[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)]
[Notices]
[Pages 44076-44083]
[FR Doc No: 2018-18672]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83916; File No. SR-OCC-2017-020]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change, as Modified by Amendment No. 2,
Concerning Enhanced and New Tools for Recovery Scenarios

August 23, 2018.

I. Introduction

    On December 18, 2017, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2017-020 (``Proposed Rule Change'')
pursuant to Section 19(b) of the Securities Exchange Act of 1934
(``Exchange Act''),\1\ and Rule 19b-4 \2\ thereunder concerning
enhanced and new tools for recovery scenarios.\3\ The Proposed Rule
Change was published for comment in the Federal Register on December
26, 2017.\4\ On January 25, 2018, the Commission designated a longer
period of time for Commission action on the Proposed Rule Change.\5\ On
March 22, 2018, the Commission published an order to institute
proceedings to determine whether to approve or disapprove the Proposed
Rule Change.\6\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Notice infra note 4, 82 FR 61107.
    \4\ Securities Exchange Act Release No. 82531 (Dec. 19, 2017),
82 FR 61107 (Dec. 26, 2017) (SR-OCC-2017-020) (``Notice''). On
December 8, 2017, OCC also filed a related advance notice (SR-OCC-
2017-809) (``Advance Notice'') with the Commission pursuant to
Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, entitled the Payment, Clearing, and
Settlement Supervision Act of 2010 and Rule 19b-4(n)(1)(i) under the
Exchange Act. 12 U.S.C. 5465(e)(1) and 17 CFR 240.19b-4(n)(1)(i),
respectively. The Advance Notice was published in the Federal
Register on January 23, 2018. Securities Exchange Act Release No.
82513 (Jan. 17, 2017), 83 FR 3244 (Jan. 23, 2018) (SR-OCC-2017-809).
     The Financial Stability Oversight Council designated OCC a
systemically important financial market utility on July 18, 2012.
See Financial Stability Oversight Council 2012 Annual Report,
Appendix A, available at http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf. Therefore, OCC is required to
comply with the Payment, Clearing and Settlement Supervision Act and
file advance notices with the Commission. See 12 U.S.C. 5465(e).
    \5\ Securities Exchange Act Release No. 82585 (Jan. 25, 2018),
83 FR 4526 (Jan. 31, 2018) (File No. SR-OCC-2017-020).
    \6\ Securities Exchange Act Release No. 82926 (Mar. 22, 2018),
83 FR 13171 (Mar. 27, 2018) (File No. SR-OCC-2017-020).
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    On July 11, 2018, OCC filed Amendment No. 1 to the Proposed Rule
Change.\7\ On July 12, 2018, OCC filed Amendment No. 2 to the Proposed
Rule Change.\8\ Therefore, the Proposed Rule Change, as modified by
Amendment No. 2, reflects the changes proposed. Notice of Amendments
No. 1 and 2 to the Proposed Rule Change was published for public
comment in the Federal Register on August 2, 2018.\9\ Comments received
on the Proposed Rule Change are discussed below.\10\ This order
approves the Proposed Rule Change as modified by Amendment No. 2
(``Amended Proposed Rule Change'').
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    \7\ In Amendment No. 1, OCC made certain changes to clarify the
use of the recovery tools and to improve the overall transparency
regarding the use of the recovery tools.
    \8\ Amendment No. 2 superseded and replaced Amendment No. 1 in
its entirety, due to technical defects in Amendment No. 1.
    \9\ Securities Exchange Act Release No. 83725 (Jul. 27, 2018),
83 FR 37839 (Aug. 2, 2018) (``Notice of Amendment'').
    \10\ The letters are available at: https://www.sec.gov/comments/sr-occ-2017-022/occ2017020.htm.
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II. Description of the Amended Proposed Rule Change \11\
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    \11\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at https://www.theocc.com/about/publications/bylaws.jsp.
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    The Amended Proposed Rule Change concerns proposed changes to OCC's
Rules and By-Laws to enhance OCC's existing tools to address the risks
of liquidity shortfalls and credit losses and to establish new tools by
which OCC could re-establish a matched book and, if necessary, allocate
uncovered losses following the default of a Clearing Member as well as
provide for additional financial resources. Each of the proposed tools
is contemplated to be deployed by OCC in an extreme stress event that
has placed OCC into a recovery or orderly wind-down scenario. The
proposed changes include modifying OCC's powers of assessment,
introducing a framework for requesting voluntary payments to the
Clearing Fund, and establishing OCC's authority to extinguish open
positons (i.e., conduct tear-ups) as well as authorizing OCC's Board of
Directors (``Board'') to re-allocate losses from tear-ups.

A. Proposed Changes to OCC Powers of Assessment

    OCC maintains a Clearing Fund comprised of required contributions
from Clearing Members, and OCC has authority to use the Clearing Fund,
by a proportionate charge or otherwise, to cover certain losses
suffered by OCC.\12\ When an amount is paid out of a Clearing Member's
required contribution to the Clearing Fund, the Clearing Member is
generally required to promptly make good any deficiency in its required
contribution to the Clearing Fund from such payment.\13\ Generally,
this requirement to promptly make good on any deficiency arising from
the default of a Clearing Member has been referred to as an
``assessment'' by OCC against a Clearing Member; however, as further
described below, OCC is making clarifying changes to a Clearing
Member's obligation to contribute to the Clearing Fund, including
defining and delineating between a Clearing Member's obligation

