[Federal Register Volume 88, Number 28 (Friday, February 10, 2023)]
[Notices]
[Pages 8975-8980]
[FR Doc No: 2023-02946]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96824; File No. SR-MRX-2023-05]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend MRX
Options 7, Section 6

February 7, 2023.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 2, 2023, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``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 proposes to amend MRX's Pricing Schedule at Options 7,
Section 7.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
    MRX proposes to amend its Pricing Schedule at Options 7, Section 6,
Ports and Other Services, to assess port fees, which were not assessed
until this year. Prior to this year, MRX did not assess its Members any
port fees. MRX launched its options market in 2016 \3\ and Members did
not pay any port fees until 2022.
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    \3\ The Exchange initially filed the proposed pricing changes on
May 2, 2022 (SR-MRX-2022-04) instituting fees for membership, ports
and market data. On June 29, 2022, the Exchange withdrew that
filing, and submitted separate filings for membership, ports and
market data. SR-MRX-2022-06 replaced the port fees set forth in SR-
MRX-2022-04. On July 1, 2022, SR-MRX-2022-06 was withdrawn and
replaced with SR-MRX-2022-09. On August 25, 2022, SR-MRX-2022-09 was
withdrawn and replaced with SR-MRX-2022-12. On October 11, 2022, SR-
MRX-2022-12 was withdrawn and replaced with SR-MRX-2022-20. On
December 8, 2022, SR-MRX-2022-20 was withdrawn and replaced with SR-
MRX-2022-28. On December 16, 2022, SR-MRX-2022-28 was withdrawn and
replaced with SR-MRX-2022-29. On February 2, 2023, SR-MRX-2022-29
was withdrawn and replaced with the instant filing.
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    Newly-opened exchanges often charge no fees for certain services,
such as ports, in order to attract order flow to an exchange, and later
amend their fees to charge for those services.\4\ The proposed port
fees within Options 7, Section 6, Ports and Other Services, are
described below.
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    \4\ See, e.g., Securities Exchange Act Release No. 90076
(October 2, 2020), 85 FR 63620 (October 8, 2020) (Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Adopt the
Initial Fee Schedule and Other Fees for MEMX LLC).
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    The Exchange proposes to amend fees for the following ports within
Options 7, Section 6: (1) FIX,\5\ (2) SQF; \6\ (3) SQF Purge; \7\ (4)
OTTO; \8\ (5) CTI; \9\ (6) FIX DROP; \10\ and Disaster Recovery
Ports.\11\ Currently, no fees are being assessed for these ports.
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    \5\ ``Financial Information eXchange'' or ``FIX'' is an
interface that allows Members and their Sponsored Customers to
connect, send, and receive messages related to orders and auction
orders to the Exchange. Features include the following: (1)
execution messages; (2) order messages; (3) risk protection triggers
and cancel notifications; and (4) post trade allocation messages.
See Supplementary Material .03(a) to Options 3, Section 7.
    \6\ ``Specialized Quote Feed'' or ``SQF'' is an interface that
allows Market Makers to connect, send, and receive messages related
to quotes, Immediate-or-Cancel Orders, and auction responses to the
Exchange. Features include the following: (1) options symbol
directory messages (e.g., underlying and complex instruments); (2)
system event messages (e.g., start of trading hours messages and
start of opening); (3) trading action messages (e.g., halts and
resumes); (4) execution messages; (5) quote messages; (6) Immediate-
or-Cancel Order messages; (7) risk protection triggers and purge
notifications; (8) opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF Purge Interface
only receives and notifies of purge requests from the Market Maker.
Market Makers may only enter interest into SQF in their assigned
options series. See Supplementary Material .03(c) to Options 3,
Section 7.
    \7\ SQF Purge is a specific port for the SQF interface that only
receives and notifies of purge requests from the Market Maker.
Dedicated SQF Purge Ports enable Market Makers to seamlessly manage
their ability to remove their quotes in a swift manner. The SQF
Purge Port is designed to assist Market Makers in the management of,
and risk control over, their quotes. Market Makers may utilize a
purge port to reduce uncertainty and to manage risk by purging all
quotes in their assigned options series. Of note, Market Makers may
only enter interest into SQF in their assigned options series.
Additionally, the SQF Purge Port may be utilized by a Market Maker
in the event that the Member has a system issue and determines to
purge its quotes from the order book.
    \8\ ``Ouch to Trade Options'' or ``OTTO'' is an interface that
allows Members and their Sponsored Customers to connect, send, and
receive messages related to orders, auction orders, and auction
responses to the Exchange. Features include the following: (1)
options symbol directory messages (e.g., underlying and complex
instruments); (2) system event messages (e.g., start of trading
hours messages and start of opening); (3) trading action messages
(e.g., halts and resumes); (4) execution messages; (5) order
messages; (6) risk protection triggers and cancel notifications; (7)
auction notifications; (8) auction responses; and (9) post trade
allocation messages. See Supplementary Material .03(b) to Options 3,
Section 7. Unlike FIX, which offers routing capability, OTTO does
not permit routing.
    \9\ Clearing Trade Interface (``CTI'') is a real-time cleared
trade update message that is sent to a Member after an execution has
occurred and contains trade details specific to that Member. The
information includes, among other things, the following: (i) The
Clearing Member Trade Agreement (``CMTA'') or The Options Clearing
Corporation (``OCC'') number; (ii) badge or mnemonic; (iii) account
number; (iv) information which identifies the transaction type
(e.g., auction type) for billing purposes; and (v) market
participant capacity. See Options 3, Section 23(b)(1). CTI Ports are
not required for an MRX Member to meet its regulatory obligations.
Members receive free daily reports listing trade executions from the
Exchange.
    \10\ FIX DROP is a real-time order and execution update message
that is sent to a Member after an order been received/modified or an
execution has occurred and contains trade details specific to that
Member. The information includes, among other things, the following:
(i) executions; (ii) cancellations; (iii) modifications to an
existing order; and (iv) busts or post-trade corrections. See
Options 3, Section 23(b)(3). FIX DROP Ports are not required for an
MRX Member to meet its regulatory obligations. Members receive free
daily reports listing open orders and trade executions from the
Exchange.
    \11\ Disaster Recovery ports provide connectivity to the
Exchange's disaster recovery data center, to be utilized in the
event the Exchange should failover during a trading day.
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    The Exchange proposes to assess no fee for the first FIX Port
obtained by an Electronic Access Member \12\ or the first

