[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Notices]
[Pages 60573-60574]
[FR Doc No: 2014-23826]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Summary Notice No. PE-2014-90]

Petition for Exemption; Summary of Petition Received

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of petition for exemption received.

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SUMMARY: This notice contains a summary of a petition seeking relief
from specified requirements of 14 CFR. The purpose of this notice is to
improve the public's awareness of, and participation in, this aspect of
FAA's regulatory activities. Neither publication of this notice nor the
inclusion or omission of information in the summary is intended to
affect the legal status of the petition or its final disposition.

DATES: Comments on this petition must identify the petition docket
number and must be received on or before October 27, 2014.

ADDRESSES: You may send comments identified by Docket Number FAA-2014-
0727 using any of the following methods:

     Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: Send comments to the Docket Management Facility;
U.S. Department of Transportation, 1200 New Jersey Avenue SE., West
Building Ground Floor, Room W12-140, Washington, DC 20590.
     Fax: Fax comments to the Docket Management Facility at
202-493-2251.
     Hand Delivery: Bring comments to the Docket Management
Facility in Room W12-140 of the West Building Ground Floor at 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
    Privacy: We will post all comments we receive, without change, to
http://www.regulations.gov, including any personal information you
provide. Using the search function of our docket Web site, anyone can
find and read the comments received into any of our dockets, including
the name of the individual sending the comment (or signing the comment
for an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78).
    Docket: To read background documents or comments received, go to
http://www.regulations.gov at any time or to the Docket Management
Facility in Room W12-140 of the West Building Ground Floor at 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Jake Troutman,<PHONE_NUMBER>, 800
Independence Avenue SW., Washington, DC, 20951.
    This notice is published pursuant to 14 CFR 11.85.

    Issued in Washington, DC, on October 1, 2014.
Lirio Liu,
Director, Office of Rulemaking.

Petition for Exemption

    Docket No.: FAA-2014-0727.
    Petitioner: SenseFly Ltd.
    Section of 14 CFR: parts 21 Subpart H, 45.23, 45.29, 61.3, 61.23,
61.113(a) and (b), 61.133(a), 91.7(a), 91.9, 91.109(a), 91.119, 91.121,
91.151(a), 91.203, 91.401, 91.403, 91.405, 91.407, 91.409, 91.411,
91.413, 91.415, 91.417, 91.419, and 91.421.
    Description of Relief Sought: The petitioner, manufacturer of the
eBee unmanned aircraft system (UAS), is seeking an exemption to
commercially operate their UAS for mapping and precision agriculture
applications.

[FR Doc. 2014-23826 Filed 10-6-14; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 86, Number 101 (Thursday, May 27, 2021)]
[Rules and Regulations]
[Pages 28483-28486]
[FR Doc No: 2021-11065]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2019-0862; Project Identifier 2019-NM-121-AD; Amendment
39-21552; AD 2021-10-19]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: The FAA is adopting a new airworthiness directive (AD) for
certain The Boeing Company Model 767-200, -300, -300F, and -400ER
series airplanes. This AD was prompted by a determination that new or
more restrictive airworthiness limitations (AWLs) are necessary. This
AD requires revising the existing maintenance or inspection program, as
applicable, to incorporate new or more restrictive airworthiness
limitations. The FAA is issuing this AD to address the unsafe condition
on these products.

DATES: This AD is effective July 1, 2021.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of July 1, 2021.

ADDRESSES: For service information identified in this final rule,
contact Boeing Commercial Airplanes, Attention: Contractual & Data
Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA
90740-5600; telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com. You may view this service information at the
FAA, Airworthiness Products Section, Operational Safety Branch, 2200
South 216th St., Des Moines, WA. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>. It is also available at
https://www.regulations.gov by searching for and locating Docket No.
FAA-2019-0862.

Examining the AD Docket

    You may examine the AD docket at https://www.regulations.gov by
searching for and locating Docket No. FAA-2019-0862; or in person at
Docket Operations between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket contains this final rule, any
comments received, and other information. The address for Docket
Operations is U.S. Department of Transportation, Docket Operations, M-
30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue
SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Wayne Lockett, Aerospace Engineer,
Airframe Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des
Moines, WA 98198; phone and fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to certain The Boeing
Company Model 767-200, -300, -300F, and -400ER series airplanes. The
NPRM published in the Federal Register on November 7, 2019 (84 FR
60007). The NPRM was prompted by a determination that new or more
restrictive AWLs are necessary. In the NPRM, the FAA proposed to
require revising the existing maintenance or inspection program, as
applicable, to incorporate new or more restrictive AWLs.
    The FAA issued a supplemental notice of proposed rulemaking (SNPRM)
to amend 14 CFR part 39 by adding an AD that would apply to certain The
Boeing Company Model 767-200, -300, -300F, and -400ER series airplanes.
The SNPRM published in the Federal Register on February 24, 2021 (86 FR
11158). The SNPRM was prompted by a determination that new or more
restrictive AWLs are necessary. The SNPRM proposed to add airplanes to
the applicability, and to require revising the existing maintenance or
inspection program, as applicable, to incorporate new or more
restrictive AWLs. The FAA is issuing this AD to address inadequate AWL
and damage tolerance rating (DTR) values in the maintenance or
inspection program that reduce the probability of detection for
foreseeable fatigue cracking of structurally significant items (SSIs).
This condition, if not addressed, could result in the loss of limit
load capability of an SSI as well as loss of continued safe flight and
landing of the airplane.

Discussion of Final Airworthiness Directive

Comments

    The FAA received comments from Boeing, FedEx Express, and United
Airlines, who stated support for the SNPRM without change.

Conclusion

    The FAA reviewed the relevant data, considered the comments
received, and determined that air safety requires

adopting this AD as proposed. Except for minor editorial changes, this
AD is adopted as proposed in the SNPRM. None of the changes will
increase the economic burden on any operator.

Related Service Information Under 1 CFR Part 51

    The FAA reviewed the following service information, which specifies
AWLs for structural inspections and structural safe life limits, among
other limitations. These documents are distinct since they apply to
different airplane configurations.
     Boeing 767-200/300/300F/400ER Airworthiness Limitations
(AWLs), D622T001-9-01, dated July 2020.
     Boeing 767-200/300/300F/400ER Airworthiness Limitations--
Line Number Specific, D622T001-9-02, dated August 2020.
    The FAA also reviewed Boeing 767-200/300/300F/400ER Damage
Tolerance Rating (DTR) Check Form Document, D622T001-DTR, dated
February 2020. This service information includes the DTR check forms
and the procedure for their use.
    This service information is reasonably available because the
interested parties have access to it through their normal course of
business or by the means identified in ADDRESSES.