to answer ``assessments'' charged by OCC under certain circumstances
described further below and a Clearing Member's obligations where OCC
seeks to effect a ``replenishment'' of the Clearing Fund.
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    \12\ See OCC By-Laws, Article VIII. For example, under Section 5
of Article VIII of the OCC By-Laws, when a Clearing Member defaults,
OCC will pay for the resulting losses or expenses by first applying
other funds available to OCC in the accounts of the defaulting
Clearing Member and then applying the defaulting Clearing Member's
required contribution to the Clearing Fund. If the losses and
expenses exceed those amounts, then OCC will charge the amount of
the remaining deficiency on a proportionate basis against all non-
defaulting Clearing Members' required contributions to the Clearing
Fund.
    \13\ See OCC By-Laws, Article VIII, Section 6.
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    Currently, a Clearing Member's obligation to make good its required
contribution to the Clearing Fund is not subject to any pre-determined
limit. However, a Clearing Member may limit the amount of its liability
to contribute to the Clearing Fund by winding-down its clearing
activities and terminating its membership. To do so, a Clearing Member
must provide written notice to OCC that it is terminating its
membership by no later than the fifth business day after application of
the proportionate charge.\14\ This termination would limit the Clearing
Member's obligation to meet a future assessment to an additional 100
percent of the amount of its then-required Clearing Fund contribution.
Thus, terminating clearing membership is the only means by which a
Clearing Member can currently limit its liability for amounts due to
the Clearing Fund. OCC proposed three changes to modify its existing
authority to assess proportionate charges against Clearing Members'
required contributions to the Clearing Fund: (1) A cooling-off period
and cap on assessments; (2) termination of clearing membership during a
cooling-off period; and (3) replenishment of resources following a
cooling-off period.
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    \14\ In addition to providing the written notice, to effectively
terminate membership, a Clearing Member must satisfy two other
conditions. First, after submitting the written notice, the Clearing
Member cannot submit for clearance any opening purchase transaction
or opening written transaction or initiate a Stock Loan through any
of the Clearing Member's accounts. Second, the Clearing Member has
to close out or transfer all of its open positions with OCC, in each
case as promptly as practicable after giving written notice. See OCC
By-Laws, Article VIII, Section 6.
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1. Cooling-Off Period and Cap on Assessments
    The proposal would introduce a minimum fifteen calendar day
``cooling-off'' period that automatically begins when OCC imposes a
proportionate charge related to the default of a Clearing Member
against non-defaulting Clearing Members' Clearing Fund contributions.
During a cooling-off period, the aggregate liability for a Clearing
Member would be capped at 200 percent of its then-required contribution
to the Clearing Fund. The cooling-off period would be extended if one
or more specific events related to the default of a Clearing Member (as
set forth in OCC's By-laws) \15\ occur(s) during that fifteen calendar
day period and results in one or more proportionate charges against the
Clearing Fund. Such an extension would run until the earlier of (i) the
fifteenth calendar day from the date of the most recent proportionate
charge resulting from that subsequent event, or (ii) the twentieth day
from the date of the proportionate charge that initiated the cooling-
off period.
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    \15\ Specifically, a cooling-off period would automatically
begin after a proportionate charge arises in response to: (i) Any
Clearing Member failure to discharge duly any obligation on or
arising from any confirmed trade accepted by OCC, (ii) any Clearing
Member (including any Appointed Clearing Member) failure to perform
any obligations (including its obligations to the correspondent
clearing corporation) under or arising from any exercised or
assigned option contract or any other contract or obligation issued
or guaranteed by OCC or in respect of which it is otherwise liable,
(iii) any Clearing Member failure to perform any obligation to OCC
in respect of the stock loan and borrow positions of such Clearing
Member, or (iv) OCC suffered any loss or expense upon any
liquidation of a Clearing Member's open positions. See OCC By-Laws,
Article VIII, Section 5(a)(i) 09(iv).
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    Once the cooling-off period ends, each remaining Clearing Member
would be required to replenish the Clearing Fund in the amount
necessary to meet its then-required contribution. Any remaining losses
or expenses suffered by OCC as a result of any events that occurred
during that cooling-off period could not be charged against the amounts
Clearing Members have contributed to replenish the Clearing Fund upon
the expiration of the cooling-off period. However, after the end of a
cooling-off period, the occurrence of another specified event that
results in a proportionate charge against the Clearing Fund would
trigger a new cooling-off period.
2. Membership Termination During a Cooling-Off Period
    As noted above, to limit its liability to replenish the Clearing
Fund, a Clearing Member currently must provide written notice of its
intent to terminate its clearing membership by no later than the fifth
business day after a proportionate charge. OCC's proposal would extend
the time frame for a Clearing Member to provide such notice of
termination, which would allow the terminating Clearing Member to avoid
liability to replenish the Clearing Fund after the cooling-off period.
Specifically, to terminate its status as a Clearing Member and not be
liable for replenishment at the end of a cooling-off period, a Clearing
Member would be required to: (i) Notify OCC in writing of its intent to
terminate by no later than the last day of the cooling-off period, (ii)
not initiate any opening purchase or opening writing transaction, and,
if the Clearing Member is a Market Loan Clearing Member or a Hedge
Clearing Member, not initiate any Stock Loan transaction through any of
its accounts, and (iii) close-out or transfer all open positions by no
later than the last day of the cooling-off period. If a Clearing Member
fails to satisfy all of these conditions by the end of a cooling-off
period, it would not have completed all of the requirements necessary
to terminate its status as a Clearing Member, and therefore, it would
remain subject to its obligation to replenish the Clearing Fund after
the cooling-off period ends.
    Given the products cleared by OCC and the composition of its
clearing membership, OCC determined that a minimum 15-calendar day
cooling-off period, rolling up to a maximum of 20 calendar days, is
likely to be a sufficient amount of time for OCC to manage the ongoing
default(s) and take necessary steps in furtherance of stabilizing the
clearing system. Further, based on its conversations with Clearing
Members, OCC believes that the proposed cooling-off period is likely to
be a sufficient amount of time for Clearing Members (and their
customers) to orderly reduce or rebalance their positions, in an
attempt to mitigate stress losses and exposure to potential initial
margin increases during the stress event.\16\ OCC also believes the
proposed cooling-off period, coupled with the other proposed changes to
OCC's assessment powers, is likely to provide Clearing Members with an
adequate measure of stability and predictability as to the potential
use of Clearing Fund resources, which would, according to OCC, remove
the existing incentive for Clearing Members to withdraw following a
proportionate charge (i.e., to avoid facing potentially unlimited
liability for replenishing the Clearing Fund).
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    \16\ See Notice of Amendment, 83 FR at 37847.
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3. Replenishment and Assessment
    The proposal would clarify the distinction between
``replenishment'' of the Clearing Fund and a Clearing Member's
obligation to answer ``assessments'' charged by OCC. In this context,
the term ``replenish'' (and its variations) would refer to a Clearing
Member's standing duty, following any proportionate charge against the
Clearing Fund, to return its Clearing Fund contribution to the amount
required from such Clearing Member for the month in question. The term
``assessment'' (and its variations) would refer to the amount, during
any cooling-off period, that a Clearing Member

would be required to contribute to the Clearing Fund in excess of the
amount of the Clearing Member's pre-funded required Clearing Fund
contribution.

B. Proposed Authority To Request Voluntary Payments

    OCC proposed new Rule 1011 to provide a framework for receipt of
voluntary payments in a circumstance where a Clearing Member has
defaulted and OCC has determined that it may not have sufficient
resources to satisfy its obligations and liabilities resulting from
such default.\17\ OCC would initiate a call for voluntary payments by
issuing a notice inviting all non-defaulting Clearing Members to make
payments to the Clearing Fund in addition to any amounts they are
otherwise required to contribute pursuant to Rule 1001 (``Voluntary
Payment Notice''). The Voluntary Payment Notice would specify the terms
applicable to any voluntary payment, including but not limited to, that
any voluntary payment may not be withdrawn once made, that no Clearing
Member shall be obligated to make a voluntary payment, and that OCC
shall retain full discretion to accept or reject any voluntary payment.
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    \17\ OCC's determination would be made notwithstanding
availability of remaining resources under Rules 707 (addressing the
treatment of funds in a Clearing Member's X-M accounts); 1001
(addressing the size of OCC's Clearing Fund and the amount of a
Clearing Member's contribution); 1104-1107 (concerning the treatment
of the portfolio of a defaulted Clearing Member); and 2210 and 2211
(concerning the treatment of Stock Loan positions of a defaulted
Clearing Member).
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    In the event that OCC eventually obtains additional financial
resources from the defaulting Clearing Member, OCC would give priority
to repayment of Clearing Members that made Voluntary Payments.
Specifically, if OCC subsequently recovers from the defaulted Clearing
Member or the estate of the defaulted Clearing Member, OCC would seek
to first compensate all non-defaulting Clearing Members that made
voluntary payments.\18\ If the amount recovered from the defaulted
Clearing Member were less than the aggregate amount of voluntary
payments, non-defaulting Clearing Members that made voluntary payments
each would receive a percentage of the amount recovered that
corresponds to that Clearing Member's percentage of the total amount of
voluntary payments received.
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    \18\ As discussed further in Section II.C.1 below, OCC's
proposed authority with respect to Voluntary Payments and Voluntary
Payments would work together to establish a hierarchy of repayment
in the event that OCC subsequently recovers from the defaulted
Clearing Member. Under proposed rules 1011(b) and 1111(a)(ii), OCC
would first seek to compensate those non-defaulting Clearing Members
who had submitted Voluntary Payments and, thereafter, to the extent
funds remained, OCC would then seek to compensation those non-
defaulting Clearing Members who had participated in the Voluntary
Tear-Up.
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C. Proposed Authority to Conduct Voluntary Tear-Ups and Partial Tear-
Ups

    OCC proposed new Rule 1111 to establish a framework to extinguish
positions of a suspended or defaulted Clearing Member on a voluntary
basis (``Voluntary Tear-Up'') or on a mandatory basis (``Partial-Tear
Up'') and, in certain extreme circumstances, to allocate any uncovered
losses in the event that OCC does not have sufficient financial
resources to conduct the tear-up. A Voluntary Tear-Up, if provided,
would precede a Partial-Tear Up, and any Partial Tear-Up would take
into account any positions extinguished as part of a Voluntary Tear-Up.
Further, Rule 1111(h) would provide that no action or omission by OCC
pursuant to, and in accordance with, Rule 1111 shall constitute a
default by OCC, provided that Rule 1111(h) would not apply where OCC
pays Clearing Members a pro rata amount of the applicable Tear-Up price
because OCC does not have adequate resources to pay the full Tear-Up
price.
    OCC's use of both Voluntary and Partial Tear-Up would be subject to
certain prerequisites. First, any tear-up would occur after one or more
failed auctions pursuant to Rule 1104 or 1106. Second, any tear-up
would occur after OCC has determined that it may not have sufficient
resources to satisfy its obligations and liabilities resulting from
such default.\19\
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    \19\ As with Voluntary Payments, this determination would be
made notwithstanding availability of remaining resources under Rules
707, 1001, 1104-1107, 2210, and 2211. See note 17 supra.
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    OCC represented that it would initiate its tear-up process on a
date sufficiently in advance of the exhaustion of its financial
resources such that OCC would expect to have adequate remaining
resources to cover the amount it must pay to extinguish the positions
of Clearing Members and customers.\20\ The holders of torn-up positions
would be assigned a price, and OCC would draw on its remaining
financial resources to extinguish the torn-up positions at the assigned
price. Although OCC does not intend, in the first instance, for its
tear-up process to serve as a means of loss allocation, OCC recognizes
that circumstances may arise such that, despite its best efforts, OCC
may not have adequate remaining financial resources to extinguish torn-
up positions at the full assigned price, resulting in the allocation of
uncovered losses by the tear-up process. As further described below, a
Clearing Member allocated an uncovered loss would then have an
unsecured claim against OCC for the value of the difference between the
pro rata amount paid to the Clearing Member and the full amount the
Clearing Member should have received.
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    \20\ Specifically, OCC stated that it anticipated that it would
determine the date on which to initiate Partial Tear-Ups by
monitoring its remaining financial resources against the potential
exposure of the remaining unauctioned positions from the
portfolio(s) of the defaulted Clearing Member(s).
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1. Voluntary Tear-Up
    As noted above, a Voluntary Tear-Up would provide an opportunity to
holders of certain positions opposite a defaulting Clearing Member to
voluntarily extinguish those positions. Although the Risk Committee of
OCC's Board of Directors (``Risk Committee'') approval is not necessary
to commence a Voluntary Tear-Up, the Risk Committee would be
responsible for determining the scope of a Voluntary Tear-Up. Proposed
Rule 1111(c) would provide discretion to the Risk Committee when
determining the appropriate scope, but the discretion would be subject
to, and limited by, certain conditions, i.e., that the determination
should be (i) based on then-existing facts and circumstances, (ii) be
in furtherance of the integrity of OCC and the stability of the
financial system, and (iii) take into consideration the legitimate
interests of Clearing Members and market participants.
    Once the Risk Committee has determined the scope, OCC would
initiate the call for Voluntary Tear-Ups by issuing a notice
(``Voluntary Tear-Up Notice'') to inform all non-defaulting Clearing
Members of the opportunity to participate in a Voluntary Tear-Up.\21\
The Voluntary Tear-Up Notice would specify the terms applicable to any
Voluntary Tear-Up, including, but not limited to, that no Clearing
Member or customers of a Clearing Member shall be obligated to
participate in a Voluntary Tear-Up, and that OCC shall retain full
discretion to accept or reject any Voluntary Tear-Up.
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    \21\ Because OCC does not know the identities of Clearing
Members' customers, OCC would depend on each Clearing Member to
notify its customers with positions in scope of the Voluntary Tear-
Up of the opportunity to participate in such tear-up.
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    Clearing Members and their customers that participated in a
Voluntary Tear-Up and incurred losses would have a claim to amounts
subsequently recovered from a defaulted Clearing Member (or the estate
of the defaulted Clearing Member). The claim would be junior to
Clearing Members who made a voluntary payment to the