SQF Port obtained by a Market Maker.\13\ The Exchange proposes to
assess a FIX Port Fee of $650 per port, per month, per account number
\14\ for each subsequent port beyond the first port. The Exchange
proposes to assess an SQF Port Fee of $1,250 per port, per month for
each subsequent port beyond the first port.\15\ The Exchange proposes
to assess an SQF Purge Port Fee of $1,250 per port, per month. The
Exchange proposes to assess an OTTO Port Fee of $650 per port, per
month, per account number. The Exchange proposes to assess a CTI Port
Fee and a FIX Drop Port Fee of $650 per port, per month.
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    \12\ The first FIX Port would be provided to each Electronic
Access Member. The term ``Electronic Access Member'' or ``EAM''
means a Member that is approved to exercise trading privileges
associated with EAM Rights. See General 1, Section 1(a)(6). Also,
the first SQF Port would be provided to each Market Maker. The term
``Market Makers'' refers to ``Competitive Market Makers'' and
``Primary Market Makers'' collectively. See Options 1, Section
1(a)(21). The term ``Competitive Market Maker'' means a Member that
is approved to exercise trading privileges associated with CMM
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1, Section
1(a)(35).
    \13\ The first SQF Port would be provided to each Market Maker.
The term ``Market Makers'' refers to ``Competitive Market Makers''
and ``Primary Market Makers'' collectively. See Options 1, Section
1(a)(21). The term ``Competitive Market Maker'' means a Member that
is approved to exercise trading privileges associated with CMM
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1, Section
1(a)(35).
    \14\ An ``account number'' shall mean a number assigned to a
Member. Members may have more than one account number. See Options
1, Section 1(a)(1). Account numbers are free on MRX.
    \15\ SQF's Port Fees are assessed a higher dollar fee as
compared to FIX and OTTO ports ($1,250 vs. $650) because the
Exchange has to maintain options assignments within SQF and manage
quoting traffic. Market Makers may utilize SQF Ports in their
assigned options series. Market Maker badges are assigned to
specific SQF ports to manage the option series in which a Market
Maker may quote. Additionally, because of quoting obligations
provided for within Options 2, Section 5, Market Makers are required
to provide liquidity in their assigned options series which
generates quote traffic. The Exchange notes because of the higher
fee, SQF ports are billed per port, per month while FIX and OTTO
ports are billed per port, per month, per account number. Members
may have more than one account number.
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    The Exchange proposes to assess no fee for the first FIX Disaster
Recovery Port obtained by an Electronic Access Member \16\ or the first
SQF Disaster Recovery Port obtained by a Market Maker.\17\ The Exchange
proposes to assess each additional FIX Disaster Recovery Port and each
additional SQF Disaster Recovery Port a fee of $50 per port, per month,
per account number. Additionally, the Exchange proposes to assess a
Disaster Recovery Fee for SQF Purge and OTTO Ports of $50 per port, per
month, per account number. Finally, the Exchange proposes to assess a
Disaster Recovery Fee for CTI Ports and FIX DROP Ports of $50 per port,
per month.
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    \16\ The first FIX Port would be provided to each Electronic
Access Member. The term ``Electronic Access Member'' or ``EAM''
means a Member that is approved to exercise trading privileges
associated with EAM Rights. See General 1, Section 1(a)(6). Also,
the first SQF Port would be provided to each Market Maker. The term
``Market Makers'' refers to ``Competitive Market Makers'' and
``Primary Market Makers'' collectively. See Options 1, Section
1(a)(21). The term ``Competitive Market Maker'' means a Member that
is approved to exercise trading privileges associated with CMM
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1, Section
1(a)(35).
    \17\ The first SQF Port would be provided to each Market Maker.
The term ``Market Makers'' refers to ``Competitive Market Makers''
and ``Primary Market Makers'' collectively. See Options 1, Section
1(a)(21). The term ``Competitive Market Maker'' means a Member that
is approved to exercise trading privileges associated with CMM
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1, Section
1(a)(35).
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    The OTTO Port, CTI Port, FIX Port, FIX Drop Port and all Disaster
Recovery Ports \18\ are available to all Electronic Access Members, and
will be subject to a monthly cap of $7,500.
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    \18\ This includes FIX, SQF, SQF Purge, OTTO, CTI and FIX Drop
Disaster Recovery Ports.
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    The SQF Port and the SQF Purge Port are available to all Market
Makers, and will be subject to a monthly cap of $17,500.\19\
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    \19\ Only Market Makers may quote on MRX. The Exchange is
proposing non-substantive technical amendments to add commas within
the ``Production'' column of the proposed rule text to separate
terms.
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    The Exchange is not amending the Nasdaq MRX Depth of Market, Nasdaq
MRX Order Feed, Nasdaq MRX Top Quote Feed, Nasdaq MRX Trades Feed, or
Nasdaq MRX Spread Feed Ports; all of these aforementioned ports will
continue to be assessed no fees. Additionally, as is the case today,
the Disaster Recovery Ports for the Nasdaq MRX Depth of Market, Nasdaq
MRX Order Feed, Nasdaq MRX Top Quote Feed, Nasdaq MRX Trades Feed and
Nasdaq MRX Spread Feed Ports will not be assessed a fee.
Order and Quote Entry Protocols
    Only one FIX order protocol is required for an MRX Member to submit
orders into MRX and to meet its regulatory requirements.\20\ The
Exchange will provide each Electronic Access Member \21\ the first FIX
Port at no cost to submit orders into MRX. Only one account number is
necessary to transact an options business on MRX and account numbers
are available to Members at no cost.
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    \20\ MRX Members have trade-through requirements under
Regulation NMS as well as broker-dealers' best execution
obligations.
    \21\ A Market Maker who is also an Electronic Access Member
would receive both one free FIX Port and one free SQF Port.
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    Only one SQF quote protocol is required for an MRX Market Maker to
submit quotes into MRX and to meet its regulatory requirements.\22\ The
Exchange will provide each Market Maker the first SQF Port at no cost
to submit quotes into MRX. A quoting protocol, such as SQF, is only
required to the extent an MRX Member has been appointed as a Market
Maker in an options series pursuant to Options 2, Section 1.
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    \22\ MRX Market Makers have intra-day quoting requirements. See
Options 2, Section 5(e). Additionally, PMMs must submit a Valid
Width Quote each day to open their assigned options series. See
Options 3, Section 8(c)(1) and 8(c)(3).
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    Only MRX Members may utilize ports on MRX. Any market participant
that sends orders to a Member would not need to utilize a port. The
Member can send all orders, proprietary and agency, through one port to
MRX. Members may elect to obtain multiple account numbers to organize
their business, however only one account number and one port for orders
and one port for quotes is necessary for a Member to trade on MRX. All
other ports offered by MRX are not required for an MRX Member to meet
its regulatory obligations.
    MRX also offers an OTTO protocol.\23\ MRX Members utilizing the
first FIX Port offered at no cost do not need to purchase an OTTO Port
to meet their regulatory obligations.
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    \23\ See note 8, supra.
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    Further, while only one FIX protocol is necessary to submit orders
into MRX, Members may choose to purchase a greater number of order
entry ports, depending on that Member's business model.\24\ To the
extent that Electronic Access Members chose to utilize more than one
FIX Port, the Electronic Access Member would be assessed $650 per port,
per month, per account number for each subsequent port beyond the first
port. To the extent that Market Makers chose to utilize more than one
SQF Port, the Market Maker would be assessed $1,250 per port, per month
for each subsequent port beyond the first port. Additionally, to the
extent a Member expended more than $7,500 for FIX Ports or more than
$17,500 for SQF Ports, the Exchange would not charge an MRX Member for
additional FIX or SQF Ports, respectively, beyond the cap.
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    \24\ For example, a Member may desire to utilize multiple FIX or
OTTO Ports for accounting purposes, to measure performance, for
regulatory reasons or other determinations that are specific to that
Member.