Costs of Compliance

    The FAA estimates that this AD affects 542 airplanes of U.S.
registry. The FAA estimates the following costs to comply with this AD:
    The FAA has determined that revising the existing maintenance or
inspection program takes an average of 90 work-hours per operator,
although the FAA recognizes that this number may vary from operator to
operator. Since operators incorporate maintenance or inspection program
changes for their affected fleet(s), the FAA has determined that a per-
operator estimate is more accurate than a per-airplane estimate.
Therefore, the FAA estimates the total cost per operator to be $7,650
(90 work-hours x $85 per work-hour).

                                     Estimated Costs of On-Condition Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per
                    Action                                 Labor cost               Parts cost        product
----------------------------------------------------------------------------------------------------------------
Reporting.....................................  1 work-hour x $85 per hour = $85              $0             $85
----------------------------------------------------------------------------------------------------------------

Paperwork Reduction Act

    A federal agency may not conduct or sponsor, and a person is not
required to respond to, nor shall a person be subject to a penalty for
failure to comply with a collection of information subject to the
requirements of the Paperwork Reduction Act unless that collection of
information displays a currently valid OMB Control Number. The OMB
Control Number for this information collection is 2120-0056. Public
reporting for this collection of information is estimated to take
approximately 1 hour per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. All responses to this collection of
information are mandatory. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing this burden to: Information Collection
Clearance Officer, Federal Aviation Administration, 10101 Hillwood
Parkway, Fort Worth, TX 76177-1524.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and procedures the Administrator finds necessary
for safety in air commerce. This regulation is within the scope of that
authority because it addresses an unsafe condition that is likely to
exist or develop on products identified in this rulemaking action.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have 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.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive:

2021-10-19 The Boeing Company: Amendment 39-21552; Docket No. FAA-
2019-0862; Project Identifier 2019-NM-121-AD.

(a) Effective Date

    This airworthiness directive (AD) is effective July 1, 2021.

(b) Affected ADs

    This AD affects AD 2014-14-04, Amendment 39-17899 (79 FR 44672,
August 1, 2014) (AD 2014-14-04).

(c) Applicability

    (1) This AD applies to The Boeing Company Model 767-200, -300, -
300F, and -400ER series airplanes, certificated in any category,
line numbers 1 through 1218 inclusive.

    (2) Installation of Supplemental Type Certificate (STC)
ST01920SE affects the ability to accomplish some of the actions
required by this AD. Therefore, for airplanes on which STC ST01920SE
is installed, a ``change in product'' alternative method of
compliance (AMOC) approval may be necessary to comply with the
requirements of 14 CFR 39.17.

(d) Subject

    Air Transport Association (ATA) of America Code 27, Flight
Controls; 52, Doors; 53, Fuselage; 54, Nacelles/pylons; 55,
Stabilizers; 57, Wings.

(e) Unsafe Condition

    This AD was prompted by a determination that new or more
restrictive airworthiness limitations (AWLs) are necessary. The FAA
is issuing this AD to address inadequate AWL and damage tolerance
rating (DTR) values in the maintenance or inspection program that
reduce the probability of detection for foreseeable fatigue cracking
of structurally significant items (SSIs). This condition, if not
addressed, could result in the loss of limit load capability of an
SSI as well as loss of continued safe flight and landing of the
airplane.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Maintenance or Inspection Program Revision

    Within 24 months after the effective date of this AD, revise the
existing maintenance or inspection program, as applicable, to
incorporate the information specified in Boeing 767-200/300/300F/
400ER Airworthiness Limitations (AWLs), D622T001-9-01, dated July
2020; and Boeing 767-200/300/300F/400ER Damage Tolerance Rating
(DTR) Check Form Document, D622T001-DTR, dated February 2020. Except
as specified in paragraph (h) of this AD, the initial compliance
time for doing the tasks is at the time specified in Boeing 767-200/
300/300F/400ER Airworthiness Limitations (AWLs), D622T001-9-01,
dated July 2020; and Boeing 767-200/300/300F/400ER Damage Tolerance
Rating (DTR) Check Form Document, D622T001-DTR, dated February 2020;
or within 24 months after the effective date of this AD; whichever
occurs later.

(h) Exceptions

    (1) Where Boeing 767-200/300/300F/400ER Airworthiness
Limitations (AWLs), D622T001-9-01, dated July 2020, specifies
compliance times (``thresholds'') for wing tank sealant removal and
ensuring sealant location limits are met, these actions must be
accomplished within the compliance times specified in Boeing 767-
200/300/300F/400ER Airworthiness Limitations (AWLs), D622T001-9-01,
dated July 2020; or at or before the next accomplishment of the
specific Maintenance Planning Document (MPD) task, but no later than
6 years after the effective date of this AD; whichever occurs later.
    (2) For any horizontal stabilizer pivot fitting lug (SSI 55-10-
I13A) on which a lug bore oversize repair has been accomplished:
Within 24 months after the effective date of this AD, re-evaluate
the repair and obtain revised inspection intervals, as applicable,
in accordance with the procedures specified in paragraph (l) of this
AD.
    (3) Where Boeing 767-200/300/300F/400ER Airworthiness
Limitations (AWLs), D622T001-9-01, dated July 2020; and Boeing 767-
200/300/300F/400ER Damage Tolerance Rating (DTR) Check Form
Document, D622T001-DTR, dated February 2020; specify to submit
reports within 10 days, those reports may be submitted within 10
days after the airplane is returned to service.
    (4) For airplanes having line numbers identified in Boeing 767-
200/300/300F/400ER Airworthiness Limitations--Line Number Specific,
D622T001-9-02, dated August 2020: Revising the existing maintenance
or inspection program, as applicable, to incorporate the information
specified in Boeing 767-200/300/300F/400ER Airworthiness
Limitations--Line Number Specific, D622T001-9-02, dated August 2020,
is an acceptable method of compliance with paragraph (g) of this AD
for the tasks specified in Boeing 767-200/300/300F/400ER
Airworthiness Limitations--Line Number Specific, D622T001-9-02,
dated August 2020, only. The initial compliance time for doing the
tasks is at the time specified in Boeing 767-200/300/300F/400ER
Airworthiness Limitations--Line Number Specific, D622T001-9-02,
dated August 2020; or within 24 months after the effective date of
this AD; whichever occurs later. For all other tasks specified in
the service information identified in paragraph (g) of this AD, the
requirements of paragraph (g) of this AD remain fully applicable and
must be complied with.