Clearing Fund, and OCC would satisfy the claims on a pro-rata basis.
2. Partial Tear-Up
    Under proposed Rule 1111(b), OCC's Board would be responsible for
the decision to conduct a mandatory Partial Tear-Up. The Risk Committee
would then be responsible for determining the appropriate scope of the
Partial Tear-Up, subject to the conditions in Rule 1111(c) discussed
above.
    The proposed rule would also provide the Board with the discretion
to conduct a mandatory Partial Tear-Up to extinguish the remaining open
positions of any defaulted Clearing Member or customer of such
defaulted Clearing Member(s) (``Remaining Open Positions'') and/or any
related open positions necessary to mitigate further disruptions to the
markets affected by the Remaining Open Positions (``Related Open
Positions''). The open positions subject to tear-up opposite to the
Remaining Open Positions and the Related Open Positions would be
designated in accordance with the methodology in Rule 1111(e).
Specifically, for Remaining Open Positions, the aggregate amount in the
identical Cleared Contracts and Cleared Securities would be designated
on a pro-rata basis to non-defaulting Clearing Members that have an
open position in such Cleared Contract or Cleared Security. For
Remaining Open Positions, all open positions in Cleared Contracts and
Cleared Securities identified in the scope of the Partial Tear-Up would
be extinguished.
    After the scope of the Partial Tear-Up is determined, OCC would
initiate the Partial Tear-Up process by issuing a notice (``Partial
Tear-Up Notice''). The Partial Tear-Up Notice would: (i) Identify the
Remaining Open Positions and Related Open Positions designated for
tear-up, (ii) identify the Tear-Up Positions, (iii) specify the
termination price (``Partial Tear-Up Price'') for each position to be
torn-up, and (iv) list the date and time, as determined by the Risk
Committee, that the Partial Tear-Up will occur (``Partial Tear-Up
Time'').
    Rule 1111(f) would provide that, to determine the Partial Tear-Up
Price, OCC would use its discretion, acting in good faith and in a
commercially reasonable manner, to adopt methods of valuation expected
to produce reasonably accurate substitutes for the values that would
have been obtained from the relevant market if it were operating
normally, including but not limited to the use of pricing models that
use the market price of the underlying interest or the market prices of
its components. Rule 1111(f) further specifies that OCC may consider
the same information set forth in subpart (c) of Section 27, Article VI
of OCC's By-Laws.\22\ OCC stated that it is likely to use the last
established end-of-day settlement price, in accordance with its
existing practices concerning pricing and valuation. However, given
that it is not possible to know in advance the precise circumstances
that would cause OCC to conduct a tear-up, Rule 1111(f) would allow OCC
to exercise reasonable discretion, if necessary, in establishing the
Partial Tear-Up Price by some means other than its existing practices
concerning pricing and valuation. For example, OCC represented that it
has observed certain rare circumstances in which a closing price for an
underlying security of an option may be stale or unavailable. A stale
or unavailable closing price could be the result of a halt on trading
in the underlying security, a corporate action resulting in a cash-out
or conversion of the underlying security (but that has not yet been
finalized), or the result of an ADR whose underlying security is being
impacted by certain provisions under foreign laws. OCC stated it would
consider these circumstances in determining whether use of the
discretion that would be afforded under proposed Rule 1111(f) might be
warranted.\23\
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    \22\ Section 27, Article VI addresses the valuation of positions
that may be subject to close-out netting in the event of OCC's
insolvency or default. Specifically, it states that in determining a
close-out amount, OCC may consider any information that it deems
relevant, including, but not limited to, any of the following
factors: (i) Prices for underlying interests in recent transactions,
as reported by the market or markets for such interests; (ii)
quotations from leading dealers in the underlying interest, setting
forth the price (which may be a dealing price or an indicative
price) that the quoting dealer would charge or pay for a specified
quantity of the underlying interest; (iii) relevant historical and
current market data for the relevant market, provided by reputable
outside sources or generated internally; and (iv) values derived
from theoretical pricing models using available prices for the
underlying interest or a related interest and other relevant data.
    \23\ See Letter from Joseph P. Kamnik, Sr. Vice President and
CRO, OCC, to Brent Fields, Secretary, Commission, at 5 (Jul. 9,
2018) (``OCC Letter'').
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    Every Partial Tear-Up position would be automatically terminated at
the Partial Tear-Up Time, without the need for any further step by any
party to the position. Upon termination, either OCC or the relevant
Clearing Member would be obligated to pay to the other party the
applicable Partial Tear-Up Price. The corresponding open position would
be deemed terminated at the Partial Tear-Up Price. In the event that,
given the amount of remaining resources, OCC would not be able to pay
the full Partial Tear-Up Price, OCC would pay each torn-up Clearing
Member a pro-rata amount of the applicable Partial Tear-Up Price based
on the amounts of such resources remaining. Those Clearing Members
would then have an unsecured claim against OCC for the value of the
difference between the pro rata amount and the Partial Tear-Up Price.
3. Re-Allocating Losses From Tear-Up
    The proposed changes would provide OCC with means to re-allocate
losses, costs, and expenses associated with the tear-up process. First,
the proposal would amend Article VIII of the By-Laws to provide OCC
discretion to use remaining Clearing Fund contributions to re-allocate
losses imposed on non-defaulting Clearing Members and customers from
tear-up. Second, in connection with a Partial Tear-Up, proposed Rule
1111(g) would provide the Board with discretion to re-allocate losses,
costs, and fees imposed upon non-defaulting Clearing Members and their
customers among all non-defaulting Clearing Members to the extent that
such losses, costs, and fees can be reasonably determined by OCC
(``Special Charge''). The Special Charge would correspond to each non-
defaulting Clearing Member's proportionate share of the variable amount
of the Clearing Fund at the time of the Partial Tear-Up. The Special
Charge would be distinct and separate from a Clearing Member's
obligation to satisfy Clearing Fund assessments during a cooling-off
period and, therefore, not subject to the cap on assessments.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Exchange Act directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to such organization.\24\ After carefully
considering the Amended Proposed Rule Change, the Commission believes
the proposal is consistent with the requirements of the Exchange Act
and the rules and regulations thereunder applicable to OCC. More
specifically, the Commission finds that the Amended Proposed Rule
Change is consistent with Section 17A(b)(3)(F) of the Exchange Act \25\
and Rules 17Ad-22(e)(2)(i), (iii), and (v), (e)(4)(viii) and

(ix), (e)(13), and (e)(23)(i) and (ii) thereunder.\26\
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    \24\ 15 U.S.C. 78s(b)(2)(C).
    \25\ 15 U.S.C. 78q-1(b)(3)(F).
    \26\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v), (e)(4)(viii)
and (ix), (e)(13), and (e)(23)(i) and (ii).
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A. Consistency With Section 17A(b)(3)(F) of the Exchange Act