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Other Protocols
    The Exchange's proposal to offer an SQF Purge Port \25\ for $1,250
per port, per month is not required for an MRX Member to meet its
regulatory obligations.
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    \25\ See note 7, supra.
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Disaster Recovery Ports
    With respect to Disaster Recovery Ports, the Exchange proposes to
assess no fee for the first FIX Disaster Recovery Port obtained by an
Electronic Access Member or the first SQF Disaster Recovery Port
obtained by a Market Maker. The Exchange proposes to assess no fees for
these ports to provide Members with continuous access to MRX in the
event of a failover at no cost. Electronic Access Members only require
one FIX Disaster Recovery Port to submit orders in the event of a
failover. Market Makers only require one SQF Disaster Recovery Port to
submit quotes in the event of a failover.\26\ Electronic Access Members
may elect to purchase additional FIX Disaster Recovery Ports for $50
per port, per month, per account number. Market Makers may elect to
purchase additional SQF Disaster Recovery Ports for $50 per port, per
month, per account number. The additional FIX and SQF Disaster Recovery
Ports are not necessary to connect to the Exchange in the event of a
failover because the Exchange has provided Members with a FIX Disaster
Recovery Port and an SQF Disaster Recovery Port at no cost. Additional
FIX and SQF Disaster Recovery Ports are not necessary for an MRX Member
to meet its regulatory obligations.\27\
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    \26\ The Exchange proposes to provide each Electronic Access
Member the first FIX Disaster Recovery Port at no cost. The Exchange
also proposes to provide each Market Maker the first SQF Disaster
Recovery Port at no cost.
    \27\ See MRX General 2, Section 12(b) (this provision implements
Rule 1000 of Regulation SCI).
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    The Exchange's proposal to offer Disaster Recovery Ports for SQF
Purge Ports and OTTO Ports for $50 per port, per month, per account
number and Disaster Recovery Ports for CTI Ports and FIX DROP Ports for
$50 per port, per month is not required for an MRX Member to meet its
regulatory obligations. The proposed Disaster Recovery Port fees are
intended to encourage Members to be efficient when purchasing Disaster
Recovery Ports.
    Finally, in the event that an MRX Member elects to subscribe to
multiple ports, the Exchange offers a monthly cap beyond which a Member
would be assessed no additional port fees in a given month. As noted
above, the SQF Port and the SQF Purge Port are subject to a monthly cap
of $17,500 and the OTTO Port, CTI Port, FIX Port, FIX Drop Port and all
Disaster Recovery Ports are subject to a monthly cap of $7,500.
    These different protocols are not all necessary to conduct business
on MRX; a Member may choose among protocols based on their business
workflow. The Exchange's proposal to offer the first FIX and SQF Port
at no cost as well as the first FIX and SQF Disaster Recovery Ports at
no cost would allow MRX Members to submit orders and quotes into MRX at
no cost while meeting their regulatory obligations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\28\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\29\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \28\ See 15 U.S.C. 78f(b).
    \29\ See 15 U.S.C. 78f(b)(4) and (5).
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    MRX proposes to amend its Pricing Schedule at Options 7, Section 6,
Ports and Other Services, to assess port fees, which were not assessed
until this year. Prior to this year, MRX did not assess its Members any
port fees. MRX launched its options market in 2016 \30\ and Members did
not pay any port fees until 2022. Of the 16 operating options
exchanges, MRX has the smallest market share at 1.37% as of November
2022.
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    \30\ The Exchange initially filed the proposed pricing changes
on May 2, 2022 (SR-MRX-2022-04) instituting fees for membership,
ports and market data. On June 29, 2022, the Exchange withdrew that
filing, and submitted separate filings for membership, ports and
market data. SR-MRX-2022-06 replaced the port fees set forth in SR-
MRX-2022-04. On July 1, 2022, SR-MRX-2022-06 was withdrawn and
replaced with SR-MRX-2022-09. On August 25, 2022, SR-MRX-2022-09 was
withdrawn and replaced with SR-MRX-2022-12. On October 11, 2022, SR-
MRX-2022-12 was withdrawn and replaced with SR-MRX-2022-20. On
December 8, 2022, SR-MRX-2022-20 was withdrawn and replaced with SR-
MRX-2022-28. The instant filing replaces SR-MRX-2022-28 which was
withdrawn on December 16, 2022.
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    The Exchange notes that, as of May 2, 2022, one MRX Member, who was
also a Market Maker, cancelled all of their ports (1 SQF Port and 1
OTTO Port) to avoid being assessed any MRX port fees.\31\ As of July 1,
2022, the Exchange did not assess MRX Members for their first SQF Port
or FIX Port. Further, in October 2022, an additional MRX Member, who is
also a Market Maker, cancelled 3 SQF Ports.\32\
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    \31\ MRX originally filed to assess a fee for all FIX Ports.
    \32\ This Member informed the Exchange that they elected to
utilize less ports in response to the current port pricing. This
Member had a total of 8 SQF Ports at the time they instructed MRX to
cancel 3 of those ports.
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Proposed Port Fees Are Reasonable, Equitable and Not Unfairly
Discriminatory
    Only one FIX order protocol is required for an MRX Member to submit
orders into MRX and to meet its regulatory requirements \33\ at no cost
while meeting its regulatory requirements. The Exchange will provide
each Electronic Access Member the first FIX Port at no cost to submit
orders into MRX. Only one account number is necessary to transact an
options business on MRX and account numbers are available to Members at
no cost.
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    \33\ MRX Members have trade-through requirements under
Regulation NMS as well as broker-dealers' best execution
obligations. See Rule 611 of Regulation NMS; 17 CFR 242.611 and
FINRA Rule 5310.
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    Only one SQF quote protocol is required for an MRX Market Maker to
submit quotes into MRX and to meet its regulatory requirements \34\ at
no cost while meeting its regulatory requirements. The Exchange will
provide each Market Maker the first SQF Port at no cost to submit
quotes into MRX. A quoting protocol, such as SQF, is only required to
the extent an MRX Member has been appointed as a Market Maker in an
options series pursuant to Options 2, Section 1.
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    \34\ MRX Members have trade-through requirements under
Regulation NMS as well as broker-dealers' best execution
obligations. MRX Market Makers have intra-day quoting requirements.
See Options 2, Section 5(e). PMMs must submit a Valid Width Quote
each day to open their assigned options series. See Options 3,
Section 8(c)(1) and 8(c)(3).
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    The Exchange proposes to offer each Electronic Access Member the
first FIX Port and first FIX Disaster Recovery Port at no cost and it
proposes to offer each Market Maker the first SQF Port and first SQF
Disaster Recovery Port at no cost to meet their regulatory
requirements. As noted above, Members may freely choose to rely on one
or many ports, depending on their business model.
    The Exchange's proposal is reasonable, equitable and not unfairly
discriminatory as MRX is providing MRX Electronic Access Members the
first FIX Port to submit orders and MRX Market Makers the first SQF
Port to submit quotes to MRX, at no cost, in addition to providing the
first FIX Disaster Recovery Port and the first SQF Disaster Recovery
Port at no cost. These

