subject to sections 

55 through 65 of the Act. 

2The Advisers and the Special Purpose 

Subsidiaries currently rely on the exemption set 

forth in section 203(b)(3) of the Advisers Act, which 

provides generally that an investment adviser with 

fewer than 15 clients is not required to register 

under the Advisers Act. As discussed below, this 

exemption has been eliminated. 

3The CLO Funds are not registered as 

‘‘investment companies’’ under the Act in reliance 

on section 3(c)(1) or 3(c)(7) of the Act, which 

excepts certain funds from the definition of 

investment company. 

4The Special Purpose Subsidiaries are currently 

wholly owned subsidiaries of Katonah Management 

Company. In the future, Special Purpose 

Subsidiaries may be wholly owned directly or 

indirectly by the Advisers, Katonah Management, 

Commodore Holdings, or another holding company 

wholly owned by the Company. Currently, the 

Company’s only subsidiaries are KDA, Trimaran, 

the Holding Companies, the Special Purpose 

Subsidiaries, and Kohlberg Capital Funding LLC I 

and KCAP Funding, two wholly owned, special 

purpose financing subsidiaries. 

5The Company has invested in the CLO Funds 

managed by the Advisers and the Special Purpose 

Subsidiaries and expects to invest in future CLO 

Funds to be managed by the Advisers and the 

Special Purpose Subsidiaries for which the 

Company expects to receive a current cash return. 

6Title IV of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act, Public Law 111–203, 

124 Stat. 1376 (2010). 

7None of the Advisers or Special Purpose 

Subsidiaries is expected to qualify for an exemption 

from registration under the rules the Commission 

recently adopted. See Exemptions for Advisers to 

Venture Capital Funds, Private Fund Advisers With 

Less Than $150 Million in Assets Under 

Management, and Foreign Private Advisers, 

Investment Advisers Act Release No. IA–3222 (Jun. 

22, 2011). The Company intends to register KDA 

and the Special Purpose Subsidiaries on a single 

application for registration. See Commission staff 

letter issued January 18, 2012, to the American Bar 

Association Business Law Section, Subcommittee 

on Hedge Funds (‘‘2012 ABA Letter’’). Trimaran 

intends to register separately as an investment 

adviser. The Company will not own any security or 

other interest in any investment adviser that will 

not be registered under the Advisers Act. 

8The Holding Companies are wholly owned by 

the Company, and therefore are subject to section 

12(d)(3). 

number, or applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicant’s Representations 

1. The Company, a Delaware 

corporation, is a non-diversified, closedend management investment company 

that has elected to be regulated as a 

business development company 

(‘‘BDC’’) under section 54(a) the Act.1

The Company’s investment objective is 

to generate current income and capital 

appreciation from investments made in 

senior secured term loans, mezzanine 

debt and selected equity investments in 

privately-held middle market 

companies. The Company originates 

and invests in senior secured term 

loans, mezzanine debt and selected 

equity securities primarily in middle 

market companies. The Company was 

formed in 2006 for the purpose of 

acquiring 100% of the equity interests 

in KDA, and raising capital in an initial 

public offering (‘‘Formation 

Transactions’’). On February 29, 2012, 

the Company acquired 100% of the 

equity interests in Trimaran, an 

unregistered investment adviser (the 

‘‘Trimaran Transaction’’).2 Trimaran 

was acquired as a wholly-owned 

subsidiary of Commodore Holdings, 

which is a newly formed wholly-owned 

subsidiary of the Company. The 

Company is and will continue to be an 

internally managed BDC. In connection 

with the Formation Transactions, KDA 

became a wholly-owned portfolio 

company of the Company. In connection 

with the Trimaran Transaction, 

Trimaran became an indirect whollyowned portfolio company of the 

Company. The Company, the Advisers 

and the Special Purpose Subsidiaries 

are directly or indirectly overseen by the 

Company’s eight member board of 

directors (‘‘Board’’), of whom five are 

not considered ‘‘interested persons’’ of 

the Company within the meaning of 

section 2(a)(19) of the Act. 