    Section 17A(b)(3)(F) of the Exchange Act requires that the rules of
a clearing agency be designed to, among other things, promote the
prompt and accurate clearance and settlement of securities
transactions, assure the safeguarding of securities and funds which are
in the custody or control of the clearing agency or for which it is
responsible, and, in general, to protect investors and the public
interest.\27\
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    \27\ 15 U.S.C. 78q-1(b)(3)(F).
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    OCC is the sole registered clearing agency for the U.S. listed
options markets. In general, OCC maintains equal and opposite
obligations on cleared positions (commonly referred to as a matched
book). In an extreme loss event caused by a Clearing Member default,
re-establishing a matched book as quickly as possible is essential
because it would allow OCC to continue clearing and settling securities
transactions as a central counterparty. In addition, allocating
uncovered losses is important in such an event because it would allow
OCC to provide further certainty to Clearing Members, their customers,
and other stakeholders about how it addresses such losses and avoid a
disorderly resolution to such an event. Thus, taken together, the
Commission believes that the new and amended authority granted to OCC
specific to the context of extreme loss events and described in the
Amended Proposed Rule Change should provide OCC with the ability to re-
establish a matched book, allocate uncovered losses if necessary, and
limit OCC's potential exposure to losses from such an event, all of
which would be essential to OCC's ability to continue promptly and
accurately clearing securities transactions in the event that an
extreme market event places OCC in a recovery scenario.
    Further, the Commission believes that the proposed changes would
provide a reasonable amount of clarity and specificity to Clearing
Members, their customers, and other stakeholders about the potential
tools that would be expected to be available to OCC if such an event
occurred, and the consequences that might arise from OCC's application
of such tools. Because of this increased clarity and specificity, OCC's
Clearing Members, their customers, and other stakeholders should have
more information regarding their potential exposure and liability to
OCC in an extreme loss event. Accordingly, the Commission believes that
the proposed changes should allow Clearing Members, their customers,
and other stakeholders to better evaluate the risks and benefits of
clearing transactions at OCC because the proposed changes result in
those parties having more information and specificity regarding the
actions that OCC could take in response to an extreme loss event. To
the extent that Clearing Members, their customers, and other
stakeholders are able to use this increased clarity and specificity to
better manage their potential exposure and liability in clearing
transactions at OCC, such parties should be able to mitigate the
likelihood that such tools could surprise or otherwise destabilize
them. For these reasons, the Commission believes that the proposed
rules providing for such clarity and specificity are designed, in
general, to protect investors and the public interest.
    It is important for OCC to implement measures, including measures
designed to facilitate OCC's ability to address risks and obligations
arising in the specific context of extreme loss events, that enhance
OCC's ability to address losses and to avoid threatening its ability to
safeguard securities and funds within OCC's custody or control. OCC's
proposed modified assessment powers would impose a cap on a Clearing
Member's potential liability to replenish the Clearing Fund following a
particular default event and extend the timeframe during which a
Clearing Member must determine whether to terminate its membership and
avoid further losses. Taken together, the Commission believes that
these tools are reasonably designed to provide OCC with sufficient
financial resources to cover default losses and ensure that OCC can
take timely actions to contain losses and continue meeting its
obligations in the event of a Clearing Member default. Similarly, the
Commission believes that these changes would provide Clearing Members
and their customers with greater certainty and predictability regarding
the amount of losses they must bear as a result of a Clearing Member
default. For these reasons, the Commission believes that the Amended
Proposed Rule Change is designed to assure the safeguarding of
securities and funds in OCC's custody or control.
    Additionally, OCC's proposed authority to conduct tear-ups would
provide OCC with a mechanism for restoring a matched book and, in the
event that OCC did not have sufficient financial resources to pay the
full Partial Tear-Up Price, allocate losses to the non-defaulting
Clearing Members. The Commission recognizes that a tear-up would result
in termination of positions of non-defaulting Clearing Members.
However, because under the proposed rules OCC would only be able to use
its tear-up authority after it has conducted an auction pursuant to its
Rules and when OCC has determined that it may not have sufficient
financial resources to meet its obligations, a tear-up would only arise
in an extreme stress scenario. Use of tear-up in such circumstances
could potentially return OCC to a matched book quickly, thereby
containing its losses and avoiding OCC's and its Clearing Members'
exposure to additional losses. OCC's proposal would also address the
determination of the Partial Tear-Up Price. Specifically, OCC would
determine a Partial Tear-Up Price by using its discretion, acting in
good faith and in a commercially reasonable manner, to adopt methods of
valuation expected to produce reasonably accurate substitutes for the
values that would have been obtained from the relevant market if it
were operating normally, including but not limited to the use of
pricing models that use the market price of the underlying interest or
the market prices of its components. The Commission believes that OCC's
proposed authority to conduct tear-ups could facilitate its ability to
return to a matched book quickly and, in an extreme event, allocate
losses. This, in turn, could help ensure that OCC is able to continue
providing its critical clearing functions by facilitating the timely
containment of default losses and liquidity pressures, thereby helping
to prevent OCC from failing in such an event, and is therefore
consistent with promoting the prompt and accurate clearance and
settlement of securities transactions.
    One commenter states that the Partial Tear-Up Price should be
determined objectively and not on a discretionary basis.\28\ In the OCC
Letter, OCC states that, in the event that it has to determine a
Partial Tear-Up Price, OCC anticipates that it is likely to use the
last established end-of-day settlement price, in accordance with its
existing practices concerning pricing and valuation, but notes that
discretion may be necessary in the circumstances likely to be
associated with an extreme loss event necessitating a tear-up where the
end-of-day closing price may be stale or

unavailable.\29\ Further, the Commission notes that, under OCC's
proposed rule, OCC would not have unfettered discretion to determine
the appropriate price. Rather, OCC's discretion would be limited by two
conditions. Specifically, in the event that OCC uses its discretion to
determine a Partial Tear-Up Price, it will be required under OCC's
proposed rule to do so (i) in good faith and (ii) in a commercially
reasonable manner.\30\ The Commission believes that this discretion, as
limited by the two specified conditions, is appropriate given that it
is not possible to know the precise circumstances likely to be
associated with an extreme loss event necessitating a tear-up, and,
therefore, the limited discretion provided for in the proposed rule may
be appropriate in such circumstances. The Commission also notes that,
in the event that OCC is using its authority to conduct a Partial Tear-
Up, OCC would provide notification to the Commission and other
regulators.\31\ Accordingly, the Commission does not believe that this
aspect of the proposal is inconsistent with the Exchange Act.
---------------------------------------------------------------------------

    \28\ See Letter from Jacqueline H. Mesa, Sr. Vice President of
Global Policy, Futures Industry Association, to Brent Fields,
Secretary, Commission, at 2; available at https://www.sec.gov/comments/sr-occ-2017-022/occ2017020.htm (Jan. 16, 2018) (``FIA
Letter'').
    \29\ See OCC Letter at 5. According to OCC, a stale or
unavailable closing price could be the result of a halt on trading
in the underlying security, a corporate action resulting in a cash-
out or conversion of the underlying security (but that has not yet
been finalized), or the result of an ADR whose underlying security
is being impacted by certain provisions under foreign laws. See id.
    \30\ See also id. at 5.
    \31\ See Securities Exchange Act Release No. 83918 (Aug. 23,
2018) at note 19 (SR-OCC-2017-021).
---------------------------------------------------------------------------

    Finally, OCC's proposal would also introduce methods of re-
allocating losses after a tear-up. First, the revised By-Laws would
allow OCC discretion to use remaining Clearing Fund contributions to
re-allocate losses imposed on non-defaulting Clearing Members and their
customers from a tear-up. Second, the revised Rules would provide the
Board with the discretion to re-allocate losses among all non-
defaulting members via a Special Charge, to the extent that such losses
can be reasonably determined. As such, the Commission believes that
these tools, and the associated governance, are designed to give OCC
the ability to re-allocate the losses in a fair and equitable manner
after an extreme market event, and, in general, to protect investors
and the public interest.
    One commenter states that the power to impose the Special Charge in
connection with a Partial Tear-Up potentially could impose costs onto
non-defaulting Clearing Members that did not have an opposing position
from a defaulting Clearing Member. According to the commenter, the
Special Charge could, in effect, be another assessment against all
Clearing Members, which could create unquantifiable and unmanageable
risks to Clearing Members. Moreover, the commenter states that the
discretion afforded the Board may result in the Special Charge being
capriciously applied. For these reasons, the commenter believes that
the costs associated with a Partial Tear-Up should not be transferrable
to unaffected Clearing Members.\32\
---------------------------------------------------------------------------

    \32\ See FIA Letter at 2.
---------------------------------------------------------------------------