ports, which are offered at no cost, would allow an MRX Member to meet
its regulatory requirements. All other ports offered by MRX are not
required for an MRX Member to meet its regulatory obligations.
Therefore, for the foregoing reasons, it is reasonable to assess no fee
for the first FIX Port obtained by an Electronic Access Member or the
first SQF Port obtained by a Market Maker as an MRX Member is able to
meet its regulatory requirements with these ports.
    Further it is equitable and not unfairly discriminatory to assess
no fee for the first FIX Port to Electronic Access Members as all
Electronic Access Members would be entitled to the first FIX Port at no
cost. Also, it is equitable and not unfairly discriminatory to assess
no fee for the first SQF Port to Market Makers as all Market Makers
would be entitled to the first SQF Port at no cost. With this proposal,
MRX Members may organize their business in such a way as to submit
orders and/or quotes continuously to MRX at no cost.
    The Exchange's proposal to assess Members $650 per port, per month,
per account number for FIX Ports beyond the first port and $1,250 per
port, per month for SQF Ports beyond the first port is reasonable
because these ports are not required for a member to meet its
regulatory requirements. Members only require one FIX Port to submit
orders to MRX and one SQF Port to submit quotes to MRX. Members
electing to subscribe to more than one FIX or SQF Port are choosing the
additional ports to accommodate their business model. Additionally, to
the extent a Member expended more than $7,500 for FIX Ports or more
than $17,500 for SQF Ports, the Exchange would not charge an MRX Member
for additional FIX or SQF Ports beyond the cap. The fees for the
proposed additional FIX and SQF Ports are equitable and not unfairly
discriminatory because any Member may elect to subscribe to additional
ports. Electronic Access Members would be subject to the same fees for
FIX Ports and Market Makers would be subject to the same fees for SQF
Ports. Unlike other market participants, Market Makers are required to
provide continuous two-sided quotes on a daily basis,\35\ and are
subject to various obligations associated with providing liquidity.\36\
Also, as noted herein, account numbers are available on MRX at no cost.
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    \35\ See MRX Options 2, Section 5.
    \36\ See MRX Options 2, Section 4.
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    The Exchange's proposal to assess $650 per port, per month, per
account number for an OTTO Port is reasonable because OTTO is not
required for a member to meet its regulatory requirements. The Exchange
is offering the first FIX Port at no cost to submit orders to MRX. In
addition to the FIX Port, all Members may elect to purchase OTTO to
submit orders to MRX. MRX Members utilizing the FIX Port, which is
offered at no cost, do not need to utilize OTTO.
    The Exchange's proposal to offer an SQF Purge Port for $1,250 per
port, per month is reasonable because this port is not required for a
member to meet its regulatory requirements. The SQF Purge Port is
designed to assist Market Makers in the management of, and risk control
over, their quotes. Market Makers may utilize a purge port to reduce
uncertainty and to manage risk by purging all quotes in their assigned
options series. The proposed SQF Purge Port is equitable and not
unfairly discriminatory because any Market Maker may elect to purchase
an SQF Purge Port and would be subject to the same fee.
    The Exchange's proposal to assess $650 per port, per month for CTI
Ports and FIX DROP Ports is reasonable because these ports are not
required for a member to meet its regulatory requirements. The proposed
CTI and FIX DROP Ports are equitable and not unfairly discriminatory
because any Member may elect to purchase an additional CTI Port or FIX
DROP Port and would be subject to the same fee.
    The Exchange's proposal to assess no fee for the first FIX Disaster
Recovery Port or the first SQF Disaster Recovery Port is reasonable
because it will provide Members with continuous access to MRX in the
event of a failover, at no cost and allow MRX Members to meet their
regulatory obligations. Further it is equitable and not unfairly
discriminatory to assess no fee for the first FIX Disaster Recovery
Port to Electronic Access Members as all Electronic Access Members
would be entitled to the first FIX Disaster Recovery Port at no cost.
Also, it is equitable and not unfairly discriminatory to assess no fee
for the first SQF Disaster Recovery Port to Market Makers as all Market
Makers would be entitled to the first SQF Disaster Recovery Port at no
cost.
    The Exchange's proposal to assess Members $50 per port, per month,
per account number for additional FIX Disaster Recovery Ports beyond
the first port offered at no cost and $50 per port, per month, per
account number for additional SQF Disaster Recovery Ports beyond the
first port at no cost is reasonable because these additional ports are
not required for MRX Members to meet their regulatory obligations.
Members only require one FIX Disaster Recovery Port to submit orders to
MRX in the event of a failover and one SQF Disaster Recovery Port to
submit quotes to MRX in the event of a failover. Additionally, to the
extent a Member expended more than $7,500 for Disaster Recovery Ports,
the Exchange would not charge an MRX Member for additional Disaster
Recovery Ports beyond the cap. The fees for the proposed additional FIX
and SQF Disaster Recovery Ports are equitable and not unfairly
discriminatory because any Member may elect additional ports and would
be subject to the same fees.
    The Exchange's proposal to offer Disaster Recovery Ports for SQF
Purge Ports, and OTTO Ports at $50 per port, per month, per account
number and CTI Ports, and FIX DROP Ports for $50 per port, per month is
reasonable because these additional ports are not required for MRX
Members to meet their regulatory obligations. The proposed Disaster
Recovery Port fees are intended to encourage Members to be efficient
when purchasing Disaster Recovery Ports. The proposed Disaster Recovery
Ports are equitable and not unfairly discriminatory because any Member
may elect to purchase an additional Disaster Recovery Port and would be
subject to the same fee, depending on the port.
    Finally, in the event that an MRX Member elects to subscribe to
multiple ports, the Exchange offers a monthly cap beyond which a Member
would be assessed no additional fees for month. As noted above, the SQF
Port and the SQF Purge Port are subject to a monthly cap of $17,500 and
the OTTO Port, CTI Port, FIX Port, FIX Drop Port and all Disaster
Recovery Ports are subject to a monthly cap of $7,500. These caps are
reasonable because they allow Members to limit their fees beyond a
certain level if they elect to purchase multiple ports in a given
month. The caps are also equitable and not unfairly discriminatory
because any Member will be subject to the cap, provided they exceeded
the appropriate dollar amount in a given month.
    The proposed port fees are comparable, and in some cases lower than
fees assessed today by other options exchanges. The proposed port fees
are similar to fees assessed today by GEMX, except that GEMX does not
offer the first FIX and SQF Port at no cost, nor does GEMX offer the
first FIX Disaster Recovery Port or the first SQF

Disaster Recovery Port at no cost.\37\ By way of comparison, ISE
assessed fees for ports \38\ in 2019 while offering the same suite of
functionality as MRX, with a limited exception.\39\ Cboe \40\ port fees
are within the range of the proposed fees. While Cboe does not offer
the first order and quote entry port at no cost or Disaster Recovery
Ports at no cost, it tiers its BOE and FIX Logical ports and each
subsequent port fee is lower than MRX's port fees. MRX's FIX DROP Port
Fee is lower than Cboe's DROP Logical Port Fee.\41\ Cboe does not cap
its ports as MRX has proposed herein. BOX port fees \42\ are within the
range of the proposed fees. While BOX does not offer the first order
and quote entry port at no cost or Disaster Recovery Ports at no cost,
it tiers its FIX and SAIL port fees and each subsequent port fee is
lower than MRX's port fees, although the fees are not capped as
proposed herein. MRX's FIX DROP Port Fee is higher than BOX's Drop Copy
Port Fee.\43\ MIAX port fees \44\ are within the range of the proposed
fees. MRX MEI Port users are allocated two (2) Full Service MEI Ports
and two (2) Limited Service MEI Ports per matching engine to which they
connect.\45\ A MIAX Market Maker may request and be allocated two (2)
Purge Ports per matching engine to which it connects via a Full Service
MEI Port.\46\ MIAX assesses a Real-Time Clearing Trade Drop Port Fee of
$0.0030 per executed contract side per month.\47\ MIAX assesses a FIX
Drop Copy Port fee of $500 per month \48\ which is lower than MRX's
proposed fee. NYSE Arca port fees \49\ are within the range of the
proposed fees. For each order/quote entry port utilized, NYSE Arca
Market Makers may utilize, free of charge, one port dedicated to quote
cancellation or ``quote takedown,'' which port(s) will not be included
in the count of order/quote entry ports utilized.\50\ NYSE Arca
assesses a DROP Copy Port fee of $500 per port per month \51\ which is
lower than MRX's proposed fee.\52\
---------------------------------------------------------------------------