(i) No Alternative Actions or Intervals

    After the existing maintenance or inspection program has been
revised as required by paragraph (g) of this AD, no alternative
actions (e.g., inspections) or intervals may be used unless the
actions or intervals are approved as an alternative method of
compliance (AMOC) in accordance with the procedures specified in
paragraph (l) of this AD.

(j) Terminating Action for AD 2014-14-04

    Accomplishing the actions required by this AD terminates all
requirements of AD 2014-14-04.

(k) Paperwork Reduction Act Burden Statement

    A federal agency may not conduct or sponsor, and a person is not
required to respond to, nor shall a person be subject to a penalty
for failure to comply with a collection of information subject to
the requirements of the Paperwork Reduction Act unless that
collection of information displays a current valid OMB Control
Number. The OMB Control Number for this information collection is
2120-0056. Public reporting for this collection of information is
estimated to be approximately 1 hour per response, including the
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and
reviewing the collection of information. All responses to this
collection of information are mandatory. Send comments regarding
this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden to
Information Collection Clearance Officer, Federal Aviation
Administration, 10101 Hillwood Parkway, Fort Worth, TX 76177-1524.

(l) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle ACO Branch, FAA, has the authority to
approve AMOCs for this AD, if requested using the procedures found
in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request
to your principal inspector or responsible Flight Standards Office,
as appropriate. If sending information directly to the manager of
the certification office, send it to the attention of the person
identified in paragraph (m) of this AD. Information may be emailed
to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the responsible Flight Standards Office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair, modification, or alteration required by this AD
if it is approved by The Boeing Company Organization Designation
Authorization (ODA) that has been authorized by the Manager, Seattle
ACO Branch, to make those findings. To be approved, the repair
method, modification deviation, or alteration deviation must meet
the certification basis of the airplane, and the approval must
specifically refer to this AD.
    (4) AMOCs for repairs and alterations approved previously for AD
2003-18-10, Amendment 39-13301 (68 FR 53503, September 11, 2003) (AD
2003-18-10), and AD 2014-14-04 are approved as AMOCs for the
corresponding actions specified in this AD. All other AMOCs for AD
2003-18-10 and AD 2014-14-04 are not approved as AMOCs for this AD.
    (5) Repairs done before the effective date of this AD that meet
the conditions specified in paragraphs (l)(5)(i) through (iii) of
this AD are acceptable methods of compliance for the repaired area
where the inspections of the baseline structure cannot be
accomplished.
    (i) The repair was approved under both 14 CFR 25.571 and 14 CFR
26.43(d) by The Boeing Company ODA that has been authorized by the
Manager, Seattle ACO Branch, FAA, to make those findings.
    (ii) The repair approval provides an inspection program
(inspection threshold, method, and repetitive interval).
    (iii) Operators revised their existing maintenance or inspection
program, as applicable, to include the inspection program
(inspection threshold, method, and repetitive interval) for the
repair.

(m) Related Information

    For more information about this AD, contact Wayne Lockett,
Aerospace Engineer, Airframe Section, FAA, Seattle ACO Branch, 2200
South 216th St., Des Moines, WA 98198; phone and fax:<PHONE_NUMBER>;
email<EMAIL_ADDRESS>

(n) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) Boeing 767-200/300/300F/400ER Airworthiness Limitations
(AWLs), D622T001-9-01, dated July 2020.
    (ii) Boeing 767-200/300/300F/400ER Airworthiness Limitations--
Line Number Specific, D622T001-9-02, dated August 2020.
    (iii) Boeing 767-200/300/300F/400ER Damage Tolerance Rating
(DTR) Check Form Document, D622T001-DTR, dated February 2020.
    (3) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Contractual & Data Services
(C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-
5600; telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com.
    (4) You may view this service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 2200
South 216th St., Des Moines, WA. For information on the availability
of this material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, email<EMAIL_ADDRESS>or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on May 5, 2021.
Lance T. Gant,
Director, Compliance & Airworthiness Division, Aircraft Certification
Service.
[FR Doc. 2021-11065 Filed 5-26-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: December 2, 2009 (Volume 74, Number 230)]
[Notices]
[Page 63162-63167]
[DOCID:fr02de09-58]

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-61066; File No. SR-Phlx-2009-98]

 Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Allow
Tied Hedge Transactions

November 25, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on November 20, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to adopt
Commentary .04 to Phlx Rule 1064 (Crossing, Facilitation and Solicited
Orders) to allow hedging stock, security future or futures contract
positions to be represented concurrently with option facilitations or
solicitations in the trading crowd (``tied hedge'' orders). The
Exchange proposes to adopt a similarly worded Commentary .02 to Options
Floor Procedure Advice (``OFPA'' or ``Advice'') B-11 (Crossing,
Facilitation and Solicited Orders) to harmonize it with Rule 1064. The
Exchange also proposes to amend Rule 1066 (Certain Types of Orders
Defined) and Commentary .08 to Rule 1080 (Phlx XL and XL II) to clarify
definitional language in respect of tied hedge orders.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/
Filings/, 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 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.

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

1. Purpose
    The purpose of the proposal is to adopt new Commentary .04 to Phlx
Rule 1064 and new Commentary .02 to OFPA B-11 to allow hedging stock,
security future or futures contract positions to be represented
currently with option facilitations or solicitations in the trading
crowd (tied hedge orders); and to clarify definitional language in
respect of tied hedge orders in Rules 1066 and 1080.
    This rule change is based on a similar recently approved rule
change proposal by another option exchange regarding tied hedge
orders.\3\
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    \3\ See Securities Exchange Act Release No. 60499 (August 13,
2009), 74 FR 42350 (August 21, 2009) (SR-CBOE-2009-007) (notice of
filing and order granting accelerated approval regarding ``tied
hedge'' transactions). SR-CBOE-2009-007 was, in turn, based on a
previous Phlx rule change proposal, SR-PHLX-2003-75, that was
ultimately not pursued to approval. See Securities Exchange Act
Release No. 48875 (December 4, 2003), 68 FR 70072 (December 16,
2003) (SR-Phlx-2003-75) (notice of filing).