    Under the terms of the proposed rule, the Special Charge could only
be used when the losses, costs, and fees imposed upon non-defaulting
Clearing Members and their customers directly resulting from a Partial
Tear-Up reasonably can be determined by OCC. Further, if it were used,
the Special Charge would correspond to each non-defaulting Clearing
Member's proportionate share of the Clearing Fund at the time of the
Partial Tear-Up. Thus, the Commission does not believe that OCC would
be permitted under the proposed rule to engage in unlimited assessments
because the amount of the Special Charge must be subject to a
reasonable determination, and the Special Charge would then correspond
to the non-defaulting Clearing Member's proportionate share of the
Clearing Fund. These aspects of the Special Charge should help ensure
that OCC does not apply the tool capriciously and that the Board would
use the Special Charge in these delineated circumstances, i.e., when
the amount of the losses was reasonably determinable. For these
reasons, the Commission does not believe that the Special Charge is
inconsistent with the Exchange Act.
    Therefore, the Commission believes that the proposed rule changes
would promote the prompt and accurate clearance and settlement of
securities transactions, assure the safeguarding of securities and
funds in OCC's custody and control, and, in general, protect investors
and the public interest, consistent with Section 17A(b)(3)(F) of the
Exchange Act.\33\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(2)(i), (iii), and (v), Rule 17Ad-
22(e)(4)(viii) and (ix), Rule 17Ad-22(e)(13), and Rule 17Ad-
22(e)(23)(i) and (ii) Under the Exchange Act

1. Governance
    Rule 17Ad-22(e)(2) requires, in relevant part, that OCC establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to provide for governance arrangements that are
clear and transparent; support the public interest requirements of
Section 17A of the Exchange Act applicable to clearing agencies, and
the objectives of owners and participants; and specify clear and direct
lines of responsibility.\34\
---------------------------------------------------------------------------

    \34\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v).
---------------------------------------------------------------------------

    The proposal, taken together with existing OCC Rules, specifies the
governance that would apply to use of each of the recovery tools.
Specifically, with respect to the modified powers of assessment, the
cooling-off period would commence automatically upon a number of events
specified in the By-Laws. The use of Voluntary Payments and either
Voluntary or Partial Tear-Up cannot occur unless OCC has determined
that it may not have sufficient resources available to satisfy its
obligations after a default. In addition, the proposal specifies the
applicable decision-making body that would be responsible for
determining whether to conduct a tear-up. Specifically, for a Voluntary
Tear-Up, OCC would be able to make that determination, and for a
Partial Tear-Up, which is mandatory, Board action is required. The Risk
Committee would be responsible for determining the scope of the tear-
ups, and any such determinations must take into account certain
considerations. Only the Board may elect to impose a Special Charge to
reallocate losses, costs, and fees from a Partial Tear-Up.
    Thus, key decisions by OCC in connection with the use of its
proposed recovery tools are subject to specific governance processes.
These requirements include the involvement of the Risk Committee in
determining the scope and pricing for any Partial Tear-up and
specifically require Board approval with respect to instituting Partial
Tear-Up and authorizing the Special Charge. Accordingly, the Commission
believes that the governance process for using the recovery tools is
clear and transparent and provides clear and direct lines of
responsibility by addressing decision making in the use of recovery
tools, thereby supporting the public interest requirements of Section
17A of the Exchange Act applicable to clearing agencies, and the
objectives of owners and participants, and therefore the Commission
believes that the proposed rule change is consistent with Rule 17Ad-
22(e)(2)(i), (iii), and (v).\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v).

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

2. Allocation of Credit Losses Exceeding Available Resources
    Rule 17Ad-22(e)(4)(viii) requires, in relevant part, that OCC
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to address allocation of credit losses
OCC may face if its collateral and other resources are insufficient to
fully cover its credit exposures.\36\ OCC's proposal includes three new
recovery tools addressing the allocation of credit losses in the event
that OCC determined that, notwithstanding the availability of any
remaining resources under the other resource rules, OCC may not have
sufficient resources to satisfy its obligations and liabilities
following a default. First, Rule 1009 would provide a framework for OCC
to receive Voluntary Payments in addition to their required
contribution to the Clearing Fund to address a shortfall. Second, Rule
1111 would provide a framework for Clearing Members and their customers
to participate in a Voluntary Tear-Up. Third, Rule 1111 would provide
the Board with the discretion to conduct a mandatory Partial Tear-Up.
This tool could be used, if necessary in the event that OCC determines
that its resources are inadequate to pay the applicable Partial Tear-Up
Price, to allocate losses by allowing OCC to pay each relevant Clearing
Member a pro rata amount of the applicable Partial Tear-Up Price based
on the amount of such resources remaining. In addition, the modified
powers of assessment would continue to allow OCC to use the Clearing
Fund to address credit losses in the event of a member default.
---------------------------------------------------------------------------

    \36\ 17 CFR 240.17Ad-22(e)(4)(viii).
---------------------------------------------------------------------------

    Thus, the Commission believes that these additional recovery tools
are reasonably designed to provide OCC with means to address allocation
of credit losses that it may face if its collateral and other resources
are insufficient to fully cover its credit exposures. Further, the
Commission believes that these tools should address fully any credit
losses that OCC may face as a result of any individual or combined
default among its Clearing Members. Therefore, the Commission believes
that these aspects of the proposed changes are consistent with Rule
17Ad-22(e)(4)(viii).\37\
---------------------------------------------------------------------------

    \37\ 17 CFR 240.17Ad-22(e)(4)(viii).
---------------------------------------------------------------------------

3. Replenishment of Financial Resources Following a Default
    Rule 17Ad-22(e)(4)(ix) requires, in relevant part, that OCC
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to describe OCC's process to replenish
any financial resources it may use following a default or other event
in which use of resources is contemplated.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 240.17Ad-22(e)(4)(ix).
---------------------------------------------------------------------------

    The proposed changes to OCC's assessment powers would include the
addition of a minimum fifteen-day cooling-off period that would be
automatically triggered by a proportionate charge to the Clearing Fund
arising from a Clearing Member default. At the end of the cooling-off
period, a remaining Clearing Member (i.e., a Clearing Member that did
not choose to terminate its membership during the cooling-off period)
would be obligated to replenish the Clearing Fund.
    The Commission recognizes that by placing a cap on its assessment
power during the cooling-off period, these revisions would effectively
limit the amount of financial resources available to OCC from its
Clearing Fund during that period. However, the Commission believes that
these proposals would provide greater certainty and predictability
regarding Clearing Members' maximum liability to the Clearing Fund.
Moreover, in light of the proposed cap on OCC's assessment powers
during the cooling-off period, OCC has authority under Rule 603 to call
for additional initial margin from Clearing Members to ensure that OCC
maintains sufficient financial resources to meet its requirements under
Rule 17Ad-22(e)(4)(iii). Finally, at the end of a cooling-off period, a
Clearing Member would be required to replenish the Clearing Fund in the
amount necessary to meet its then-required contribution.
    In light of the foregoing discussion, the Commission believes that
the provisions related to OCC's assessment powers, taken together with
the other components of OCC's default management procedures and
recovery rules, which are reasonably designed to allow OCC to replenish
its financial resources following a default or other event in which use
of such resources is contemplated, are consistent with Rule 17Ad-
22(e)(4)(ix).\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 240.17Ad-22(e)(4)(ix).
---------------------------------------------------------------------------

    One commenter states that OCC should provide an explanation of its
determination to set the cap on the powers of assessment at 200 percent
during a cooling-off period.\40\ In the OCC Letter, OCC provided an
explanation of the internal analysis that it conducted to reach the 200
percent determination.\41\ Specifically, OCC stated that it considered
its ability to have sufficient financial resources inclusive of its
proposed assessment powers to withstand extreme market conditions on a
``Cover-2'' basis under various scenarios, and that OCC determined
that, under such scenarios, it would be able to meet its clearing
obligations so long as it was able to use (1) the financial resources
on hand in the Clearing Fund, and (2) the full funding of two
assessments (i.e., 200 percent) from non-defaulting Clearing
Members.\42\ Moreover, OCC stated that it reviewed the caps that other
CCPs impose upon their own assessment powers and determined that the
200 percent cap is generally aligned with other assessment caps.\43\
Based on review of the analysis provided by OCC and the caps of other
CCPs,\44\ the Commission believes that the 200 percent cap in the
proposed changes is consistent with Rule 17Ad-22(e)(4)(ix).
---------------------------------------------------------------------------

    \40\ See FIA Letter at 1-2.
    \41\ See OCC Letter at 2-3.
    \42\ See id.
    \43\ See id. at 3.
    \44\ See, e.g., Self-Regulatory Organizations; ICE Clear Credit
LLC; Notice of Filing Amendment No. 1 and Order Granting Accelerated
Approval of Proposed Rule Change to Amend the ICE Clear Credit
Clearing Rules, as Modified by Amendment No. 1, Relating to Default
Management, Clearing House Recovery and Wind-Down, Exchange Act
Release No. 79750 (Jan. 6, 2017), 82 FR 3831 (Jan. 12, 2017) (SR-
ICC-2016-013) (approving a proposed rule change including, among
other things, a 300 percent cap on non-defaulting participants'
liability during a cooling-off period).
---------------------------------------------------------------------------