    \37\ See GEMX Options 7, Section 6.C. (Ports and Other
Services).
    \38\ Since 2019, ISE has assessed the following port fees: a FIX
Port Fee of $300 per port, per month, per mnemonic, an SQF Port Fee
and SQF Purge Port Fee of $1,100 per port, per month, an OTTO Port
Fee of $400 per port, per month, per mnemonic with a monthly cap of
$4,000, a CTI Port Fee and FIX DROP Port Fee of $500 per port, per
month, per mnemonic. See Securities Exchange Act Release No. 82568
(January 23, 2018), 83 FR 4086 (January 29, 2018) (SR-ISE-2018-07)
(Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Assess Fees for OTTO Port, CTI Port, FIX Port, FIX Drop
Port and Disaster Recovery Port Connectivity). Of note, ISE assessed
port fees prior to 2019 as well.
    \39\ See note 41, supra.
    \40\ Cboe assesses a fee of $750 per port up to 5 BOE/FIX
Logical Ports, and $800 per port for over 5 BOE/FIX Logical Ports.
See Cboe's Fees Schedule.
    \41\ Cboe assesses $750 for Drop Logical Ports and $850 for
Purge Ports. See Cboe's Fees Schedule.
    \42\ BOX assesses tiered FIX Port Fees as follows: $500 per port
per month for the first FIX Port, $250 per port per month for FIX
Ports 2-5 and $150 per port per month for over 5 FIX Ports. BOX
assesses $1000 per month for all SAIL Ports for Market Making and
$500 per month per port up to 5 ports for order entry and $150 per
month for each additional port. See BOX's Fee Schedule.
    \43\ BOX assesses Drop Copy Port Fees of $500 per port per month
for each month a Participant is credentialed to use a Drop Copy
Port. Drop Copy Port Fees will be capped at $2,000 per month. See
BOX's Fee Schedule.
    \44\ MIAX tiers its FIX Port fees as follows: $550 per month for
the 1st FIX Port, $350 per month per port for the FIX Ports 2
through 5 and $150 per month for over 5 FIX Ports. MIAX tiers its
MEI Port Fees and assesses fees per number of classes and as a
percentage of National Average Daily Volume. MEI Port fees range
from $5,000 to $20,500 per month. The applicable fee rate is the
lesser of either the per class basis or percentage of total national
average daily volume measurement. However, if the Market Maker's
total monthly executed volume during the relevant month is less than
0.060% of the total monthly executed volume reported by The Options
Clearing Corporation in the market maker account type for MIAX-
listed option classes for that month, then the fee will be $14,500
instead of the fee otherwise applicable. MIAX will assess monthly
MEI Port Fees on Market Makers in each month the Member has been
credentialed to use the MEI Port in the production environment and
has been assigned to quote in at least one class. See MIAX's Fee
Schedule.
    \45\ MEI Port Fees include MEI Ports at the Primary, Secondary
and Disaster Recovery data centers. MIAX Market Makers may request
additional Limited Service MEI Ports for which MIAX will assess MIAX
Market Makers $100 per month per additional Limited Service MEI Port
for each engine. See MIAX's Fee Schedule.
    \46\ For each month in which the MIAX Market Maker has been
credentialed to use Purge Ports in the production environment and
has been assigned to quote in at least one class, the Exchange will
assess the MIAX Market Maker a flat fee of $1,500 per month,
regardless of the number of Purge Ports allocated to the MIAX Market
Maker. The MEI Port Fee for a Market Maker that trades solely in
Proprietary Products is waived until December 31, 2022. See MIAX's
Fee Schedule.
    \47\ See MIAX's Fee Schedule.
    \48\ See MIAX's Fee Schedule.
    \49\ NYSE Arca assesses a tiered order/quote entry port fee of
$450 for the first 40 ports and $150 per port per month for the 41
ports or greater. For purpose of calculating the number of order/
quote entry ports and quote takedown ports, NYSE Arca aggregates the
ports of affiliates. See NYSE Arca Options Fees and Charges.
    \50\ Any quote takedown port utilized by a NYSE Arca Market
Maker that is in excess of the number of order/quote entry ports
utilized will be counted and charged as an order/quote entry port.
See NYSE Arca Options Fees and Charges.
    \51\ Only one fee per drop copy port shall apply, even if
receiving drop copies from multiple order/quote entry ports and/or
from NYSE Arca Equities). For the backup datacenter port, no fee
shall apply if configured such that it is duplicative of another
drop copy port of the same user. See NYSE Arca Options Fees and
Charges.
    \52\ NYSE ARCA capped fees for Order/Quote Entry Ports, Quote
Takedown Ports, and Drop Copy Ports are based on the total number of
such ports an OTP Holder or OTP Firm is billed for in the month
preceding the beginning of the NYSE ARCA's migration to the Pillar
platform, during the Pillar Migration.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any intermarket burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.
    Nothing in the proposal burdens inter-market competition because
MRX's proposal to offer the first FIX and SQF Ports for free, as well
as the first Disaster Recovery version of these ports, permits MRX to
set fees, similar to other options markets, while continuing to allow
MRX Members to meet their regulatory obligations. MRX's offering would
permit Electronic Access Members and Market Makers the ability to
submit orders and quote to MRX at no cost. The remainder of the port
offerings (additional FIX and SQF Ports, additional FIX and SQF
Disaster Recovery Ports, SQF Purge Port, OTTO Port, CTI Port, FIX DROP
Port and Disaster Recovery Ports for SQF Purge Ports, OTTO Ports, CTI
Ports, and FIX DROP Ports) are not required for MRX Members to meet
their regulatory obligations. The proposed port fees are similar to
port fees assessed by other options markets as noted in this proposal.
    Nothing in the proposal burdens intra-market competition because
the Exchange would uniformly assess the port fees to all Members, as
applicable, and would uniformly apply monthly caps. With respect to the
higher fees assessed for SQF Ports and SQF Purge Ports, the Exchange
notes that only Market Makers may utilize these ports. Market Makers
are required to provide continuous two-sided quotes on a daily
basis,\53\ and are subject to various obligations associated with
providing liquidity.\54\ As a result of these quoting obligations, the
SQF Port and SQF Purge Port are designed to handle higher throughput to
permit Market Makers to bundle orders to meet their obligations. The
technology to permit Market Makers to submit a greater number of
quotes, in addition to the various risk protections \55\ afforded to
these market participants when quoting, accounts for the higher SQF
Port and SQF Purge Port fees.
---------------------------------------------------------------------------

    \53\ See MRX Options 2, Section 5.
    \54\ See MRX Options 2, Section 4.
    \55\ See MRX Options 3, Section 15(a)(3). Market Makers are
offered risk protections to permit them to manage their risk more
effectively.

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

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\56\
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-MRX-2023-05 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MRX-2023-05. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MRX-2023-05 and should be submitted on
or before March 3, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\57\
---------------------------------------------------------------------------

    \57\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-02946 Filed 2-9-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 214 (Tuesday, November 5, 2013)]
[Notices]
[Pages 66395-66396]
[FR Doc No: 2013-26559]

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

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a Closed Meeting on Thursday,
November 7, 2013 at 2:30 p.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the Closed Meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or her designee, has
certified that, in her opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) and (10), permit
consideration of the scheduled matter at the Closed Meeting.
    Commissioner Piwowar, as duty officer, voted to consider the items
listed for the Closed Meeting in a closed session.
    The subject matter of the Closed Meeting will be:
    Institution and settlement of injunctive actions;
    Institution and settlement of administrative proceedings;
    An adjudicatory matter; and
    Other matters relating to enforcement proceedings.
    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed, please contact the Office of the
Secretary at<PHONE_NUMBER>.

    Dated: October 31, 2013.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-26559 Filed 11-1-13; 11:15 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Proposed Rules]
[Pages 46729-46738]
[FR Doc No: 2017-21221]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2017-0902; Product Identifier 2016-NM-188-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to supersede Airworthiness Directive (AD) 2004-03-
07, which applies to certain Airbus Model A320-111, -211, -212, and -
231 series airplanes. AD 2004-03-07 requires repetitive inspections for
fatigue cracking around the fasteners attaching the pressure panel to
the flexible bracket at frame (FR) 36, adjacent to the longitudinal
beams on the left and right sides of the airplane; and repair as
necessary. Since we issued AD 2004-03-07, additional cracking has been
found under the longitudinal beams in locations outside of the
inspection areas required by AD 2004-03-07. This proposed AD would
retain certain requirements of AD 2004-03-07, expand the applicability,
and require an inspection of the fastener holes on the pressure panel
between FR 35 and FR 36 under the longitudinal beam and modification or
repair as applicable. We are proposing this AD to address the unsafe
condition on these products.

DATES: We must receive comments on this proposed AD by November 20,
2017.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this NPRM, contact Airbus,
Airworthiness Office--EIAS, 1 Rond Point Maurice Bellonte, 31707
Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44
51; email<EMAIL_ADDRESS>Internet http://www.airbus.com. You may view this referenced service information at the
FAA, Transport Standards Branch, 1601 Lind Avenue SW., Renton, WA. For
information on the availability of this material at the FAA, call 425-
227-1221.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
0902; 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 proposed AD, the regulatory evaluation, any comments
received, and other information. The street address for the Docket
Operations office (telephone<PHONE_NUMBER>) is in the ADDRESSES section.
Comments will be available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Sanjay Ralhan, Aerospace Engineer,
International Section, Transport Standards Branch, FAA, 1601 Lind
Avenue SW., Renton, WA 98057-3356; telephone<PHONE_NUMBER>; fax 425-227-
1149.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under the ADDRESSES section. Include ``Docket No. FAA-2017-0902;
Product Identifier 2016-NM-188-AD at the beginning of your comments. We
specifically invite comments on the overall regulatory,

economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD based on those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    On January 29, 2004, we issued AD 2004-03-07, Amendment 39-13451
(69 FR 5907, February 9, 2004) (``AD 2004-03-07''), for certain Airbus
Model A320-111, -211, -212, and -231 series airplanes. AD 2004-03-07
was prompted by fatigue tests which revealed cracking around the
fasteners attaching the pressure panel to the flexible bracket at FR
36, adjacent to the longitudinal beams on the left and right sides of
the airplane. Investigation revealed that the damage was caused by high
loads in this area. AD 2004-03-07 requires repetitive inspections for
fatigue cracking around the fasteners attaching the pressure panel to
the flexible bracket at FR 36, adjacent to the longitudinal beams on
the left and right sides of the airplane; and repair as necessary. AD
2004-03-07 also provides an optional terminating action for the
repetitive inspections. We issued AD 2004-03-07 to detect and correct
fatigue cracking around the fasteners attaching the pressure panel to
the flexible bracket at the FR 36 adjacent to the longitudinal beams,
which could result in reduced structural integrity and possible rapid
decompression of the airplane.
    Since we issued AD 2004-03-07, additional cracks have been found
under the longitudinal beams at locations that are not included in the
inspection area required by AD 2004-03-07. Fatigue and damage tolerance
analyses were performed and the results indicated that all the holes in
the pressure panel above the longitudinal beams have to be cold worked.
    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA
Airworthiness Directive 2016-0206, dated October 13, 2016; corrected
October 14, 2016 (referred to after this as the Mandatory Continuing
Airworthiness Information, or ``the MCAI''), to correct an unsafe
condition for certain Airbus Model A318 and Model A319 series
airplanes, Model A320-211, -212, -214, -231, -232, and -233 airplanes,
and Model A321-111, -112, -131, -211, -212, -213, -231, and -232
airplanes. The MCAI states:

    During fatigue tests, cracks were found around the fasteners
connecting the pressure panel with the flexible bracket at fuselage
frame (FR) 36, adjacent to the longitudinal beams on left-hand (LH)
and right-hand (RH) sides.
    This condition, if not detected and corrected, could impair the
structural integrity of the aeroplane.
    To address this unsafe condition, DGAC [Direction
G[eacute]n[eacute]rale de l'Aviation Civile] France issued [French]
AD 2000-531-155(B) [which corresponds with FAA AD 2004-03-07] to
require repetitive inspections of the longitudinal beams of the FR
36 pressure panel and, depending on findings, the accomplishment of
a repair.
    Since that [French] AD was issued, additional cracks have been
found under the beams, but in locations not covered by the required
inspections. Fatigue and damage tolerance analyses were performed,
the results of which indicated that all the holes in the pressure
panel above all the longitudinal beams have to be cold worked.
    For the reasons described above, this [EASA] AD retains the
requirements of DGAC France AD 2000-531-155(B), which is superseded,
extends the applicability to all A320 family aeroplanes and requires
[a special detailed inspection of the fastener holes on the pressure
panel between FR35 and FR36 under the longitudinal beam and]
modification [or repair] of all the affected holes.
    This [EASA] AD is republished to correct the number of the
superseded DGAC AD.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
0902.

Related Service Information Under 1 CFR Part 51

    Airbus has issued Service Bulletin A320-53-1264, Revision 01, dated
July 4, 2016. The service information describes procedures for a
special detailed inspection (rotating probe) for cracking of the
fastener holes on the pressure panel between FR 35 and FR 36 under the
longitudinal beam and repair of any crack.
    Airbus has also issued Service Bulletin A320-53-1240, Revision 01,
dated April 4, 2016, which describes procedures for modifying the
pressure panel above the left and right longitudinal beams, including
related investigative action (e.g., high frequency eddy current
(rototest) inspection of all the removed fastener holes) and corrective
actions (e.g., repair), by cold working the attachment holes under the
longitudinal beam at FR 36 for airplanes on which no cracking was
found.
    In addition, Airbus issued Service Bulletin A320-53-1263, Revision
01, dated February 29, 2016, which describes procedures for modifying
the pressure panel above the left and right longitudinal beams,
including related investigative actions (e.g., eddy current rotating
probe inspection of the fastener holes) and corrective actions (e.g.,
repair), by adding a doubler and a filler, and cold expansion of the
holes under the longitudinal beam at FR 36 for airplanes on which
cracking was found.
    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.

FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all pertinent information and determined an unsafe condition
exists and is likely to exist or develop on other products of these
same type designs.

Differences Between This Proposed AD and the MCAI or Service
Information

    The MCAI specifies that operators can calculate revised thresholds
for Model A319 and A320 series airplanes with sharklets installed
(Airbus Service Bulletin A320-57-1193). This proposed AD does not
include those calculations because the calculations could result in
different inspection thresholds for each individual airplane. However,
under the provisions of paragraph (o)(1) of this AD, we will consider
requests for approval of alternative compliance times.

Costs of Compliance

    We estimate that this proposed AD affects 737 airplanes of U.S.
registry.
    We estimate the following costs to comply with this proposed AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost on U.S.
             Action                     Labor cost          Parts cost     Cost per product        operators
----------------------------------------------------------------------------------------------------------------
Inspection [Retained from AD     Up to 2 work-hours x                 $0  Up to $170 per      Up to $125,290 per
 2004-03-07].                     $85 per hour = $170                      inspection cycle.   inspection cycle.
                                  per inspection cycle.
Inspection [new proposed         13 work-hours x $85 per               0  $1,105............  $814,385.
 requirement].                    hour = $1,105.
----------------------------------------------------------------------------------------------------------------

    We estimate the following costs to do any necessary modifications
that would be required based on the results of the proposed inspection.
We have no way of determining the number of aircraft that might need
these modifications:

                                               On-Condition Costs
----------------------------------------------------------------------------------------------------------------
               Action                         Labor cost                Parts cost           Cost per product
----------------------------------------------------------------------------------------------------------------
Modification.......................  Up to 213 work-hours x $85   Up to $8,510..........  Up to $26,615.
                                      per hour = $18,105.
Reporting..........................  1 work-hour x $85 per hour   $0....................  $85.
                                      = $85.
----------------------------------------------------------------------------------------------------------------

    We have received no definitive data that would enable us to provide
a cost estimate for the on-condition repairs specified in the service
information.

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 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 control
number for the collection of information required by this NPRM is 2120-
0056. The paperwork cost associated with this NPRM has been detailed in
the Costs of Compliance section of this document and includes time for
reviewing instructions, as well as completing and reviewing the
collection of information. Therefore, all reporting associated with
this NPRM is mandatory. Comments concerning the accuracy of this burden
and suggestions for reducing the burden should be directed to the FAA
at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information
Collection Clearance Officer, AES-200.

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.
    This proposed AD is issued in accordance with authority delegated
by the Executive Director, Aircraft Certification Service, as
authorized by FAA Order 8000.51C. In accordance with that order,
issuance of ADs is normally a function of the Compliance and
Airworthiness Division, but during this transition period, the
Executive Director has delegated the authority to issue ADs applicable
to transport category airplanes to the Director of the System Oversight
Division.

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would 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 this proposed
regulation:
    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.

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA proposes to amend 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 removing Airworthiness Directive (AD)
2004-03-07, Amendment 39-13451 (69 FR 5907, February 9, 2004), and
adding the following new AD:

Airbus: Docket No. FAA-2017-0902; Product Identifier 2016-NM-188-AD.

(a) Comments Due Date

    We must receive comments by November 20, 2017.

(b) Affected ADs

    This AD replaces AD 2004-03-07, Amendment 39-13451 (69 FR 5907,
February 9, 2004) (``AD 2004-03-07'').

(c) Applicability

    This AD applies to the Airbus airplanes identified in paragraphs
(c)(1) through (c)(4) of this AD, certificated in any category,
except for airplanes on which Airbus Modification 151574 was
embodied in production.
    (1) Model A318-111, -112, -121, and -122 airplanes.
    (2) Model A319-111, -112, -113, -114, -115, -131, -132, and -133
airplanes.
    (3) Model A320-211, -212, -214, -231, -232, and -233 airplanes.

    (4) Model A321-111, -112, -131, -211, -212, -213, -231, and -232
airplanes.

(d) Subject

    Air Transport Association (ATA) of America Code 53, Fuselage.

(e) Reason

    This AD was prompted by fatigue tests which revealed cracking
around the fasteners attaching the pressure panel to the flexible
bracket at frame (FR) 36, adjacent to the longitudinal beams on the
left and right sides of the airplane. We are issuing this AD to
detect and correct fatigue cracking around the fasteners attaching
the pressure panel to the flexible bracket at the FR 36 adjacent to
the longitudinal beams, which could result in reduced structural
integrity of the airplane and possible rapid decompression of the
airplane.