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Background
    By way of background, Rule 1064 and OFPA B-11 \4\ generally deal
with, among other things: (a) When an Options Floor Broker (``Floor
Broker'') who holds orders to buy and sell the same options series may
cross such orders; \5\ (b) when a Floor Broker holding an options order
for a public customer and a contra-side order may cross such orders;
\6\ and (c) when a solicitation occurs where an order, other than a
cross, is presented by a Floor Broker for execution in the trading
crowd.\7\ Rule 1064 also deals with firm participation guarantees
entitling a Floor Broker to cross certain percentages of the original
order with other orders that the Floor Broker is holding, or in the
case of a public customer order, with facilitation orders of the
original firm (i.e. the firm from which the original customer order
originated).\8\
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    \4\ OFPA B-11 is similar in structure and content to Rule 1064
(with the exception that Commentaries .02 and .03 to Rule 1064 are
not in OFPA B-11). A sentence regarding priority is added to
subsection (c)(iii) of Rule 1064 for conformity with OFPA B-11.
    \5\ Rule 1064(a).
    \6\ Rule 1064(b).
    \7\ Rule 1064(c).
    \8\ Commentary .02 to Rule 1064. For purposes of this
commentary, an ``original order'' is when a Floor Broker holds an
equity, index or U.S. dollar-settled foreign currency option order
of the eligible order size or greater. Commentary .02 provides
further that spread, straddle, combination or hedge orders, as
defined in Exchange Rule 1066, on opposite sides of the market may
be crossed, provided that the Floor Broker holding such orders
proceeds in the manner described in Rule 1064.
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    Additionally, Rule 1064 and OFPA B-11 indicate that a non member
organization or person associated with a member or member organization
who has knowledge of all the material terms of an order being
facilitated, or an order being crossed, the execution of which is
imminent, shall not enter (based on such knowledge) an order to: (a)
Buy or sell an option for the same underlying security, (b) buy or sell
a security underlying such class, or (c) buy or sell a related
instrument (known as the ``anticipatory hedge rule'').\9\
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    \9\ Rule 1064(d). For purposes of this subsection (d), an order
to buy or sell a ``related instrument'' means, ``in reference to an
index option, an order to buy or sell securities comprising 10% or
more of the component securities in the index or an order to buy or
sell a futures contract on an economically equivalent index.''
---------------------------------------------------------------------------

    The Exchange notes that Rule 1064 and OFPA B-11 were designed to
preserve the right to solicit orders in advance of submitting a
proposal to the trading crowd, while at the same time assuring that
orders that are the subject of solicitation are exposed to the auction
market (trading crowd) in a meaningful way by prohibiting behavior such
as anticipatory hedging.
    Rule 1064 and OFPA B-11 provide that a violation of the rule or
Advice, respectively, may be considered inconsistent with just and
equitable principles of trade.\10\
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    \10\ Commentary .01 to Rule 1064 and OFPA B-11. The language of
Commentary .01 to OFPA B-11 is clarified to indicate that a
violation of the Advice may be considered conduct inconsistent with
just and equitable principles of trade.
---------------------------------------------------------------------------

    When Phlx originally adopted the anticipatory hedge rule in 2001,
the Exchange believed that the prohibition on anticipatory hedging was
necessary to prevent members and associated persons from using
undisclosed non-public information about imminent solicited option
transactions to trade the relevant option or any closely-related
instrument in advance of persons represented in the relevant options
crowd.\11\ While the Exchange has continued to believe that this basic
principle remains true, changes in the marketplace have caused the
Exchange to re-evaluate the effectiveness and efficiency of the
Exchange's anticipatory hedge rule requirements.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 44740 (August 23,
2001), 66 FR 45721 (August 29, 2001) (SR-Phlx-2001-61) (notice of
filing and immediate effectiveness regarding, among other things,
anticipatory hedge rule in Rule 1064 and OFPA B-11).
---------------------------------------------------------------------------

    The Exchange believes that increased volatility in the markets, as
well as the advent of penny trading in underlying stocks and resultant
decreased liquidity at the top of each underlying market's displayed
NBBO, it has become increasingly difficult for members and member
organizations to assess ultimate execution prices and the extent of
available stock to hedge related options facilitation/solicitation
activities, and to manage that market risk. This risk extends to simple
and complex orders,\12\ and to all market participants involved in the
transaction (whether upstairs or on-floor) because of the uncertainty
of the extent to which the market participant will participate in the
transaction, the amount of time associated with the auction process,
and the likelihood that the underlying stock prices in today's
environment may be difficult to assess and may change before they are
able to hedge. These circumstances can make it difficult to obtain a
hedge, difficult to quote orders, and difficult to achieve executions;
and can translate into less liquidity in the form of smaller size and
wider quote spreads, fewer opportunities for price improvement, and the
inefficient handling of orders.
---------------------------------------------------------------------------

    \12\ Subsection (a)(i)(F) to Commentary .08 is clarified to
indicate that Complex Orders include ``tied hedge'' orders. Rule
1066 is similarly clarified to indicate that hedge orders include
``tied hedge'' orders.
---------------------------------------------------------------------------

    Additionally, more and more trading activity appears to be taking
place away from the exchange-listed environment and in the over-the-
counter (``OTC'') market, which by its nature is not subject to the
same trade-through type risks present in the exchange environment.
Therefore, the Exchange is seeking to make its trading rules more
efficient not only to address the market risk and execution concerns,
but also to effectively compete with and attract volume from the OTC
market. What is more, trading strategies of market-makers, which
include Registered Options Traders (``ROTs'') and specialists on the
Exchange, have evolved.\13\ Whereas market-makers previously tended to
trade based on delta risk,\14\ now market-making strategy tends to be
based more on volatility.\15\ The tied hedge transaction procedures
(described below) are designed in a way that is consistent with this
shift toward a volatility trading strategy, and makes it more desirable
for market-makers to compete for orders that are exposed through the
solicitation process.
---------------------------------------------------------------------------

    \13\ For obligations and restrictions generally applicable to
ROTs and specialists, see Rule 1014.
    \14\ The price of an option is not completely dependent on
supply and demand, nor on the price of the underlying security.
Market-makers price options based on fundamental measures of risk as
well. One of these measures, delta, is the rate of change in the
price of an option as it relates to changes in the price of the
underlying security, security future or futures contract. The delta
of an option is measured incrementally based on movement in the
price of the underlying security, security future or futures
contract. For example, if the price of an option increases or
decreases by $1.00 for each $1.00 increase or decrease in the price
of the underlying security, the option would have a delta of 100. If
the price of an option increases or decreases by $0.50 for each
$1.00 increase or decrease in the price of the underlying security,
the option would have a delta of 50.
    \15\ Volatility is a measure of the fluctuation in the
underlying security's market price. Market-makers that trade based
on volatility generally have options positions that they hedge with
the underlying. Once hedged, the risk exposure to the market-maker
is realized volatility and implied volatility. Realized volatility
(also known as historical volatility) is the actual volatility in
the underlying. Implied volatility is determined by using option
prices existing in the market at the time rather than using
historical data on the market price changes of the underlying.
---------------------------------------------------------------------------