4. Authority To Take Timely Action To Contain Losses and Liquidity
Demands and Continue To Meet Obligations
    Rule 17Ad-22(e)(13) requires, in relevant part, that OCC establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to ensure that it has the authority and operational
capacity to take timely action to contain losses and liquidity demands
and continue to meet its obligations.\45\ As described above, OCC's
proposal would provide OCC with modified assessment powers and new
tools of Voluntary Payments, Voluntary Tear-Ups, and Partial Tear-Ups.
---------------------------------------------------------------------------

    \45\ 17 CFR 240.17Ad-22(e)(13).
---------------------------------------------------------------------------

    As discussed above, the Commission recognizes that a tear-up would
result in termination of positions of non-defaulting Clearing Members.
However, because OCC would only be able to use its tear-up authority
after it has conducted an auction pursuant to its Rules and when OCC
has determined that it may not have sufficient financial resources to
meet its obligations, a tear-up would only arise in an extreme stress
scenario. Further, use of tear-up in such circumstances could
potentially return

OCC to a matched book quickly, thereby containing its losses.
    The Commission believes that these tools are designed to provide
greater certainty to Clearing Members seeking to estimate the potential
risks and losses arising from their use of OCC, while enabling OCC to
promptly return to a matched book. The Commission believes that
returning to a matched book pursuant to these provisions in the context
of OCC's default management and recovery facilitates OCC's operational
capacity to timely contain losses and liquidity demands while
continuing to meet its obligations. Thus, the Commission believes that
the proposed changes are consistent with Rule 17Ad-22(e)(13).\46\
---------------------------------------------------------------------------

    \46\ Id.
---------------------------------------------------------------------------

5. Public Disclosure of Key Aspects of Default Rules
    Rules 17Ad-22(e)(23)(i) and (ii) require, in relevant part, that
OCC establish, implement, maintain, and enforce written policies and
procedures reasonably designed to provide for the public disclosure of
all relevant rules and material procedures, including key aspects of
default rules and procedures, as well as sufficient information to
enable participants to identify and evaluate the risks, fees and other
material costs they incur by participating in OCC.\47\ The Commission
believes that the proposed changes address key aspects of OCC's default
rules and procedures, thereby providing Clearing Members with a better
understanding of the potential risks and costs they might face in an
extreme event where OCC may use its proposed recovery tools, including
the potential use of the Special Charge. Accordingly, the Commission
believes that OCC has disclosed these key aspects of its default rules
and procedures, consistent with Rule 17Ad-22(e)(23)(i) and (ii).\48\
---------------------------------------------------------------------------

    \47\ 17 CFR 240.17Ad-22(e)(23)(i) and (ii).
    \48\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
Amended Proposed Rule Change is consistent with the requirements of the
Exchange Act, and in particular, with the requirements of Section 17A
of the Exchange Act \49\ and the rules and regulations thereunder.
---------------------------------------------------------------------------

    \49\ In approving this Amended Proposed Rule Change, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\50\ that the Proposed Rule Change (SR-OCC-2017-020), as
modified by Amendment No. 2, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78s(b)(2).
    \51\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18672 Filed 8-28-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 249 (Tuesday, December 29, 2015)]
[Rules and Regulations]
[Pages 81174-81178]
[FR Doc No: 2015-32078]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2015-0076; Directorate Identifier 2013-NM-246-AD;
Amendment 39-18350; AD 2015-26-02]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

AGENCY: Federal Aviation Administration (FAA), Department of
Transportation (DOT).

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for all
Airbus Model A330-200, A330-200 Freighter, and A330-300 series
airplanes; and Airbus Model A340-200, A340-300, A340-500, and A340-600
series airplanes. This AD was prompted by a report that, during a
production flight test, the ram air turbine (RAT) did not pressurize
the green hydraulic system. For certain airplanes, this AD requires
identification of the part number, serial number, and standard of the
RAT pump, RAT module, RAT actuator, and RAT lower gearbox assembly;
replacement of the balance weight screw, modification of the actuator
coil spring, modification of the actuator, an inspection of the anti-
stall valve for correct installation in the RAT pump housing; and
corrective actions if necessary. For certain other airplanes, this AD
requires re-identification or replacement of the RAT module. We are
issuing this AD to prevent loss of the impeller function and RAT pump
pressurization capability, which, if preceded by a total engine flame-
out, could result in the loss of control of the airplane.

DATES: This AD becomes effective February 2, 2016.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of February 2,
2016.

ADDRESSES: You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2015-0076; or in person at the
Docket Management Facility, U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC.
    For Airbus service information identified in this final rule,
contact Airbus SAS, Airworthiness Office--EAL, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax
+33 5 61 93 45 80; email<EMAIL_ADDRESS>Internet
http://www.airbus.com. For Hamilton Sundstrand service information
identified in this AD, contact Hamilton Sundstrand, Technical
Publications, Mail Stop 302-9, 4747 Harrison Avenue, P.O. Box 7002,
Rockford, IL 61125-7002; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>;
email<EMAIL_ADDRESS>Internet http://www.hamiltonsundstrand.com. You may view this referenced service
information at the FAA, Transport Airplane Directorate, 1601 Lind
Avenue SW., Renton, WA. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>. It is also available on the
Internet at http://www.regulations.gov by searching for and locating
Docket No. FAA-2015-0076.

FOR FURTHER INFORMATION CONTACT: Vladimir Ulyanov, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue SW., Renton, WA 98057-3356; telephone<PHONE_NUMBER>;
fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would apply to all Airbus Model A330-200,
A330-200 Freighter, and A330-300 series airplanes; and Airbus Model
A340-200, A340-300, A340-500, and A340-600 series airplanes. The NPRM

published in the Federal Register on January 23, 2015 (80 FR 3513).
    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA
Airworthiness Directive 2013-0274, dated November 15, 2013 (referred to
after this as the Mandatory Continuing Airworthiness Information, or
``the MCAI''), to correct an unsafe condition for all Airbus Model
A330-200, A330-200 Freighter, and A330-300 series airplanes; and Airbus
Model A340-200, A340-300, A340-500, and A340-600 series airplanes. The
MCAI states:

    During a production flight test of an A330-300 aeroplane, the
Ram Air Turbine (RAT) did not pressurize the green hydraulic system.
Investigation revealed that the impeller drive (hex) shaft had a
reduced length of engagement with the pump drive shaft. This caused
the impeller drive shaft to disengage from the pump and disconnect
the impeller. It was determined that the disconnection was the
result of internal hex dimensions on the pump impeller shaft, which
had been changed in a manufacturing drawing. From the investigation
analysis, it was possible to identify a list of affected parts.
    This condition, if not detected and corrected, could lead to the
loss of impeller function and RAT pump pressurization capability,
possibly resulting, in case of total engine flame out, to the loss
of control of the aeroplane.
    To address this unsafe condition, a new design RAT pump shaft
has been developed with a decreased hexagonal shaft housing depth,
which increases the hexagonal drive shaft engagement in the impeller
shaft to carry the impeller torque. Airbus issued Service Bulletin
(SB) A330-29-3122, SB A340-29-4093 and SB A340-29-5021 to provide
instructions for in-service replacement of the affected RAT
hydraulic pumps, or re-identification of the RAT pump and complete
RAT module, as applicable.
    For the reasons described above, this [EASA] AD requires
identification and replacement [modification] or re-identification
of all affected RAT hydraulic pumps on A330 and A340-200/300
aeroplanes, and replacement [modification] of all affected RAT
modules on A340-500/-600 aeroplanes.

For affected pumps, the required actions also include concurrent
actions, as applicable, including replacement of the balance weight
screw, modification of the actuator coil spring, modification of the
actuator, an inspection of the anti-stall valve for correct
installation in the RAT pump housing and re-installation if necessary.
For affected pumps, corrective actions include replacement of the RAT
hydraulic pump, and re-identification of the part number of the RAT
module. You may examine the MCAI in the AD docket on the Internet at
http://www.regulations.gov/#!documentDetail;D=FAA-2015-0076-0003.

Comments

    We gave the public the opportunity to participate in developing
this AD. The following presents the comments received on the NPRM (80
FR 3513, January 15, 2015) and the FAA's response to each comment.
    One commenter, Joseph P. Evans, supported the NPRM (80 FR 3513,
January 15, 2015).