2. The Advisers manage certain 

unregistered collateralized loan 

obligation funds that invest in broadly 

syndicated loans, high yield bonds and 

other credit instruments (‘‘CLO 

Funds’’).3 The Advisers and the Special 

Purpose Subsidiaries do not currently 

offer any other investment advisory 

services or provide services to any other 

entities other than the CLO Funds. The 

Advisers receive contractual and 

recurring management fees and may 

also receive incentive fees from the CLO 

Funds for management and advisory 

services. The Company expects to 

receive dividends of earnings from the 

Advisers that are derived from recurring 

fee income and to generate capital 

appreciation from its investment in the 

asset management business of the 

Advisers. Alternatively, for internal 

structuring purposes, these fees may be 

paid to certain special purpose vehicles 

that are direct or indirect wholly-owned 

subsidiaries of the Company (each a 

‘‘Special Purpose Subsidiary’’).4 The 

revenue that the Advisers and the 

Special Purpose Subsidiaries generate 

through the fees they receive for 

managing the CLO Funds and after 

paying the expenses associated with its 

operations, including compensation of 

employees, may be distributed to the 

Company as dividends.5

3. The Company has made an election 

to be treated for tax purposes as a 

regulated investment company (‘‘RIC’’). 

The fee income received by the Advisers 

and the Special Purpose Subsidiaries in 

connection with the provision of 

services to the CLO Funds could impair 

the Company’s RIC status if the 

Company earned such income directly. 

Therefore, in order for the Company to 

maintain its RIC status while continuing 

to receive this income, the Company 

believes that it is in the best interests of 

the Company and its shareholders for 

the Advisers and the Special Purpose 

Subsidiaries to continue to receive fees 

from the CLO Funds instead of the 

Company receiving such fees directly. 

4. The Private Fund Investment 

Advisers Registration Act of 2010 (the 

‘‘2010 Act’’) 6 eliminated the exemption 

from investment advisor registration on 

which the Advisers and the Special 

Purpose Subsidiaries have relied, and 

they will be required to register with the 

Commission as investment advisers 

under the Advisers Act.7 The Company 

states that if relief is not granted, the 

Company will likely be forced to decide 

between losing its RIC status, 

terminating its relationship with the 

Advisers and the Special Purpose 

Subsidiaries, or limiting the dollar 

amount of assets that the Adviser and 

the Special Purpose Subsidiaries 

manage in order to avoid them having 

to register as investment advisers with 

the Commission. 

Applicant’s Legal Analysis 

1. Section 12(d)(3) of the Act makes 

it unlawful for any registered 

investment company and any company 

controlled by such registered 

investment company,8 to purchase or 

otherwise acquire any security issued by 

or any other interest in certain 

securities-related businesses, including 

the business of any person who is an 

investment adviser registered under the 

Advisers Act, unless (a) such person is 

a corporation all the outstanding 

securities of which are owned by one or 

more registered investment companies; 

and (b) such person is primarily 

engaged in the business of underwriting 

and distributing securities issued by 

other persons, selling securities to 

customers, or any one or more of such 

or related activities, and the gross 

income of such person normally is 

derived principally from such business 

or related activities. Section 60 of the 

Act provides that section 12 shall apply 

to a BDC to the same extent as if it were 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 14449 

9Rule 12d3–1 under the Act provides certain 

limited relief from the restrictions of section 

12(d)(3). Since the Company expects that a 

significant portion of the Advisers and the Special 

Purpose Subsidiaries’ gross revenues will be 

derived from ‘‘securities related activities’’ as 

defined in rule 12d3–1, and since the Company 

owns all of the outstanding securities of the 

Advisers and the Special Purpose Subsidiaries, rule 

12d3–1 does not appear to be available. 