(f) Compliance

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

(g) Retained Inspection and Follow-On Actions, With No Changes

    This paragraph restates the requirements of paragraphs (a) and
(b) of AD 2004-03-07, with no changes.
    (1) For Model A320-211, -212, and -231 series airplanes having
serial numbers 0002 through 0107 inclusive, except those airplanes
on which Airbus Modification 21202/K1432 has been incorporated in
production, or on which Airbus Service Bulletin A320-53-1029,
Revision 01, dated April 29, 2002, has been incorporated: Prior to
the accumulation of 30,000 total flight cycles, do a rotating probe
inspection on airplanes with a center fuel tank, or a detailed
inspection on airplanes without a center fuel tank, to detect
cracking around the fasteners that attach the pressure panel to the
flexible bracket at FR 36, adjacent to the longitudinal beams on the
left and right sides of the airplane, in accordance with the
Accomplishment Instructions of Airbus Service Bulletin A320-53-1030,
Revision 01, dated May 21, 2002.
    (2) If no crack is detected by the inspection required by
paragraph (g)(1) of this AD, repeat the applicable inspection
thereafter at intervals not to exceed 6,000 flight cycles for
airplanes without a center fuel tank, and at intervals not to exceed
18,000 flight cycles for airplanes with a center fuel tank.

(h) Retained Corrective Actions, With Specific Delegation Approval
Language

    This paragraph restates the requirements of paragraphs (c) and
(d) of AD 2004-03-07, with specific delegation approval language.
    (1) If any crack is detected during any inspection required by
paragraph (g)(1) of this AD, before further flight, repair the
affected structure by accomplishing all applicable actions in
accordance with paragraphs 3.B. through 3.E. of the Accomplishment
Instructions of Airbus Service Bulletin A320-53-1030, Revision 01,
dated May 21, 2002. Repeat the applicable inspection thereafter at
intervals not to exceed 6,000 flight cycles for airplanes without a
center fuel tank, and at intervals not to exceed 18,000 flight
cycles for airplanes with a center fuel tank. For any area where
cracking is repaired, the repair constitutes terminating action for
the repetitive inspection of that area.

    Note 1 to paragraph (h)(1) of this AD: Airbus Service Bulletin
A320-53-1030 references Airbus Service Bulletin A320-53-1029,
Revision 01, dated April 29, 2002, as an additional source of
service information for certain repairs.

    (2) If Airbus Service Bulletin A320-53-1030, Revision 01, dated
May 21, 2002, specifies to contact the manufacturer for appropriate
action: Before further flight, repair using a method approved in
accordance with the procedures specified in paragraph (o)(2) of this
AD.

(i) Retained Optional Terminating Action for Paragraphs (g) and (h) of
This AD, With Revised Compliance Language

    This paragraph restates the requirements of paragraph (e) of AD
2004-03-07, with revised compliance language. For Model A320-211, -
212, and -231 series airplanes having serial numbers 0002 through
0107 inclusive, except those airplanes on which Airbus Modification
21202/K1432 has been incorporated in production, or Airbus Service
Bulletin A320-53-1029, Revision 01, dated April 29, 2002:
Modification, before the effective date of this AD, of the structure
around the fasteners that attach the pressure panel to the flexible
bracket at FR 36, adjacent to the longitudinal beams on the left and
right sides of the airplane, by accomplishing all applicable actions
in accordance with paragraphs 3.A. through 3.E. of the
Accomplishment Instructions of Airbus Service Bulletin A320-53-1029,
Revision 01, dated April 29, 2002, constitutes terminating action
for the actions required by paragraphs (g) and (h) of this AD.

(j) New Requirement of This AD: Inspection

    For all airplanes, except for airplanes identified in paragraph
(l) of this AD: At the applicable time specified in table 1 to
paragraph (j) of this AD, do a special detailed inspection for
cracking of the fastener holes on the pressure panel between FR 35
and FR 36 under the longitudinal beam, in accordance with the
Accomplishment Instructions of Airbus Service Bulletin A320-53-1264,
Revision 01, dated July 4, 2016.
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(k) On-Condition Actions

    (1) If, during any inspection required by paragraph (j) of this
AD, no cracking is found, or cracking is found that is within the
limits specified in Airbus Service Bulletin A320-53-1264, Revision
01, dated July 4, 2016: Before further flight, modify the pressure
panel above the left and right longitudinal beams, including doing
all applicable related investigative and corrective actions, in
accordance with the Accomplishment Instructions of Airbus Service
Bulletin A320-53-1240, Revision 01, dated April 4, 2016; or Service
Bulletin A320-53-1263, Revision 01, dated February 29, 2016; as
applicable. Do all related investigative and corrective actions
before further flight. Where Airbus Service Bulletin A320-53-1240,
Revision 01, dated April 4, 2016; and Service Bulletin A320-53-1263,
Revision 01, dated February 29, 2016; specify to contact Airbus for
appropriate action: Before further flight, accomplish the repair in
accordance with the procedures specified in paragraph (o)(2) of this
AD.
    (2) If, during any inspection required by paragraph (j) of this
AD, any cracking is found that exceeds the limits specified in
Airbus Service Bulletin A320-53-1264, Revision 01, dated July 4,
2016: Do the actions specified in, and at the compliance times
specified in, paragraphs (k)(2)(i) and (k)(2)(ii) of this AD.
    (i) Before further flight, repair any cracking in accordance
with the Accomplishment Instructions of Airbus Service Bulletin
A320-53-1264, Revision 01, dated July 4, 2016. Where Airbus Service
Bulletin A320-53-1264, Revision 01, dated July 4, 2016, specifies to
contact Airbus for appropriate action, and specifies that action as
``RC'' (Required for Compliance): Before further flight, request
approval of repair instructions using a method approved in
accordance with the procedures specified in paragraph (o)(2) of this
AD, and accomplish the repair accordingly within the compliance time
specified in those instructions. If no compliance time is defined in
the repair instructions, accomplish the repair before further
flight.
    (ii) At the times specified in paragraph (k)(2)(ii)(A) or
(k)(2)(ii)(B) of this AD, as applicable: Report any findings of
cracking that exceeds the limits specified in Airbus Service
Bulletin A320-53-1264, Revision 01, dated July 4, 2016, to Airbus
Customer Services through TechRequest on Airbus World (https://w3.airbus.com/) by selecting Engineering Domain and ATA 57-10.
    (A) If the inspection was done on or after the effective date of
this AD: Report within 90 days after that inspection.
    (B) If the inspection was done before the effective date of this
AD: Report within 90 days after the effective date of this AD.

(l) Actions for Certain Airplanes

    For Model A319 and Model A320 series airplanes on which the
actions specified in Airbus Service Bulletin A320-57-1193 have been
embodied and the airplane has accumulated 33,000 flight cycles or
66,000 flight hours or more since the airplane's first flight on the
effective date of this AD: Within 30 days after the effective date
of this AD, contact the Manager, International Section, Transport
Standards Branch FAA; or the EASA; or Airbus's EASA DOA for approved
repair instructions and within the compliance time specified in
those instructions, accomplish the repair accordingly. If no
compliance time is defined in the repair instructions, accomplish
the repair before the next flight.

(m) Terminating Action for Repetitive Inspections Required by Paragraph
(g)(2) of This AD

    (1) Modification of an airplane as specified in paragraph
(m)(1)(i), (m)(1)(ii), or (m)(1)(iii) of this AD constitutes
terminating action for the repetitive inspection required by
paragraph (g)(2) of this AD for that airplane only.
    (i) Modification of an airplane as required by paragraph (k)(1)
of this AD.
    (ii) Modification of an airplane prior to the effective date of
this AD, in accordance with the Accomplishment Instructions of
Airbus Service Bulletin A320-53-1240, dated March 19, 2015; or
Airbus Service Bulletin A320-53-1263, dated March 19, 2015; as
applicable.
    (iii) Modification of an airplane using instructions obtained in
accordance with the procedures specified in paragraph (o)(2) of this
AD.
    (2) Repair of an airplane as required by paragraph (k)(2) of
this AD constitutes terminating action for the repetitive
inspections required by paragraph (g)(2) of this AD for that
airplane, unless specified otherwise in the repair instructions
approved by the Manager, International Section, Transport Standards
Branch, FAA; or the EASA; or Airbus's EASA DOA.