Proposed Exception to Anticipatory Hedge Rule
    In order to address the concerns associated with increased
volatility and decreased liquidity and more effectively compete with
the OTC market, the

Exchange is proposing to adopt in Commentary .04 to Rule 1064 and
Commentary .02 to OFPA B-11 a limited exception to the anticipatory
hedging restrictions that would permit the representation of hedging
stock positions in conjunction with option orders in the options
trading crowd (a ``tied hedge'' transaction). The Exchange believes
this limited exception remains in keeping with the original design of
Rule 1064(d), but sets forth a more practicable approach considering
today's trading environment that will provide the ability to hedge in a
way that will still encourage meaningful competition among upstairs and
floor traders. Besides stock positions, the proposal would also permit
security futures positions to be used as a hedge. In addition, in the
case where the order is for options on indices, options on exchange-
traded funds (``ETFs'') or options on Holding Company Depository
Receipts (``HOLDRS''), a related instrument may be used as a hedge. A
``related instrument'' would mean, in reference to an index option,
securities comprising ten percent or more of the component securities
in the index or a futures contract on any economically equivalent index
applicable to the option order. A ``related instrument'' would mean, in
reference to an ETF or HOLDR option, a futures contract on any
economically equivalent index applicable to the ETF or HOLDR underlying
the option order.\16\
---------------------------------------------------------------------------

    \16\ For example, a tied hedge order involving options on the
iShares Russell 2000 Index ETF (IWM) might involve a hedge position
in the underlying ETF, security futures overlying the ETF, or
futures contracts overlying the Russell 2000 Index.
---------------------------------------------------------------------------

    With a tied hedge transaction, Exchange members would be permitted
to hedge an option order with the underlying security, a security
future or futures contract, as applicable, and then forward the option
order and the hedging position to an Exchange Floor Broker with
instructions to represent the option order together with the hedging
position to the options trading crowd. The in-crowd market participants
that chose to participate in the option transaction must also
participate in the hedging position.
    First, under the proposal, the original option order must be in a
class designated as eligible for a tied hedge transaction as determined
by the Exchange, including FLEX options classes.\17\ The original
option order must also be within designated tied hedge eligibility size
parameters, which would be determined by the Exchange and would not be
smaller than 500 contracts.\18\ The Exchange notes that the minimum
order size would apply to an individual original order.\19\ Multiple
original orders could not be aggregated to satisfy the requirement
(though multiple contra-side solicited orders could be aggregated to
execute against the original order). The Exchange states that the
primary purpose of this provision is to limit use of the tied hedge
procedures to larger orders that might benefit from a member's or
member organization's ability to execute a facilitating hedge.\20\
Assuming an option order meets these eligibility parameters, the
proposal also includes a number of other conditions that must be
satisfied.
---------------------------------------------------------------------------

    \17\ FLEX options provide investors with the ability to
customize basic option features including size, expiration date,
exercise style, and certain exercise prices. See Rule 1079.
    \18\ The designated classes and minimum order size applicable to
each class would be communicated to the membership via an Options
Regulatory Alert (``ORA''). For example, the Exchange could
determine to make the tied hedge transaction procedures available in
options class XYZ for orders of 1000 contracts or more. Such a
determination would be announced via ORA, which would include a
cumulative list of all classes and corresponding sizes for which the
tied hedge procedures are available.
    \19\ In determining whether an individual original order
satisfies the eligible order size requirement, any complex order
must contain one leg alone which is for the eligible order size or
greater. For complex order procedures generally, see Commentary .08
to Rule 1080 and Rule 1089(b)(2). For complex order procedures in
respect of locked and crossed markets, see Rule 1083(d).
    \20\ The Exchange believes that, given the decreased amount of
liquidity available at the NBBO, the frequency with which quotes may
flicker, and differing costs associated with accessing liquidity on
various markets, as well as for ease of administration, the proposed
500 contract minimum should be sufficient to address these
considerations.
---------------------------------------------------------------------------

    Second, the proposal would also require that, prior to entering
tied hedge orders on behalf of customers, the member or member
organization must deliver to the customer a onetime written
notification informing the customer that his order may be executed
using the Exchange's tied hedge procedures. Under the proposal, the
written notification must disclose the terms and conditions contained
in the proposed rule and be in a form approved by the Exchange. Given
the minimum size requirement of 500 contracts per order, the Exchange
believes that use of the tied hedges procedures will generally consist
of orders for the accounts of institutional or sophisticated, high net
worth investors. The Exchange therefore believes that a one-time
notification delivered by the member or member organization to the
customer would be sufficient, and that an order-by-order notification
would be unnecessary and overly burdensome.
    Third, a member or member organization would be required to create
an electronic record that it is engaging in a tied hedge order in a
form and manner prescribed by the Exchange. The Exchange states that
the purpose of this provision is to create a record to ensure that
hedging trades would be appropriately associated with the related
options order and appropriately evaluated in the Exchange's
surveillance program. The Exchange believes that this requirement
should enable the Exchange to monitor for compliance with the
requirements of the proposed rule, as discussed below, by identifying
the specific purchase or sell orders relating to the hedging position.
    Fourth, the proposed rule would require that members and member
organizations that have decided to engage in tied hedge orders for
representation in the trading crowd would have to ensure that the
hedging position associated with the tied hedge order is comprised of a
position that is designated as eligible for a tied hedge transaction.
Eligible hedging positions would be determined by the Exchange for each
eligible class and may include (a) The same underlying stock applicable
to the option order, (b) a security future overlying the same stock
applicable to the option order, or (c) in reference to an option on an
index, ETF or HOLDR, a ``related instrument'' (as described above). For
example, for options overlying XYZ stock, the Exchange may determine to
designate the underlying XYZ stock or XYZ security futures or both as
eligible hedging positions.\21\ The Exchange states that the purpose of
this provision is to ensure that the hedging position would be for the
same stock, equivalent security future or related instrument, as
applicable, thus allowing crowd participants who may be considering
participation in a tied hedge order to adequately evaluate the risk
associated with the option as it relates to the hedge. With stock
positions in particular, the Exchange notes that occasionally crowd
participants hedge option positions with stock that is related to the
option, such as the stock of an issuer in the same industry, but not
the actual stock associated with the option. Except as otherwise
discussed above for index options, the proposed

rule change would not allow such a ``related'' hedging stock position,
but would require the hedging stock position to be the actual security
underlying the option.
---------------------------------------------------------------------------