10 In the unusual circumstance where the 

Company and the CLO Funds invest in the same 

security, the policies and procedures of the 

Company and the Advisers and the Special Purpose 

Subsidiaries govern the allocation of investment 

opportunities. These policies provide that 

investment opportunities are allocated according to 

‘‘optimum investment amounts’’ for the Company 

and the CLO Funds based on criteria such as 

investment objectives, diversification cash flow, 

liquidity requirements and asset allocation targets 

specific to each CLO Fund. If the total investment 

is unavailable, the allocation available is generally 

allocated among investing entities pro rata based on 

the optimum investment amount. The Company, 

the Advisers and Special Purpose Subsidiaries have 

also adopted other policies and procedures to 

address potential conflicts, including but not 

limited to, allocation of expenses, personal 

securities trading, insider trading and 

confidentiality of proprietary information. 

11The term ‘‘Unaffiliated Adviser Clients’’ 

includes the current clients of the Unaffiliated 

Adviser and any future advisory clients of the 

Unaffiliated Adviser so long as any Trimaran 

Principal is employed by, or on the Board of, the 

Company or any investment adviser owned by the 

Company. 

a registered closed-end investment 

company. 

2. Section 6(c) of the Act provides that 

the Commission may conditionally or 

unconditionally exempt any person, 

security, or transaction from any 

provision of the Act or any rule 

thereunder, if and to the extent that 

such exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

3. It is not expected that the Advisers 

or the Special Purpose Subsidiaries 

would also be broker-dealers that are 

primarily engaged in the business of 

underwriting and distributing securities 

issued by other persons. The ownership 

of the Advisers and the Special Purpose 

Subsidiaries, at such point as it becomes 

necessary for them to register as 

investment advisers, could thus cause 

the Company (and the Holding 

Companies) to be in violation of section 

12(d)(3) of the Act.9

4. The Company requests an order 

pursuant to section 6(c) of the Act 

granting an exemption from the 

provisions of section 12(d)(3) of the Act, 

to the extent necessary to permit the 

Company (and the Holding Companies) 

to continue to hold a greater than 50% 

equity interest in the Advisers and the 

Special Purpose Subsidiaries, when the 

Advisers and the Special Purpose 

Subsidiaries are required to register as 

investment advisers under the Advisers 

Act. 

5. The Company states that section 

12(d)(3) was intended to safeguard 

investment companies from (a) 

entrepreneurial risks of securities 

related businesses, and (b) conflicts of 

interest and reciprocal practices 

between investment companies and 

securities related businesses. 

6. The Company does not believe a 

greater than 50% ownership of the 

Advisers or the ownership of the 

Special Purpose Subsidiaries presents 

the potential for the type of abuse 

intended to be eliminated by section 

12(d)(3) of the Act. The Company’s and 

Holding Companies’ ownership and 

control of the Advisers and the Special 

Purpose Subsidiaries does not raise the 

concerns regarding entrepreneurial risks 

and conflicts of interests and reciprocal 

practices. The Company notes that the 

form of organization of most securities 

related businesses has changed since the 

time section 12(d)(3) was enacted, from 

privately held general partnerships to 

corporate forms that are characterized 

by limited liability. The Company’s 

ownership of the Advisers and the 

Special Purpose Subsidiaries does not 

expose its shareholders to unlimited 

liability because the Advisers and the 

Special Purpose Subsidiaries are each 

organized as a separate entity and are 

structured as limited liability 

companies, not partnerships. 

7. Applicant also asserts that the 

Company’s and Holding Companies’ 

ownership and control of the Advisers 

and the Special Purpose Subsidiaries do 

not present potential conflicts of interest 

and reciprocal practices. The Company 

owns 100% of the equity interests in the 

Advisers and the Special Purpose 

Subsidiaries and, as a result, exercises 

total control over the strategic direction 

of the Advisers and the Special Purpose 

Subsidiaries, including the power to 

control the policies that affect the 

Company and to protect the Company 

from potential conflicts of interest and 

reciprocal practices. The investment 

focus of the CLO Funds and the 

Company are distinct and generally do 

not overlap.10 Furthermore, the CLO 

Funds do not hold securities of the 

Advisers or Special Purpose 

Subsidiaries or the Company, and the 

Advisers and the Special Purpose 

Subsidiaries do not serve as investment 

adviser, underwriter or promoter to the 

Company. 