(n) Credit for Previous Actions

    (1) This paragraph provides credit for actions required by
paragraphs (g) and (h)(1) of this AD, if those actions were
performed before March 15, 2004 (the effective date of AD 2004-03-
07) using Airbus Service Bulletin A320-53-1030, dated January 5,
2000; or Airbus Service Bulletin A320-53-1029, dated January 5,
2000.
    (2) This paragraph provides credit for actions required by
paragraph (j) of this AD, if those actions were performed before the
effective date of this AD using Airbus Service Bulletin A320-53-
1264, dated March 19, 2015.
    (3) This paragraph provides credit for actions required by
paragraph (k)(1) of this AD, if those actions were performed before
the effective date of this AD using Airbus Service Bulletin A320-53-
1240, dated March 19, 2015; or Airbus Service Bulletin A320-53-1263,
dated March 19, 2015; for that airplane only.

(o) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Section, Transport Standards 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 local Flight
Standards District Office, as appropriate. If sending information
directly to the International Branch, send it to the attention of
the person identified paragraph (p)(2) of this AD. 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.
    (2) Contacting the Manufacturer: As of the effective date of
this AD, 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 Section, Transport Standards
Branch, 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.
    (3) Required for Compliance (RC): Except as required by
paragraph (k)(2)(i) of this AD: If any service information contains
procedures or tests that are identified as RC, those procedures and
tests must be done to comply with this AD; any procedures or tests
that are not identified as RC are recommended. Those procedures and
tests that are not identified as RC may be deviated from using
accepted methods in accordance with the operator's maintenance or
inspection program without obtaining approval of an AMOC, provided
the procedures and tests identified as RC can be done and the
airplane can be put back in an airworthy condition. Any
substitutions or changes to procedures or tests identified as RC
require approval of an AMOC.
    (4) Reporting Requirements: 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 5
minutes per response, including the time for reviewing instructions,
completing and reviewing the collection of information. All
responses to this collection of information are mandatory. Comments
concerning the accuracy of this burden and suggestions for reducing
the burden should be directed to the FAA at 800 Independence Ave.
SW., Washington, DC 20591, Attn: Information Collection Clearance
Officer, AES-200.

(p) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information
(MCAI) EASA AD 2016-0206, dated October 13, 2016; corrected October
14, 2016; for related information. This MCAI may be found in the AD
docket on the Internet at http://www.regulations.gov by searching
for and locating Docket No. FAA-2017-0902.
    (2) For more information about this AD, contact Sanjay Ralhan,
Aerospace Engineer, International Section, Transport Standards
Branch, FAA, 1601 Lind Avenue SW.,

Renton, WA 98057-3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.
    (3) For service information identified in this AD, contact
Airbus, Airworthiness Office--EIAS, 1 Rond Point Maurice Bellonte,
31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5
61 93 44 51; email<EMAIL_ADDRESS>Internet http://www.airbus.com. You may view this service information at the FAA,
Transport Standards Branch, 1601 Lind Avenue SW., Renton, WA. For
information on the availability of this material at the FAA, call
425-227-1221.

    Issued in Renton, Washington, on September 21, 2017.
Dionne Palermo,
Acting Director, System Oversight Branch, Aircraft Certification
Service.
[FR Doc. 2017-21221 Filed 10-5-17; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 81, Number 124 (Tuesday, June 28, 2016)]
[Notices]
[Pages 42016-42017]
[FR Doc No: 2016-15178]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78130; File No. SR-FINRA-2016-019]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Adopt NASD Rule 2830 as FINRA Rule 2341
(Investment Company Securities) in the Consolidated FINRA Rulebook

June 22, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 9, 2016, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to adopt NASD Rule 2830 (Investment Company
Securities) as FINRA Rule 2341 (Investment Company Securities) in the
consolidated FINRA rulebook without any substantive changes. FINRA also
proposes to update cross-references within other FINRA rules
accordingly.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''),\4\ FINRA is proposing to transfer
NASD Rule 2830 (Investment Company Securities) into the Consolidated
FINRA Rulebook as FINRA Rule 2341 (Investment Company Securities)
without any substantive changes. NASD Rule 2830 regulates members'
activities in connection with the sale and distribution of securities
of companies registered under the Investment Company Act of 1940
(``investment company securities'').\5\ In connection with the
distribution and sale of investment company securities, NASD Rule 2830
limits the sales charges members may receive, prohibits directed
brokerages arrangements, limits the payment and receipt of cash and
non-cash compensation, sets conditions on discounts to dealers, and
addresses other issues such as members' purchases and sales of
investment company securities as principal.
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    \4\ The current FINRA rulebook consists of: (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from New York Stock Exchange
LLC (``NYSE'') (``Incorporated NYSE Rules'') (together, the NASD
Rules and Incorporated NYSE Rules are referred to as the
``Transitional Rulebook''). While the NASD Rules generally apply to
all FINRA members, the Incorporated NYSE Rules apply only to those
members of FINRA that are also members of the NYSE (``Dual
Members''). The FINRA Rules apply to all FINRA members, unless such
rules have a more limited application by their terms. For more
information about the rulebook consolidation process, see
Information Notice, March 12, 2008 (Rulebook Consolidation Process).
    \5\ As with NASD Rule 2830, FINRA Rule 2341 would not regulate
members' activities in connection with variable insurance contracts,
which are regulated by FINRA Rule 2320 (Variable Contracts of an
Insurance Company).
---------------------------------------------------------------------------

    Proposed FINRA Rule 2341 closely tracks the language of NASD Rule
2830 and makes only non-substantive, technical changes to the text of
the NASD rule by, for instance, replacing the reference to a legacy
NASD rule with the applicable FINRA rule and making other non-
substantive, technical conforming changes.\6\
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    \6\ FINRA previously solicited comment on a proposal to move
NASD Rule 2830 to the Consolidated FINRA Rulebook with substantive
changes. See Regulatory Notice 09-34 (June 2009); see also
Securities Exchange Act Release No. 64386 May 3, 2011), 76 FR 26779
(May 9, 2011) (Notice of Filing File No. SR-FINRA-2011-018)
(withdrawn on August 1, 2011). Given that FINRA would like to
proceed with the rulebook consolidation process expeditiously to
provide greater clarity and regulatory efficiency to FINRA members,
FINRA is proposing to move NASD Rule 2830 to the Consolidated FINRA
Rulebook without substantive changes at this time, but FINRA may
consider proposing substantive changes to the rule as part of future
rulemaking.

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

    In addition, the proposed rule change makes technical changes to
paragraph (b)(10) of NASD Rule 2830. Paragraph (b)(10) of NASD Rule
2830 incorporates by reference several definitions under the Investment
Company Act, including ``open-end management investment company.''
However, the Investment Company Act does not define the term ``open-end
management investment company,'' but defines ``management company,''
and divides this term into two sub-classifications, ``open-end
company'' and ``closed-end company.'' \7\ Accordingly, paragraph
(b)(10) of proposed FINRA Rule 2341 would incorporate the definitions
of ``open-end company'' and ``closed-end company'' from the Investment
Company Act, rather than ``open-end management investment company.''
The proposed rule change would then replace references to the terms
``open-end management investment company,'' ``open-end investment
company,'' and ``open-end management company'' in NASD Rule 2830(c),
(d), (g), (h), (i) and (j) with references to ``open-end company.''
Similarly, the proposed rule change would replace references to the
term ``closed-end investment company'' in NASD Rule 2830(d) and (j)
with a reference to ``closed-end company.'' These proposed changes
would correct these references in the NASD rule for the purposes of
adopting it as a FINRA rule, without changing the substantive meaning.
FINRA has filed the proposed rule change for immediate effectiveness.
The implementation date will be 30 days after the date of the filing.
---------------------------------------------------------------------------

    \7\ See Sections 4(3) and 5(a) of the Investment Company Act.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change, which
does not substantively change the rule, is consistent with the Act
because it is being undertaken pursuant to the rulebook consolidation
process, which is designed to provide additional clarity and regulatory
efficiency to FINRA members by consolidating the applicable NASD,
Incorporated NYSE, and FINRA rules into one rule set.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. As noted above, the proposed
rule change will not substantively change either the text or
application of the rule. FINRA would like to proceed with the rulebook
consolidation process expeditiously, which is believed will provide
additional clarity and regulatory efficiency to members.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2016-019 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FINRA-2016-019. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2016-019 and should be
submitted on or before July 19, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-15178 Filed 6-27-16; 8:45 am]
 BILLING CODE 8011-01-P