    \21\ As with designated classes and minimum order size, the
eligible hedging positions applicable to each class would be
communicated to the membership via ORA, which would include a
cumulative list of all classes and corresponding sizes for which the
tied hedge procedures are available. See note 19, supra.
---------------------------------------------------------------------------

    Fifth, the proposal would require that the entire hedging position
be brought without undue delay to the trading crowd. In considering
whether the hedging position is presented without ``undue delay,'' the
Exchange believes that members and member organizations should continue
to have the same ability to shop an order in advance of presenting it
to the crowd and should be able to enhance that process through
obtaining a hedge. The Exchange also believes that, once a hedge is
obtained, the order should be brought to the crowd promptly in order to
satisfy the ``undue delay'' requirement. In addition, the proposal
would require that the hedging position be announced to the trading
crowd concurrently with the option order, offered to the crowd in its
entirety, and offered at the execution price received by the member or
member organization introducing the order to any in-crowd market
participant who has established parity or priority for the related
options. In-crowd market participants that participate in the option
transaction must also participate in the hedging position on a
proportionate basis \22\ and would not be permitted to prevent the
option transaction from occurring by giving a competing bid or offer
for one component of the tied hedge order. The Exchange states that the
purpose of these requirements is to ensure that the hedging position
represented to the crowd would be a good faith effort to provide in-
crowd market participants with the same opportunity as the member or
member organization introducing the tied hedge order to compete most
effectively for the option order.
---------------------------------------------------------------------------

    \22\ For example, if an in-crowd market participant's allocation
is 100 contracts out of a 500 contract option order (\1/5\), the
same in-crowd market participant would trade 10,000 shares of a
50,000 stock hedge position tied to that option order (\1/5\).
---------------------------------------------------------------------------

    For example, if a member or member organization introducing a tied
stock hedge order were to offer 1,000 XYZ option contracts to the crowd
(overlying 100,000 shares of XYZ stock) and concurrently offer only
30,000 of 100,000 shares of the underlying stock that the member
obtained as a hedge, crowd participants might only be willing or able
to participate in 300 of the option contracts offered if the hedging
stock position cannot be obtained at a price as favorable as the stock
hedging position offering price, if at all. The Exchange states that
the effect of this would be to place the crowd at a disadvantage
relative to the introducing member or member organization for the
remaining 700 option contracts in the tied stock hedge order, and thus
create a disincentive for the crowd to bid or offer competitively for
the remaining 700 option contracts. The Exchange believes the
requirement that the hedging position be presented concurrently with
the option order in the crowd and offered to the crowd in its entirety
at the execution price received by the member or member organization
introducing the order should ensure that the crowd would be competing
on a level playing field with the introducing member or member
organization to provide the best price to the customer.
    Sixth, the proposal would require that the hedging position not
exceed the options order on a delta basis. For example, in the
situation where a tied stock hedge order involves the simultaneous
purchase of 50,000 shares of XYZ stock and the sale of 500 XYZ call
contract (known as a ``buy-write''), and the delta of the option is
100, it would be considered ``hedged'' by 50,000 shares of stock.
Accordingly, the proposed rule would not allow the introducing member
firm to purchase more than 50,000 shares of stock in the hedging stock
position. The Exchange believes that it is reasonable to require that
the hedging position be in amounts that do not exceed the equivalent
size of the related options order on a delta basis, and not for a
greater number of shares. The Exchange believes that the proposed rule
change would support its view that the member or member organization
introducing the tied hedge order be guided by the notion that any
excess hedging activity could be detrimental to the eventual execution
price of the option order. Consequently, while delta estimates may vary
slightly, the introducing member or member organization would be
required to assume hedging positions not to exceed the equivalent size
of the options order on a delta basis.\23\
---------------------------------------------------------------------------

    \23\ The Exchange notes that there may be scenarios where the
introducing member purchases (sells) less than the delta, e.g., when
there is not enough stock available to buy (sell) at the desired
price. In such scenarios, the introducing member would present the
stock that was purchased (sold) and share it with the in-crowd
market participants on equal terms. This risk of obtaining less than
a delta hedge is a risk that exists under the current rules because
of the uncertainty that exists when market participants price an
option and have to anticipate the price at which they will be able
to obtain a hedge. The proposed tied hedge procedures are designed
to help reduce this risk, but the initiating member may still be
unable to execute enough stock at the desired price. To the extent
the initiating member is able to execute any portion of the hedge,
the risk exposure to the initiating member and in-crowd market
participants would be diminished because those shares would be
``tied up'' and available for everyone that participates on the
resulting tied hedge transaction. The Exchange does not believe that
the initiating member would have an unfair advantage by having the
ability to pre-facilitate less than a delta hedge because the
proposed procedures would require the in-crowd market participants
to get a proportional share of the hedge. To the extent more stock
is needed to complete a hedge, the initiating member and the in-
crowd market participants would have the same risk exposure that
they do today.
---------------------------------------------------------------------------

    The Exchange believes that the delta basis requirement, together
with the additional conditions that an introducing member or member
organization bring the hedging position without undue delay to the
trading crowd and announce it concurrently with the option order, offer
it to the crowd in its entirety, and offer it at the execution price
received by the member or member organization to any in-crowd market
participant who has established parity or priority, will help assure
that the hedging activity is bona fide and not for speculative or
manipulative purposes. Additionally, the Exchange believes these
conditions will help assure that there is no adverse affect on the
auction market because, as discussed above, in-crowd market
participants will have the same opportunity as the member or member
organization introducing the tied hedge order to compete for the option
order and will share the same benefits of limiting the market risk
associated with hedging. The Exchange believes that customers will also
benefit if the market risks are limited in the manner proposed. Once an
original order is hedged, there is no delta risk. With the delta risk
minimized, quotes will likely narrow as market participants (whether
upstairs or on-floor) are better able to hedge and compete for orders.
For example, market-makers could more easily quote markets to trade
against a customer's original order based on volatility with the delta
risk minimized, which should ultimately present more price improvement
opportunities to the original order.\24\
---------------------------------------------------------------------------