Request To Include Optional Actions in Paragraphs (h) and (j) of the
Proposed AD (80 FR 3513, January 15, 2015)

    Delta Airlines (DAL) requested that paragraph (h) of the Proposed
AD (80 FR 3513, January 15, 2015) be revised to include an option for
operators to concurrently do the actions described in Airbus Service
Bulletin A330-29-3126, dated June 12, 2014, which refers to Hamilton
Sundstrand Service Bulletin ERPS06M-29-21, dated May 27, 2014, when
doing any corrective actions required by paragraph (h) of the proposed
AD. Based upon its requested revision to paragraph (h) of the proposed
AD, DAL also requested that paragraph (j) of the proposed AD be revised
to include a statement that if an operator did the optional concurrent
actions specified in Airbus Service Bulletin A330-29-3126, dated June
12, 2014, the RAT module should be re-identified using the instructions
in that service information.
    We agree with the commenter's request to include an option for the
reasons provided by the commenter. The actions described in Airbus
Service Bulletin A330-29-3126, dated June 12, 2014, include
concurrently doing the actions specified in paragraphs (h) and (j) of
this AD. For similar reasons, we have also included options for
operators to do the actions in Airbus Service Bulletin A340-29-4097,
dated June 12, 2014; and Airbus Service Bulletin A340-29-5025, dated
June 16, 2014; as applicable.
    We have included a new paragraph (k) in this AD to allow operators
the option to do the actions in Airbus Service Bulletin A330-29-3126,
dated June 12, 2014; and Airbus Service Bulletin A340-29-4097, dated
June 12, 2014, and re-designated the subsequent paragraphs accordingly.
Paragraph (l) of this AD has been revised to include the option for
operators to do the actions described in Airbus Service Bulletin A340-
29-5025, dated June 16, 2014, for the Model A340-541 and A340-642
series airplanes.
    If operators do the optional actions, the RAT actuators will be
modified to the current standards and the RAT modules re-identified
with the current part numbers. The service information for the optional
actions specified in paragraph (k) of this AD states that the actions
in the service information required by paragraphs (g), (h), and (j) of
this AD, as applicable, should be done concurrently, as described
below.
     Airbus Service Bulletin A330-29-3126, dated June 12, 2014,
specifies that the actions in Airbus Service Bulletin A330-29-3122,
dated October 25, 2012, be done concurrently.
     Airbus Service Bulletin A340-29-4097, dated June 12, 2014,
specifies that the actions in Airbus Service Bulletin A340-29-4093,
dated October 25, 2012, be done concurrently.
    The service information for the optional actions specified in
paragraph (l) of this AD states that the actions in the service
information required by paragraph (l) of this AD should be done
concurrently, as described as follows: Airbus Service Bulletin A340-29-
5025, dated June 16, 2014, specifies that the actions in Airbus Service
Bulletin A340-29-5021, dated October 2, 2012, be done concurrently.

Request To Correct an Error in Referenced Vendor Service Information

    Delta requested that the reference to Hamilton Sundstrand Service
Bulletin ERPS06M-29-19 in paragraph (i) of the proposed AD (80 FR 3513,
January 15, 2015) be changed to Hamilton Sundstrand Service Bulletin
ERPS06M-29-13. Delta noted that Airbus Service Bulletin A330-29-3122,
dated October 25, 2012, references Hamilton Sundstrand Service Bulletin
ERPS06M-29-13.
    We agree that the reference to Hamilton Sundstrand Service Bulletin
ERPS06M-29-19 in paragraph (i) of the proposed AD (80 FR 3513, January
15, 2015) was incorrect. We inadvertently referred to Hamilton
Sundstrand Service Bulletin ERPS06M-29-19, and we should have referred
to Hamilton Sundstrand Service Bulletin ERPS06M-29-13. We have revised
paragraph (i) of this AD to provide the correct reference, which is
Hamilton Sundstrand Service Bulletin ERPS06M-29-13.
    In the preamble of Airbus Service Bulletin A330-29-3122, dated
October 25, 2012, there are two incorrect references to the Hamilton
Sundstrand service information. The references incorrectly specify
Hamilton Sundstrand Service Bulletin ``EPRPS06M-29-13.'' The first
``P'' in the citation should have been omitted. The correct reference
is ``ERPS06M-29-13.'' As previously stated, we have

revised paragraph (i) of this AD to address this issue.

Conclusion

    We reviewed the relevant data, considered the comments received,
and determined that air safety and the public interest require adopting
this AD with the changes described previously and minor editorial
changes. We have determined that these minor changes:
     Are consistent with the intent that was proposed in the
NPRM (80 FR 3513, January 15, 2015) for correcting the unsafe
condition; and
     Do not add any additional burden upon the public than was
already proposed in the NPRM (80 FR 3513, January 15, 2015).
    We also determined that these changes will not increase the
economic burden on any operator or increase the scope of this AD.

Related Service Information Under 1 CFR Part 51

    Airbus has issued the following service information. This service
information describes procedures for identifying the part number,
serial number, and standard of the RAT pump, RAT module, RAT actuator,
and RAT lower gearbox assembly; replacing the balance weight screw,
modifying the actuator coil spring, modifying the actuator, and doing
an inspection of the anti-stall valve for correct installation; and re-
identifying the part numbers of the RAT hydraulic pump and RAT module.
     Airbus Service Bulletin A330-29-3122, dated October 25,
2012.
     Airbus Service Bulletin A340-29-4093, dated October 25,
2012.
    Airbus also issued Service Bulletin A330-29-3126, dated June 12,
2104; and Service Bulletin A340-29-4097, dated June 12, 2104, which
describe procedures for identifying the part number and serial number
of the RAT actuator; modifying the RAT actuators; and re-identifying
the part numbers of the RAT module.
    Airbus has also issued Service Bulletin A340-29-5021, dated October
2, 2012; and Service Bulletin A340-29-5025, dated June 16, 2014, which
describe procedures for identifying the part number and serial number
of the RAT actuator, modifying the RAT actuators; and re-identifying
the part numbers of the RAT module.
    Hamilton Sundstrand has issued Service Bulletin ERPS06M-29-19,
dated August 6, 2012, which identifies the serial numbers of the
suspect hydraulic pump.
    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 the ADDRESSES section.

Costs of Compliance

    We estimate that this AD affects 66 airplanes of U.S. registry.
    We also estimate that it will take about 14 work-hours per product
to comply with the basic requirements of this AD. The average labor
rate is $85 per work-hour. Based on these figures, we estimate the cost
of this AD on U.S. operators to be $78,540, or $1,190 per product.
    In addition, we estimate that any necessary follow-on actions will
take about 18 work-hours and require parts costing up to $427,301, for
a cost of $428,831 per product. We have no way of determining the
number of aircraft that might need this action.

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.
    We are 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

    We determined that 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. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979);
    3. Will not affect intrastate aviation in Alaska; and
    4. 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.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2015-0076; or in person at the
Docket Management Facility between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays. The AD docket contains this AD, the
regulatory evaluation, any comments received, and other information.
The street address for the Docket Operations office (telephone 800-647-
5527) is in the ADDRESSES section.

List of Subjects in 14 CFR Part 39

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

Adoption of 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 (AD):

2015-26-02 Airbus Amendment 39-18350. Docket No. FAA-2015-0076;
Directorate Identifier 2013-NM-246-AD.

(a) Effective Date

    This AD becomes effective February 2, 2016.

(b) Affected ADs

    This AD affects AD 2012-21-19, Amendment 39-17235 (77 FR 65812,
October 31, 2012); and AD 2012-21-20, Amendment 39-17236 (77 FR
65799, October 31, 2012).

(c) Applicability

    This AD applies to all Airbus airplanes, certificated in any
category, identified in paragraphs (c)(1) and (c)(2) of this AD, all
manufacturer serial numbers.
    (1) Model A330-201, -202, -203, -223, -223F, -243, -243F, -301,
-302, -303, -321, -322, -323, -341, -342, and -343 airplanes.
    (2) Model A340-211, -212, -213, -311, -312, -313, -541, and -642
airplanes.

(d) Subject

    Air Transport Association (ATA) of America Code 29, Hydraulic
Power.

(e) Reason

    This AD was prompted by a report that, during a production
flight test, the ram air turbine (RAT) did not pressurize the green
hydraulic system. We are issuing this AD to prevent loss of the
impeller function and RAT pump pressurization capability, which, if
preceded by a total engine flame-out, could result in the loss of
control of the airplane.