8. No advisory personnel employed 

by the Company or any of its investment 

adviser subsidiaries are involved in any 

advisory businesses or activities outside 

of the Company’s ownership and 

control, except for certain principals of 

Trimaran (the ‘‘Trimaran Principals’’). 

These principals serve as employees of 

Trimaran, serve as directors of the 

Company, and are also the principals 

and sole owners of a registered 

investment adviser that is not an 

affiliated person (as defined in section 

2(a)(3) of the Act) of the Company 

(together with any adviser that is a 

‘‘relying adviser’’ (as that term is used 

in the 2012 ABA Letter) of such 

registered investment adviser, the 

‘‘Unaffiliated Adviser’’). No new 

investments are currently being 

recommended to the Unaffiliated 

Adviser’s clients. Furthermore, the 

investment strategies of the CLO Funds 

and the Unaffiliated Adviser’s clients 

(the ‘‘Unaffiliated Adviser Clients’’) 11

do not overlap. The Company, the 

Advisers, the Special Purpose 

Subsidiaries, and the CLO Funds shall 

not invest in the same securities or 

investments as the Unaffiliated Adviser 

or the Unaffiliated Adviser Clients. 

9. The Company asserts that allowing 

the Company and Holding Companies to 

own the Advisers and the Special 

Purpose Subsidiaries after they have 

registered as advisers under the 

Advisers Act is not only consistent with 

the protection of investors, but it 

benefits the Company and its 

shareholders by ultimately increasing its 

gross revenues and net income. The 

Company’s Board found that the 

continued investment by the Company 

in the Advisers and Special Purpose 

Subsidiaries is in the best interests of 

the Company and its shareholders. 

Moreover, if the requested relief is not 

granted, the Company, and, thus, the 

Company’s shareholders, will likely 

suffer the harm of either losing some or 

all of the benefit of the income from 

owning the Advisers and Special 

Purpose Subsidiary business or 

potentially losing the benefit of the 

Company’s RIC status. 

10. For the foregoing reasons, the 

Company believes that permitting the 

Company and the Holding Companies to 

continue to hold a greater than 50% 

equity interest of each Adviser and to 

hold each Special Purpose Subsidiary 

after their registration as an investment 

adviser under the Advisers Act is in the 

best interests of the Company and its 

shareholders, appropriate in the public 

interest, and consistent with the 

protection of investors and the purposes 

fairly intended by the policies and 

provisions of the Act. 


srobinson on DSK4SPTVN1PROD with NOTICES
14450 Federal Register / Vol. 77, No. 47 / Friday, March 9, 2012 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

Applicant’s Conditions 

The Company agrees that the order 

granting the requested relief will be 

subject to the following conditions: 

1. The Company will not dispose of 

its interests in an Adviser if, as a result, 

the Company would own, directly or 

indirectly, 50% or less of the 

outstanding voting interests or 

economic interests in that Adviser 

unless the Company disposes of 100% 

of its interests in such Adviser. 

2. The Board will review at least 

annually the investment management 

business of the Company, the Advisers 

and the Special Purpose Subsidiaries in 

order to determine whether the benefits 

derived by the Company warrant the 

continuation of the ownership by the 

Company of the Advisers and the 

Special Purpose Subsidiaries and, if 

appropriate, will approve (by at least a 

majority of the directors of the Company 

who are not ‘‘interested persons’’ of the 

Company as defined by the Act) at least 

annually, such continuation. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5732 Filed 3–8–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66511; File No. SR–NSX– 

2012–04] 

Self-Regulatory Organizations; 

National Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change To Amend 

the NSX Fee and Rebate Schedule 

March 5, 2012. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 1, 

2012, National Stock Exchange, Inc. 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

National Stock Exchange, Inc. 