    \24\ The Exchange also believes that the proposed exception to
the anticipatory hedging procedures will assist in the Exchange's
competitive efforts to attract order flow from the OTC market, which
may result in increased volume on the exchange markets.
---------------------------------------------------------------------------

    At this time, the Exchange is not proposing any special priority
provisions applicable to tied hedge transactions, though it intends to
evaluate whether such changes are desired and may submit a separate
rule filing on this subject in the future. Under the instant proposal,
all tied hedge transactions will be treated as

complex orders. Priority will be afforded in accordance with the
Exchange's existing open outcry allocation and reporting procedures for
complex orders.\25\ Any resulting tied hedge transactions will also be
subject to the existing NBBO trade-through requirements for options and
stock, as applicable. In this regard, the Exchange believes that the
resulting option and stock components of the tied hedge transactions
may qualify for various NBBO trade through exceptions including, for
example, the complex trade exception.\26\ However, when the option
order is a simple order the execution of the option leg of a tied hedge
transaction does not qualify it for any NBBO trade-through exception
for a Complex Trade. Recognizing that tied hedge transactions involve
complex orders and trades, the Exchange is amending the definition of
Complex Order to clarify that these include ``tied hedge''
transactions.\27\
---------------------------------------------------------------------------

    \25\ For reporting procedures, see, Rules 1053 (Filing of Trade
Information), 1003 (Reporting of Options Positions), 1022
(Securities Accounts and Orders of Specialists and Registered
Options Traders), and 1028 (Confirmations). For allocation
procedures, see, Rules 1014 (Obligations and Restrictions Applicable
to Specialists and Registered Options Traders) and 1080 (Phlx XL and
XL II). Options trading rules are generally located in the 1000
series of rules known as the Options Rules (Rule 1000 et. seq.) and
include Rules 1001 (Position Limits), 1002 (Exercise Limits), 1033
(Bid and Offers--Premium), 1034 (Minimum Increments), and 1035
(Acceptance of Bid or Offer).
    \26\ See Rule 1085(b)(6) (Order Protection). Rules 1083
(Intermarket Linkage) through 1087 (Limitation on Principal Order
Access) implement the recently-approved joint Options Order
Protection and Locked/Crossed Market Plan (the ``Protection and
Locked/Crossed Plan''). See Securities Exchange Act Release No.
60405 (July 30, 2009), 74 FR 39362 (August 6, 2009)(File No. 4-
546)(approval order for the Protection and Locked/Crossed Plan). See
also Securities Exchange Act Release No. 60550 (August 20, 2009), 74
FR 44430 (August 28, 2009)(SR-Phlx-2009-61)(approval order for Phlx
rules implementing the Protection and Locked/Crossed Plan).
    \27\ See Commentary .08(a)(i)(F) to Rule 1080. The Exchange
notes that a complex order for ``tied hedge''purposes in Rule 1080
is distinct from a complex trade for linkage purposes in Rule 1083;
and that intramarket priority on the Exchange for tied hedge
purposes is distinct from intermarket priority for linkage purposes.
---------------------------------------------------------------------------

    The Exchange recognizes that, at the time a tied hedge transaction
is executed in a trading crowd, market conditions in any of the non-
Phlx market(s) may prevent the execution of the non-options leg(s) at
the price(s) agreed upon. For example, the execution price may be
outside the non-Phlx market's best bid or offer (``BBO''), such as
where the stock leg is to be executed at a price of $25.03 and the
particular stock market's BBO is $24.93-$25.02; such an execution would
normally not be permitted unless an exception applies that permits the
trade to be reported outside the BBO.\28\ The Exchange clarified in
proposed Commentary .04 to Rule 1064 and Commentary.02 to OFPA B-11
that in the event the conditions in the non-Phlx market continue to
prevent the execution of the non-option leg(s) at the agreed price(s),
the trade representing the options leg(s) of the tied hedge transaction
may be cancelled at the request of any member that is a party to the
tied hedge transaction.
---------------------------------------------------------------------------

    \28\ The Exchange notes that the possibility of this scenario
occurring exists with complex order executions today and tied hedge
transactions would present nothing unique or novel in this regard.
---------------------------------------------------------------------------

    The following examples illustrate these principles:
     Simple Original Order: Introducing member receives an
original customer order to buy 500 XYZ call options, which has a delta
of 100. The introducing member purchases 50,000 shares of XYZ stock on
the NYSE for an average price of $25.03 per share. Once the stock is
executed on the NYSE, the introducing member, without undue delay,
announces the 500 contract option order and 50,000 share tied stock
hedge at $25.03 per share to the appropriate Phlx trading crowd.
     Complex Original Order: Introducing member receives an
original customer stock-option order to buy 500 XYZ call options and
sell 50,000 shares of XYZ stock. The introducing member purchases
50,000 shares of XYZ stock on the NYSE for an average price of $25.03
per share. Once the stock is executed on the NYSE, the introducing
member, without undue delay, announces the 500 contract option order
and 50,000 share tied stock hedge at $25.03 per share to the
appropriate trading crowd.
    In either the scenario regarding simple orders or the scenario
regarding complex orders (which includes ``tied hedge'' orders), the
next steps are the same and generally are no different from the
procedures currently used to execute a complex order on Phlx in open
outcry.
    The Exchange notes regarding the examples above that:
     The in-crowd market participants would have an opportunity
to provide competing quotes for the tied hedge package (and not for the
individual component legs of the package). For example, assume the best
net price is $24.53 (equal to $0.50 for each option contract and $25.03
for each corresponding share of hedging stock).
     The option order and hedging stock would be allocated
among the in-crowd market participants that established priority or
parity at that price, including the initiating member, in accordance
with the allocation algorithm applicable to the options class, with the
options leg being executed and reported on Phlx and the stock leg being
executed and reported on the stock market specified by the initiating
member. For example, the introducing member might trade 40% pursuant to
an open outcry crossing entitlement (200 options contracts and 20,000
shares of stock) and the remaining balance might be with three
different market-makers that each participated on 20% of the order (100
options contracts and 10,000 shares of stock per market-maker).
     The resultant tied hedge transaction: (a) would qualify as
a ``complex trade'' under the Options Intermarket Linkage and the
execution of the 500 option contracts with the market participants
would not be subject to the NBBO for the particular option series in
the scenario where the original order is a complex order (not a simple
order); and (b) would qualify as a ``qualified contingent trade'' under
Regulation NMS and the execution of the 30,000 shares of stock (the
original 50,000 shares less the initiating member's 20,000 portion)
with the market participants would not be subject to the NBBO for the
underlying XYZ stock.
     The execution of the options leg would have to satisfy
Phlx's intra-market priority rules for complex orders (including that
the execution price may not be outside the Phlx BBO (``PBBO'')). Thus,
if the PBBO for the series was $0.40 $0.55, the execution could take
place at or inside that price range (e.g., at the quoted price of
$0.50) and could not take place outside that price range (e.g., not at
$0.56).
     Similarly, the execution of the stock at $25.03 per share
would have to satisfy the intra-market priority rules of the non-Phlx
market(s) where the stock is to be executed (including that the
execution price may not be outside that market's BBO) or,
alternatively, qualify for an exception that permits the trade to be
reported outside the non-Phlx market(s) BBO.
     If market conditions in the non-Phlx market(s) prevent the
execution of the stock leg(s) at the price(s) agreed upon from
occurring (e.g., the BBO remains at $24.93-$25.02), then the options
leg(s) could be cancelled at the request of any member that is a party
to that trade.
    While the particular circumstances surrounding each transaction on
the Exchange's trading floor are different, the Exchange does not
believe, as a general proposition, that the tied hedge