(f) Compliance

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

(g) Identification of RAT Components

    For Airbus Model A330-201, -202, -203, -223, -223F, -243, -243F,
-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes;
and Model A340-211, -212, -213, -311, -312, and -313 airplanes:
Except as provided by paragraph (i) of this AD, within 36 months
after the effective date of this AD, identify the part number,
serial number, and standard (through the mod-dots) of the RAT pump,
RAT module, RAT actuator, and RAT lower gearbox assembly, in
accordance with the Accomplishment Instructions of the applicable
Airbus service information specified in paragraphs (g)(1) and (g)(2)
of this AD. A review of airplane maintenance records is acceptable
in lieu of this identification if the part number, serial number,
and standard can be conclusively determined from that review.
    (1) For Airbus Model A330-201, -202, -203, -223, -223F, -243, -
243F, -301, -302, -303, -321, -322, -323, -341, -342, and -343
airplanes: Airbus Service Bulletin A330-29-3122, dated October 25,
2012.
    (2) For Airbus Model A340-211, -212, -213, -311, -312, and -313
airplanes: Airbus Service Bulletin A340-29-4093, dated October 25,
2012.

(h) Corrective and Concurrent Actions

    If the serial number of the RAT hydraulic pump is included in
table 7, ``Suspect Hydraulic Pump Serial Numbers,'' of Hamilton
Sundstrand Service Bulletin ERPS06M-29-19, dated August 6, 2012:
Within 36 months after the effective date of this AD, do all
applicable corrective actions, in accordance with the Accomplishment
Instructions of the applicable Airbus service information specified
in paragraphs (g)(1) and (g)(2) of this AD. Prior to or concurrently
with doing the corrective actions required by this paragraph, do the
actions specified in paragraphs (h)(1) through (h)(4) of this AD, in
accordance with the Accomplishment Instructions of Airbus Service
Bulletin A330-29-3122, dated October 25, 2012 (for Model A330-200, -
200 Freighter, and -300 series airplanes); or Airbus Service
Bulletin A340-29-4093, dated October 25, 2012 (for Airbus Model
A340-211, -212, -213, -311, -312, and -313 airplanes).
    (1) Replace the balance weight screw.
    (2) Modify the actuator coil spring.
    (3) Modify the actuator.
    (4) Do a general visual inspection of the anti-stall valve for
correct installation in the RAT pump housing, and if any incorrect
installation is found, before further flight, correctly install the
anti-stall valve.

(i) Exception to Service Information Specifications

    Airbus Service Bulletin A330-29-3122, dated October 25, 2012
(for Model A330-200, -200 Freighter, and -300 series airplanes),
refers to Hamilton Sundstrand Service Bulletin ``EPRPS06M-29-13'' as
an additional source of guidance for doing certain actions required
by paragraph (h) of this AD. The first ``P'' in the citation should
have been omitted; the correct reference is to Hamilton Sundstrand
Service Bulletin ``ERPS06M-29-13.''

(j) Re-Identification of Part Numbers

    If the serial number of the RAT hydraulic pump is not included
in table 7, ``Suspect Hydraulic Pump Serial Numbers,'' of Hamilton
Sundstrand Service Bulletin ERPS06M-29-19, dated August 6, 2012:
Within 36 months after the effective date of this AD, re-identify
the part numbers of the RAT hydraulic pump and RAT module, in
accordance with the Accomplishment Instructions of the applicable
Airbus service information specified in paragraphs (g)(1) and (g)(2)
of this AD.

(k) Service Information for Optional Actions

    Accomplishment of the actions required by paragraphs (g), (h),
and (j) of this AD, in accordance with the Accomplishment
Instructions of Airbus Service Bulletin A330-29-3126, dated June 12,
2014; or Airbus Service Bulletin A340-29-4097, dated June 12, 2014,
as applicable, constitutes compliance with the requirements of
paragraphs (g), (h), and (j) of this AD.

(l) RAT Module Replacement (Modification)

    For Airbus Model A340-541 and -642 airplanes having RAT module
part number (P/N) 772722D, 772722E, 772722F, or 772722G: Within 36
months after the effective date of this AD, replace (modify) the RAT
module, in accordance with the Accomplishment Instructions of Airbus
Service Bulletin A340-29-5021, dated October 2, 2012. As an option,
accomplishment of the RAT module replacement (modification), in
accordance with the Accomplishment Instructions of Airbus Service
Bulletin A340-29-5025, dated June 16, 2014, constitutes compliance
with the requirement of this paragraph.

(m) Exception to Paragraphs (g), (h), and (j) of This AD

    The actions required by paragraphs (g), (h), and (j) of this AD
are not required for airplanes on which Airbus Modification 202537
was embodied in production, provided it can be determined that,
since the airplane's first flight, no RAT hydraulic pump or RAT
module having a part number identified in paragraph (n) of this AD
is installed on that airplane.

(n) Terminating Action for Certain Requirements of Other ADs

    (1) For Airbus Model A330-201, -202, -203, -223, -223F, -243, -
243F, -301, -302, -303, -321, -322, -323, -341, -342, and -343
airplanes; and A340-211, -212, -213, -311, -312, and -313 airplanes:
Accomplishment of the actions required by paragraphs (g), (h), and
(j) of this AD constitutes compliance with the requirements of
paragraphs (g)(1) and (g)(2) of AD 2012-21-19, Amendment 39-17235
(77 FR 65812, October 31, 2012); and paragraphs (g)(1) and (g)(2) of
AD 2012-21-20, Amendment 39-17236 (77 FR 65799, October 31, 2012).
    (2) For Airbus Model A340-541 and -642 airplanes: Accomplishment
of the actions required by paragraph (l) of this AD constitutes
compliance with the requirements of paragraphs (h)(1) and (h)(2) of
AD 2012-21-20, Amendment 39-17236 (77 FR 65799, October 31, 2012).

(o) Parts Installation Prohibition

    (1) For Airbus Model A330-201, -202, -203, -223, -223F, -243, -
243F, -301, -302, -303, -321, -322, -323, -341, -342, and -343
airplanes; and A340-211, -212, -213, -311, -312, and -313 airplanes:
After modification of the RAT module as required by paragraph (h) of
this AD, no person may install any complete RAT module having a part
number identified in paragraph (o)(1)(i) of this AD, or any RAT
hydraulic pump having the part number identified in paragraph
(o)(1)(ii) of this AD, on any airplane.
    (i) RAT module P/N 766351, 768084, 770379, 770952, 770952A,
770952B, 1702934, 1702934A, or 1702934B.
    (ii) RAT hydraulic pump P/N 5909522 (Parker P/N 4207902).
    (2) For Airbus Model A340-541 and -642 airplanes: After
modification of the RAT module as required by paragraph (l) of this
AD, no person may install any complete RAT module having P/N
772722D, 772722E, 772722F, or 772722G, on any airplane.

(p) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, 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 local Flight
Standards District Office, as appropriate. If sending information
directly to the International Branch, send it to ATTN: Vladimir
Ulyanov, Aerospace Engineer, International Branch, ANM-116,
Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton,
WA 98057-3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Information
may be emailed to<EMAIL_ADDRESS>Before using any
approved AMOC, notify your appropriate principal inspector, or
lacking a principal inspector, the manager of the local flight
standards district office/certificate holding district office. The
AMOC approval letter must specifically reference this AD.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain corrective actions from a manufacturer, the action must be
accomplished using a method approved by the Manager, International
Branch, ANM-116, Transport Airplane Directorate, FAA; or the
European Aviation Safety Agency (EASA); or Airbus's EASA Design
Organization Approval (DOA). If approved by

the DOA, the approval must include the DOA-authorized signature.

(q) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI)
EASA Airworthiness Directive 2013-0274, dated November 15, 2013, for
related information. This MCAI may be found in the AD docket on the
Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2015-
0076-0003.

(r) 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 this AD specifies otherwise.
    (i) Airbus Service Bulletin A330-29-3122, dated October 25,
2012.
    (ii) Airbus Service Bulletin A330-29-3126, dated June 12, 2014.
    (iii) Airbus Service Bulletin A340-29-4093, dated October 25,
2012.
    (iv) Airbus Service Bulletin A340-29-4097, dated June 12, 2014.
    (v) Airbus Service Bulletin A340-29-5021, dated October 2, 2012.
    (vi) Airbus Service Bulletin A340-29-5025, dated June 16, 2014.
    (vii) Hamilton Sundstrand Service Bulletin ERPS06M-29-19, dated
August 6, 2012.
    (3) For Airbus service information identified in this AD,
contact Airbus SAS, Airworthiness Office--EAL, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96;
fax +33 5 61 93 45 80; email<EMAIL_ADDRESS>
Internet http://www.airbus.com.
    (4) For Hamilton Sundstrand service information identified in
this AD, contact Hamilton Sundstrand, Technical Publications, Mail
Stop 302-9, 4747 Harrison Avenue, P.O. Box 7002, Rockford, IL 61125-
7002; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>; email
<EMAIL_ADDRESS>Internet http://www.hamiltonsundstrand.com.
    (5) You may view this service information at the FAA, Transport
Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For
information on the availability of this material at the FAA, call
425-227-1221.
    (6) 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, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on December 9, 2015.
Michael Kaszycki,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2015-32078 Filed 12-28-15; 8:45 am]
BILLING CODE 4910-13-P