(‘‘NSX®’’ or ‘‘Exchange’’) is proposing to 

amend its Fee and Rebate Schedule (the 

‘‘Fee Schedule’’) issued pursuant to 

Exchange Rule 16.1(c) to adjust the 

rebates for certain orders executed in 

the Exchange’s Automatic Execution 

Mode, amend the fee tiers for certain 

orders executed in the Exchange’s Order 

Delivery Mode, adjust the routing fee, 

and establish a fee for receipt of the 

Exchange’s Depth of Book feed. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nsx.com, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

With this rule change, the Exchange is 

proposing to modify the Fee Schedule 

in four respects. First, the proposed rule 

change would amend the rebates 

applicable to liquidity adding orders in 

securities priced at least one dollar in 

the Exchange’s Automatic Execution 

Mode of order interaction (‘‘AutoEx’’). 

Second, the proposed rule change 

would amend the rebate tiers applicable 

to orders in securities priced at least one 

dollar in the Exchange’s Order Delivery 

Mode of order interaction (‘‘Order 

Delivery’’). Third, the proposed rule 

change would increase the order routing 

fee from $0.0029 to $0.0030 per share. 

Finally, the proposed rule change would 

establish a fee applicable to direct 

recipients of the Exchange’s Depth of 

Book (‘‘DOB’’) feed. Each of the 

proposed changes is further addressed 

below. 

Rebates for Securities Priced at Least 

One Dollar in AutoEx 

The proposed rule change proposes to 

modify the rebates applicable to 

liquidity adding orders in securities 

priced one dollar or more in AutoEx. 

These changes can be found in Section 

I of the Fee Schedule. 

Currently, for Tape A and C 

securities, the Exchange offers a rebate 

in AutoEx for displayed orders that add 

liquidity based upon an ETP Holder’s 

Liquidity Adding ADV (as such term is 

defined in Endnote 3 of the Fee 

Schedule). For Tape A and C securities, 

the Exchange offers per share rebates of 

$0.0026 or $0.0029 depending on 

whether the ETP Holder has achieved a 

Liquidity Adding ADV of at least 10 

million. For Tape B securities, the 

Exchange currently offers a rebate of 

$0.0030 per share. The proposed rule 

change would eliminate all rebate 

volume tiers in AutoEx and establish a 

flat $0.0026 rebate per share for 

liquidity adding orders of securities of 

at least one dollar, regardless of an ETP 

Holder’s Liquidity Adding ADV or 

whether the security is Tape A, B or C. 

Corresponding edits are made to 

Endnote 3 to reflect the elimination of 

the distinction between Tapes A, B and 

C with respect to this rebate. 

For Zero Display Orders (as defined in 

Endnote 4 of the Fee Schedule) that add 

liquidity in AutoEx, the Exchange 

currently offers a rebate of $0.0025 per 

share if an ETP Holder’s Total ADV (as 

defined in Endnote 5 of the Fee 

Schedule) is at least 30 million and 

Liquidity Adding ADV is at least 5 

million. The proposed fee change would 

eliminate this rebate altogether, such 

that there would be no rebate associated 

with such orders. The defined term 

‘‘Total ADV’’ would also be deleted 

from Endnote 5 of the Fee Schedule as 

no longer utilized. 

Rebates for Securities Priced at Least 

One Dollar in Order Delivery 

As reflected in Section II of the Fee 

Schedule, for all liquidity adding 

displayed orders of securities priced at 

least one dollar in Order Delivery, the 

Exchange currently offers a $0.0008 or 

$0.0024 per share rebate depending on 

whether an ETP Holder’s Liquidity 

Adding ADV is between one and 5 

million, or over 5 million, respectively. 

The proposed rule filing would adjust 

these tiers and rebates such that an 

$0.0008 per share rebate would apply to 

each Order Delivery displayed order 

that adds liquidity where an ETP 

Holder’s Liquidity Adding ADV is less 

than 15 million, or a $0.0024 per share 

rebate would apply to each such order 

where an ETP Holder’s Liquidity 

Adding ADV is at least 15 million. 

In addition, for Zero Display Reserve 

Orders in Order Delivery of securities 

priced at least one dollar, the current 

rebate tiers, depending on Liquidity 

Adding ADV, of between $0.0008 and 


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