procedures would be inherently harmful or detrimental to customers or
have an adverse affect on the auction market. Rather, the Exchange
believes the procedures will improve the opportunities for an order to
be exposed to a competitive auction and represent an improvement over
the current rules. The fact that the parties to such a trade end up
fully hedged may contribute to the best execution of the orders,\29\
and, in any event, participants continue to be governed by, among other
things, their best execution responsibilities. The Exchange also
believes that the proposed tied hedge procedures are fully consistent
with the original design of Rule 1064(d) which, as discussed above, was
to eliminate the unfairness that can be associated with a solicited
transaction and encourage meaningful competition. The tied hedge
procedures should enable in-crowd market participants to be on equal
footing with solicited parties in a manner that minimizes all parties'
market risk while continuing to assure that orders are exposed in a
meaningful way.
---------------------------------------------------------------------------

    \29\ As market participants are better able to hedge risk
associated with completing these transactions, the Exchange believes
that quotes may narrow and result in increased price improvement
opportunities.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \30\ in general, and furthers the objectives of Section
6(b)(5) of the Act \31\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest, by establishing rules governing tied hedge orders, which
include specific requirements and procedures to be followed.
Specifically, the Exchange believes the procedures will improve the
opportunities for orders to be exposed to price improvement in a manner
that will encourage a fair, competitive auction process and minimize
all parties' market risk.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f(b).
    \31\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

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

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

    No written comments were either solicited or received.

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

    Because the foregoing rule does not (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change at least five business days prior to the date of
filing of the proposed rule change or such shorter time as designated
by the Commission,\32\ the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \33\ and Rule 19b-4(f)(6)
thereunder.\34\
---------------------------------------------------------------------------

    \32\ The Exchange has satisfied this requirement.
    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate 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.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2009-98 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2009-98. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such 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-Phlx-2009-98 and should be
submitted on or before December 23, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-28740 Filed 12-1-09; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 162 (Monday, August 22, 2016)]
[Notices]
[Page 56628]
[FR Doc No: 2016-19904]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. TS16-2-000]

PPL Electric Utilities Corporation; Notice of Filing

    Take notice that on December 23, 2015, pursuant to Rule 207 of the
Federal Energy Regulatory Commission's (Commission) Rules of Practice
and Procedure,\1\ PPL Electric Utilities Corporation filed a request
that the Commission confirm that the Standards of Conduct for
Transmission Providers adopted in the Order No. 717 \2\ and set forth
in Part 358 \3\ of the Commission's regulations do not apply to it at
this time.
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    \1\ 18 CFR 385.207 (2015).
    \2\ Standards of Conduct for Transmission Providers, Order No.
717, 73 FR 63,796 (Oct. 27, 2008), FERC Stats. & Regs. ] 31,280
(2008), on reh'g, Order No. 717-A, 74 FR 54,463 (Oct. 22, 2009),
FERC Stats. & Regs. ] 31,297 (2009), clarified, Order No. 717-B, 74
FR 60,153 (Nov. 20, 2009), 129 FERC ] 61,123 (2009), on reh'g, Order
No. 717-C, 75 FR 20,909 (Apr. 22, 2010), 131 FERC ] 61,045 (2010),
on reh'g and clarification, Order No. 717-D, 76 FR 20,838 (Apr. 14,
2011), 135 FERC ] 61,017 (2011).
    \3\ 18 CFR 358.1(b).
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    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date. On or
before the comment date, it is not necessary to serve motions to
intervene or protests on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov. Persons unable to file electronically should submit an
original and 5 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive email
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5:00 p.m. Eastern Time on September 6, 2016.

    Dated: August 15, 2016.
Kimberly D. Bose,
Secretary.
[FR Doc. 2016-19904 Filed 8-19-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 78, Number 221 (Friday, November 15, 2013)]
[Notices]
[Pages 68869-68870]
[FR Doc No: 2013-27326]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 103; SEC File No. 270-410, OMB Control No. 3235-0466.

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the existing
collection of information provided for in Rule 103 of Regulation

M (17 CFR 242.103), under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission plans to submit this existing
collection of information to the Office of Management and Budget
(``OMB'') for extension and approval.
    Rule 103--Nasdaq Passive Market Making--permits passive market-
making in Nasdaq securities during a distribution. A distribution
participant that seeks use of this exception would be required to
disclose to third parties its intention to engage in passive market
making.
    There are approximately 255 respondents per year that require an
aggregate total of 255 hours to comply with this rule. Each respondent
makes an estimated 1 annual response. Each response takes approximately
1 hour to complete. Thus, the total compliance burden per year is 255
burden hours. The total estimated internal labor cost of compliance for
the respondents is approximately $16,065.00, resulting in an estimated
internal labor cost of compliance per response of approximately $63.00
(i.e., $16,065.00/255 responses).
    Written comments are invited on: (a) 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; (b) the accuracy of the Commission's
estimates of the burden 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.
Consideration will be given to comments and suggestions submitted in
writing within 60 days of this publication.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
    Please direct your written comments to: Thomas Bayer, Director/
Chief Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email
to<EMAIL_ADDRESS>
    Dated: November 8, 2013.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27326 Filed 11-14-13; 8:45 am]
BILLING CODE 8011-01-P